PENSION QUESTION AND ANSWERS FROM COQUITLAM PENSION INFORMATION SESSION
NOV.19 AND 20 2002.


THESE QUESTIONS CAME FROM SEVERAL DIFFERENT GROUPS SO ARE NOT GENERIC TO THE CCROU RULES.

Q1; How is Old Age Security clawed back?

A1; Total income based, commencing at $54,000, ends at $84,000 per year.

Q2; How are best 5 years or best sixty months calculated.

A2;† For the CCROU; Highest Plan Earnings is based on best consecutive 5 calendar years, or last 60 months of service prior to retirement date.† Several non-op unions (CAW, BMWE, and USW) are allowed their best 60 consecutive months.

Q3; What would I receive in pension if I retired at age 45?

A3; If you have 25 years service and requested early retirement an actuarial reduction in pension amount is calculated based on the regular formula and reduced for each year from normal retirement, (roughly 6-7% per year).† Choose to leave money in pension until you attain normal retirement age, at which time an unreduced benefit will be paid, or lump sum amount can be taken.† If you have less than 25 years then benefit can only be paid at age 65 or a lump sum amount paid out. This information is on your yearly pension statement.

Q4; Do I need Company permission to early retirement?

A4; No, company consent is not required for CCROU employees.

Q5; The date July 31, 1991 is at several points in pension information and rules,

e.g.; articles 8.06, 8A.03, what is this date?

A5; This date is when CCRA imposed maximum pension limits on the plan. For service up to July 31, 1991 a high earner can get whatever the pension formula generates; for service after that date the pension may not be more than $1722.22 times years of service.

Q6; Under the different forms of pension choices; 50% or 60% spousal amounts, once this choice is made, am I able to change, re; spouse dies shortly after retiring?

A6; No

Q7: My pension statement indicates a 4% interest rate for paying benefits upon severance; how is this determined?

A7; I think this question is referring to the interest rate credited on employee contributions. For 2002 this was 4.0%. I don't understand the "severance" part of the question - the benefits from the pension plan are not affected by whether a member voluntarily or involuntarily terminated.

Q8; Why is this amount 4% yet for early retirement actuarial reduction 6-7% is used?

Q8: This is a complicated question. The actuarial reduction is our best estimate of maintaining the same cost to the plan if a member retires early. For example, suppose a member has earned a pension of $1000/month starting in 5 years time when he is age 65. We have to calculate how much pension we can pay starting at age 60 - so that the cost to the plan is unchanged. Two things affect how much the plan can pay. First, a pension from age 60 will be paid for 5 more years. Second, the plan will start paying 5 years earlier and will therefore lose interest on the money it pays out. These things taken together generate a reduction in pension in the order of 6-7% per year. The fact that the pension plan pays interest of 4% on employee contributions does not enter into the calculation.

Q9: Is there any restriction to spousal benefits if I were to be married after retirement date?

A9; If you begin a relationship with a new spouse after you retire and your former spouse is not entitled to any pension benefit, your new spouse after retirement may receive a survivor benefit equal to 50% of your pension.

Q10:† We use to receive information newsletters on Pension Plan investment and changes, why is this information no longer sent out?

A10; Not sure what is being referred to here.† Currently, when there are changes to pension affecting CCROU employees, updates are sent for inclusion in the pension guide.† The CCROU is currently negotiating a new contract. Should anything change regarding the current rules, employees will be notified.

Q11: What are the current investments of the Plan?

A11:† Employees can request this information by calling Pension Services and asking for a copy of the Statement of Investment Policies and Procedures.

Q12:† Who is the current investment manager of the Planís investments?

A12;† CPR is in the process of determining this.

Q13; Post retirement extended health care benefits; what are they and who handles them?

A13; Blue Cross is the carrier for the post-retirement health care.† For further information, please call Pension Services and ask for the brochure.

Q14; Is the 60 month/5 year provision for calculating HPE comparable to other plan outside the railway?

A14: ††† BC. Public Sector Plans, best 5 yrs. (which is one of the largest plans in Canada),

Manitoba University Plan is best 5 yrs average

BC Rail is best 5 in 10 consecutive years.

TELUS uses a career average.

Q15: Can we buyback time missed while on strike?

A15; No.

Q16: If I make the maximum pensionable earnings, ($86,111) yet miss one calendar month account off disabled, how would this be calculated for pensionable service?

A16:† In order to get one month of pensionable service, you must work one day in that month.† If you donít, that month doesnít get counted regardless of how much money you make.† If† you are off a month because of illness/injury, that is considered a pensionable leave and can be paid back so you would get the month as service.

Q17: Is there interest added to contributions based on deemed earnings?

A17: No

Q18:† Buyback, why canít this time be paid though payroll deduction similar to deemed earnings contributions?

A18: It may be because buyback is a negotiated benefit and deemed earnings are a regulated benefit, we will seek clarification.

Buyback must be paid for at the time it is bought back.† Those are the rules of† buyback.

Q19:† Is the basic health care plan that is available to pensioners also available to someone on disability pension?

A19: If someone qualifies for disability pension, they qualify for Blue Cross.

Q20:† Single retiree passes away, where does the remaining pension go?

A20: Depending how much benefit is paid out to date, lifetime contributions Ė benefit paid, would be paid to the personís estate.

Q21:† I am 55/85, I want to retire, how much time do I have to decide once I receive the information from the pension dept.?

A21:† You are notified 6 months prior to reaching age 65, not sure what notice you get if retirement is earlier.† Will look into.

Once pension services receives your pension application, we will calculate your pension options and send them to you within 3 months of your retirement date.† It is assumed that once we have the application, you are serious about retiring and your record will be changed in CMA/VIP.†

Q22: The Benefit Enrollment and Beneficiary form we are required to submit, does this information transfer over to the Pension Dept.?

A22: Your spousal information is picked up for annual statement purposes.† The information is entered on the employee side of VIP, and then when annual statements are run, the process goes to look at the information and puts it into the correct space.

Q23:† Up to about 7 years ago, all the bargaining unitsí pension rules were similar, why are they all now different?

A23:† As a result of negotiations.† Unions wanted different rules and changes in pension for their members.

Q24: Does the pension benefit from the CPR Plan affect the benefit I receive from CPP?

A24: No.†

Q25: For the purpose of calculating best five years, will they pro rate any periods when off sick, similar to MBR basic weekly rate?

Q25: No, any time(earnings) missed account disabled is reconstructed and repaid to reflect actual earnings and contribution that would have otherwise been made.

Q26: How do they calculate the spousal reduction; 60/70/80% etc.?

A26: This is an actuarial calculation.† Will seek clarification†

This calculation is done on the basis of maintaining the same cost to the plan. For example, suppose a member has earned a pension of $1000/month in the normal form. At the member's death his spouse will receive $500/month for the rest of her lifetime. We have to calculate how much pension the plan can pay to the member, with 60% payable to the spouse, so that the long term cost to the plan is unchanged. We do this calculation by looking at the life expectancies of the member and the spouse, and calculating on average how many years the spouse can expect to receive her pension. Both the member's age and the spouse's age affect the calculation, but typically we find that the plan can pay about $980/month to the member, with 60% ($588) to the spouse, for the same cost to the plan. Because of the "same cost" basis of calculation, from a financial perspective the plan does not care which option the member takes.

Q27: If I choose the 100% spousal amount, how does a spouse who is more than 10 years younger affect the calculation?

A27:† As explained in A26, we factor in both the member's age and the spouse's age in the calculation of the optional form. Suppose the member has a pension of $1000/month and has a spouse who is 20 years younger. In this case the normal form of pension provides a 45% ($450) survivor pension to the spouse. We calculate how much pension the plan can pay to the member, with the same amount to the spouse, so that the cost to the plan is unchanged. Once we calculate the answer, the spouse will get 100% of the member's

Q28: Through a divorce settlement, an amount is removed from my Plan, can I pay this money back?† If not, why can it not be handled the same as buyback?

A28: No. Will seek clarification.

There is no ability under the pension rules to allow an employee to buy back pension as a result of a divorce settlement.† Pension was already paid for during that time Ė it is just being split up between the two parties. Buyback is for time when there is no pension contribution.


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