UNIVERSITY OF OTTAWA PENSION PLAN ADMINISTRATIVE STAFF

UNIVERSITY OF OTTAWA PENSION

PLAN

ADMINISTRATIVE STAFF

February 27, 2013

Last update: January 15, 2013

Biography of Luc Lauzière, BA, BCOM University of Ottawa Luc has been employed by the University of Ottawa since 1998 and is currently the Manager, Pension Plans of the Pension Sector. Luc is perfectly bilingual.

Education and Training Luc is a University of Ottawa Graduate in Administration (1986) and in Commerce with a Major in Human Resources and a Minor in Accounting (1987). Since, Luc has acquired other training certifications in Human Resources, Pension and Benefits. Professional Experience Since 1986 Luc has acquired work experience in Human Resources specifically in Pension and Benefits both in the private and public sectors.

•  University of Ottawa Manager, Pension Plans April 2006 Present •  University of Ottawa Pension Officer March 1998 March 2006 •  LOEB Inc. (Provigo) Benefits Advisor February 1997 February 1998 •  LOEB Inc. (Provigo) Benefits Supervisor June 1992 January 1997 •  C Corp. Inc. Human Resources Coordinator Juin 1986 Mai 1992

Main Functions, Pension Sector As the Manager of the Pension Sector, Luc is responsible for all aspects related to the University of Ottawa Pension Plans, which are the University of Ottawa Defined Benefit Pension Plan and Part Time Teachers Defined Contribution Pension Plan. He is advising the pension plan members, is managing the activities of the Pension Team, is providing multiple advises on pensions issues, and is assisting members and the Faculties/Services with various requests. The main aspects of his work is to ensure good communications, finances, pension plan compliances, regulations, integrated systems, provide training, manage service and provide interpretations regarding official documents.

Manager, Pension Plans

Preparing for retirement Day 1

Ø  Alumni Relations and the SSRA

Ø  Dynamics of Retirement : Psychological Preparation

Day 2 Ø  Personal Finances: Cash Flow, RRSPs, RRIFs, Annuities

Ø  Financial and Estate Planning Considerations

Ø  Physical Activity and Ageing

Descriptive

AGENDA Ø  Pension

Ø  Defined Benefit Pension Plan Ø  Pension Governance Structure Ø  Non compulsory retirement Ø  Required contributions (employee/employer) Ø  Benefit formula Ø  Date of retirement Ø  Examples of calculation Ø  Voluntary contributions Ø  Pension indexation Ø  Survivor benefit options Ø  Pension beneficiaries

Ø  Retiring allowance Ø  Calculation Policy 53, Section 42.05 SSUO-OSSTF, Section 32.05 PIPSC (Not applicable for

Contractual) Ø  Examples and Notice

Ø  Group benefits Ø  Insurance coverage Ø  Other benefits

Ø  Summary of retirement benefits Ø  Working Tools

Ø  Reference to your personal pension statement and Annual Report Ø  Financial planner

Agenda

RETIREMENT INCOME

q  q  Canada/Québec Pension Plan (CPP/QPP) q  Old Age Security (OAS) q  Other employer pension plan(RPP) q  Registered Retirement Savings Plan(RRSP) q  Retirement Allowance q  Personal Savings q  Tax-Free Savings Accounts (TFSA) q  Investment Income q  Personal Assets q  Spouse’s Income q  Fiscal Impact q  Employment/Business Income q  Other Plans

Retirement Income

PENSION PLAN

The University of Ottawa Pension Plan is a defined-benefit plan. This means that, at the time of your retirement, you will receive a benefit based on a formula that takes into account the average salary of your best 60 months of earnings and the number of years of credited service you have in the Plan.

-Average Salary -Contributions -Pension Service Employee and -Pension Formula Employer = = Pension Payable (Retirement) Required Funds X Actuarial Factors = Commuted Value (Death)

Defined Benefit Pension Plan

Financial Planner

Organizational Chart of responsibilities and reporting relationships

Board of Governors

Executive Committee

Pension Plan Committee Pension Fund Investment Committee President

Treasurer/Director Pension Fund

Assistant Director Treasury &

Pension Fund

Assistant Director Private Market Investments

Treasury Analyst

Administrative Committee

V-P Resources

Associate V-P Human Resources

Director, HR Shared Services

Manager, Pension Plans

Pension Plans Advisor

Pension Plans Advisor

Pension Fund Investment: - Policy recommendations - Investment Strategy -  Manager selection and oversight -  Performance objectives Key Advisors: Actuary; trustee/custodian; investment managers; consultants

Plan Sponsor and Administrator: - Governance structure - Policies (investment; funding) - Plan terms and provisions

Pension Plan Administration: - Member entitlements - Member communications -  Pension administration -  Prescribed filings Key Advisors: Actuary; trustee/custodian; regulatory authorities

Pension Governance Structure

Statistics

STATISTICS

University of Ottawa Pension Plan Statistics as at December 31, 2012: §  Fund Value 1,462,376,773 $ §  Pension Benefits Paid 55,553,871 $ §  Withdrawal/Transfers 8,458,890 $ §  Employee Contributions Remitted 15,584,852 $ §  Employer Contributions Remitted 34,343,879 $ §  Transfer Value in the Plan 1,036,094 $ §  Buy-Back Value in the Plan 589,803 $

§  Number of Retiree 1,857 §  Number of Active Member 3,424 §  Number of Deferred Member 780

Plan Activities as at December 31, 2012: §  New Members 247 §  New Retirees (active and deferred members) 93 §  Deceased Retirees 34 §  Terminated Members 76 §  Deceased Active Members 1 §  Amortized Buy-Back 64 §  Withdrawals/Transfers 112

NON-COMPULSORY RETIREMENT Bill 211

•  In June 2005, the Ontario Minister of Labour introduced Bill 211, An Act to amend the Human Rights Code and certain other Acts to end mandatory retirement. The Act received Royal Assent on December 12, 2006, to take effect one year after this date.

•  Mandatory retirement ended on December 12, 2006. •  Ending mandatory retirement will not have an impact on pension

benefits already earned. •  Employees can continue membership in pension plans and accrue

benefits past age 65 subject to service or contribution caps. •  You can contribute to the pension plan up to November 30th in the

calendar year in which you attain the age of 71. Please note that your pension benefit is payable effective the month of December of that same calendar year.

Non-Compulsory Retirement

CONTRIBUTIONS

A.  Required employee contributions Reform Post-reform (Pre-2004) (Post-2003) Up to the Integration Level* 3.40% 4.25% Above the Integration Level 5.24% 6.55%

B.  Employer contributions

8.50% 12.19%

Reform Post-reform (Pre-2004) (Post-2003) Current Integration Level $31,790 $36,698 *Integration level The University pension plan provides for a pension that differs for the portion of earnings below and above a certain threshold. The threshold of earnings is based on the maximum earnings (YMPE) covered for purposes of determining the pension payable from the Canada and Quebec Pension Plan and differs for service before and after January 1, 2004. Currently the Canada and Quebec Pension Plan set this amount at $51,100 for 2013.

Required Contributions (Employee / Employer)

PENSION BENEFIT FORMULA

A.  Pension calculation formula (following the reform) •  Average salary = 60 best months (Total pension service) •  For the Pre-2004 service the Integration Level is set at $31,790

Please note that there is no maximum pensionable service in the pension plan

Service to December 31, 2003 (Pre-2004)

i) $31,790 X 1.3% X pension participation = a ii) (Average salary - $31,790) X 2% X pension participation = b Total annual pension pre-2004 (a + b) = c

Benefit Formula

B.  Pension calculation formula (post reform)

•  Average salary = 60 best months (Total pension service) •  Pre-2004 set Integration Level indexed annually at a rate of 55 % of the

increase in the YMPE*

Service Post-2003

i) $36,698 X 1.3% X pension participation = a ii) (Average salary - $36,698) X 2% X pension participation = b Total annual pension post-2003 (a + b) = d Total Annual Pension UO (c + d)

MINIMUM PENSION TEST As part of the pension plan reform, a participant to the University pension plan is

entitled to a minimum pension equal to 1.5% for each pension year. (Average Salary X 1.5% X pension participation)

*Year’s Maximum Pensionable Earnings (YMPE) This is the amount the government sets each year, and uses to base your contributions to (as well as your benefits from) the Canada Pension Plan or Quebec Pension Plan. In 2013, the YMPE is $51,100. Annual changes to the YMPE are based on increases in average Canadian industrial wages.

Benefit Formula

DATE OF RETIREMENT Your normal retirement date as per the plan text is the 1st day of the month coincident with or next following your 65th anniversary. However, you may retire earlier. In that case:

Pension Benefit-Factor 90

Factor 90 applies ----------------------------->

55 years 60 years 65 yearsEarly Optional Normal

10 000$ 15 000$ 20 000$

PENSION CALCULATION -Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $40,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790 / $36,698 1) SERVICE PRE-2004

i) $31,790 X 1.3% X 16 = $6,612.32 ii)  $8,210 X 2% X 16 = $2,627.20 $9,239.52

2) SERVICE POST-2003

i) $36,698 X 1.3% X 9 = $4,293.67 ii) $3,302 X 2% X 9 = $594.36 $4,888.03 Total pension UO 1 + 2 $14,127.55

MINIMUM PENSION TEST ($40,000 X 1.5% X 25) = 3) CPP/QPP maximum reduced (-32.4%) pension = $8,213.40 Total UO + CPP/QPP = $23,213.40

Benefit Calculation-Example 1

Benefit Calculation


i) $31,790 X 1.3% X 16 = $6,612.32 ii)  $18,210 X 2% X 16 = $5,827.20 $12,439.52


i) $36,698 X 1.3% X 9 = $4,293.67 ii) $13,302 X 2% X 9 = $2,394.36 $6,688.03 Total pension UO 1 + 2

MINIMUM PENSION TEST ($50,000 X 1.5% X 25) = $18,750.00 3) CPP/QPP maximum reduced (-32.4%) pension = $8,213.40 Total UO + CPP/QPP = $27,340.95


Benefit Calculation Benefit Calculation


i) $31,790 X 1.3% X 16 = $6,612.32 ii)  $48,210 X 2% X 16 = $15,427.20 $22,039.52





Benefit Calculation Benefit Calculation


i) $31,790 X 1.3% X 6 = $2,479.62 ii)  $28,210 X 2% X 6 = $3,385.20 $5,864.82





Benefit Calculation Benefit Calculation Benefit Calculation


i) $31,790 X 1.3% X 1 = $413.27 ii)  $18,210 X 2% X 1 = $364.20 $777.47


i) $36,698 X 1.3% X 9 = $4,293.67 ii) $13,302 X 2% X 9 = $2,394.36 $6,688.03 Total pension UO 1 + 2 $7,465.50



Benefit Calculation


i) $31,790 X 1.3% X 1 = $413.27 ii)  $8,210 X 2% X 1 = $164.20 $577.47


i) $36,698 X 1.3% X 9 = $4,293.67 ii) $3,302 X 2% X 9 = $594.36 $4,888.03 Total pension UO 1 + 2 $5,465.50



VOLUNTARY CONTRIBUTIONS

• For pre-1988 service, $200 per year of pensionable earning prior to 1988 (excluding buy-back and transferred service) • Payable at termination, death, retirement or for pension service buy-back • RRSP transfer or cash/taxable option

Estimated value of voluntary contributions

• 25 years of service at December 31, 2012: $00.00 -No initial amount as at December 1988 • 30 years of service at December 31, 2012: $6,678.57 -Initial amount of $1,000 as at December 1988 • 35 years of service at December 31, 2012: $13,357.16 -Initial amount of $2,000 as at December 1988

Voluntary Contributions

PENSION INDEXATION A)  Three steps indexation formula based on inflation from previous year

(Consumer Price Index (CPI)-September to October)

1.  Full indexation if inflation is less than 2%

2.  2% automatic indexation if inflation is between 2% and 3%

3.  Inflation minus 1% if inflation is between 3% and 8% (Max 8%) B)  Special Ad hoc indexation

Annual revisits of percentage not accorded in 2 & 3

Pension Indexation

SURVIVOR PENSION BENEFIT TO THE SPOUSE AND GUARANTEE PERIODS

Standard Option Ø  5 years guarantee / 60% Survivor benefit to the spouse

• Therefore, if your death occurs on or before the guarantee period; -  and you are survived by your spouse, he/she will receive your full monthly pension until the end of the 5 years

guarantee and then it will reduce to 60% for his/her lifetime. -  and there is no surviving spouse, a lump sum representing the value of the remaining guaranteed monthly payments

becomes payable to your Estate. • Should your death occur after the guarantee period;

-  and your spouse survives you, his/her monthly benefit will be 60% of your benefit for her lifetime. -  and there is no surviving spouse, the pension payments cease; there is no death benefit payable to the estate

because the guarantee period is expired.

Optional Options Ø  0 years guarantee / 60% Survivor benefit Ø  10 years guarantee / 60% Survivor benefit Ø  15 years guarantee / 60% Survivor benefit Ø  100% lifetime with 0-5-10-15 years guarantee periods -Reduction of approx. 15% for the 100% survivor benefit -Reduction of approx. 2% for a 10 years guarantee period -Reduction of approx. 5% for a 15 years guarantee period

Note: There is only one irrevocable choice at retirement.

Survivor Pension Benefit

PENSION BENEFICIARIES

Pre-retirement (Pension Benefit Value payable): 1) Spouse

The person married to you by a religious or civil ceremony or with whom you have been living in a relationship that resembles a marriage for at least one year and whom you have designated in writing to the University as your spouse. Based on pension plan text, waiver of spousal benefit allowed before retirement.

2)  Designation or Estate

Post-retirement (Survivor Benefit payable based on choice): 1)  Spouse

Same as above. Based on pension plan text, no waiver of spousal benefit allowed at retirement.

2)  Children Your eligible dependent children as per the provisions of the plan are your natural or adopted children under 19 at retirement whom you support and/or is under age 27 and a full time student in a recognized education institution and/or is physically or mentally disabled.

Pension Beneficiaries

RETIRING ALLOWANCE (Same formula for all Administrative Employee Groups)

A) Less than 60 years of age without factor 90

2003 Standard salary class at retirement X .004 X UO service X 5 maximum B) 60 years of age or under age 60 with the factor 90

2003 Standard salary class at retirement X .006 X UO service X 5 maximum C) Or based on your collective agreement

The Revenue Canada Agency tax sheltering policy (Under paragraph 60(j.1) of the Income Tax Act)

$ 2,000 for each year of service (pre-1996) may be transferred to an RRSP plus $1,500 for each non-contributory year of service

Retiring Allowance-Formula

Retiring Allowance-Salary Class

EXAMPLES as at December 31, 2012: 35 hours per week Salary Scale as at May 1st, 2003 Class Age/service/ratio factor Non-Taxable Taxable 4 58/25 (30,595*.004*25*5)= $15,297 $ 15,297 $0

60/25 (30,595*.006*25*5)= $22,946 $ 16,000 $6,946 62/25 (30,595*.006*25*3)= $13,768 $ 13,768 $0

6 58/25 (36,435*.004*25*5)= $18,217 $ 16,000 $2,217 60/25 (36,435*.006*25*5)= $27,326 $ 16,000 $11,326 62/25 (36,435*.006*25*3)= $16,396 $ 16,000 $396

8 58/25 (43,891*.004*25*5)= $21,945 $ 16,000 $5,945 60/25 (43,891*.006*25*5)= $32,918 $ 16,000 $16,918 62/25 (43,891*.006*25*3)= $19,751 $ 16,000 $3,751

10 58/25 (54,768*.004*25*5)= $27,384 $ 16,000 $11,384 60/25 (54,768*.006*25*5)= $41,076 $ 16,000 $25,076 62/25 (54,768*.006*25*3)= $24,646 $ 16,000 $8,646

NOTICE You are planning to retire soon? Non-unionized Administration Staff Policy 53 Non-unionized administration staff members with salary classes 1 to 9 must give a notice of retirement at least three months prior to departure, and administration staff members with salary classes 10 to 17 must give a notice of retirement at least six months prior to departure. Section 42.05 PSUO-OSSTF Employees shall give three (3) months of notice that they are retiring in order to receive the retirement allowance. Such notice is irrevocable. Employees are encouraged to give as much notice as possible in order to help the faculty or service with its budget and succession planning. Section 32.05 PIPSC Employees shall give three (3) months of notice that they are retiring in order to receive the retirement allowance. Such notice is irrevocable. Employees are encouraged to give as much notice as possible in order to help the faculty or service with its budget and succession planning. Contact Human Resources. They will assist you in completing the required forms and explain the steps to follow to apply for a pension from the government plans. Please note that Human Resources will need three months to process your retirement file.

Retiring Allowance-Notice

GROUP BENEFITS

A) Group Insurance (monthly premium May 1st, 2013 before the provincial tax)

Single Family •  Hospital insurance (Semi-private/Private) 4.36$-6.14$ 8.24$-13.43$ •  Health care plan (to age 65) 78.16$ 202.00$ •  Basic Dental insurance (to age 65) 21.70$ 65.48$

The monthly premiums are paid by the retiree

After 65 of age, the following programs are available (Booklets are available) :

•  MROO, (Municipal Retirees Organization of Ontario) •  Follow-me (Manulife Financial) •  RTIP-OTIP (Retired Teachers Insurance Plan of Ontario)

Group Benefits

GROUP BENEFITS B) Life Insurance

Employee became insured: • Prior to May 1, 1971

Ø  50% of salary at retirement (Max $100,000 of coverage) • On or after May 1, 1971 but prior to July 1, 1976

Ø  2.5% of salary at retirement per year of service max 20 years (Min $2,000 Max $100,000) • On or after July 1, 1976

Ø  10 years service or less = $2,000 Ø  more than 10 years of service = 10% of salary at retirement (Min $2,000 Max $5,000)

-The monthly premiums to maintain the life insurance coverage are at the University’s cost and is a taxable benefit for the retiree, a taxation slip will be issued. -Any transfer of pension service is not recognized under the hire date

C) Health Care Spending Account (Manulife Financial in effect since May 1st, 2002)

• Applies to employees with a minimum of 10 years of employment service • Annual Health Care Spending Account of $96 (Contract 80448) and not applicable for contractual • Or based on your collective agreement

Group Benefits

OTHER BENEFITS

1) Tuition fee exemption for employees and eligible dependants until retiree’s 70th birthday (not applicable for contractual)

2) Library services

3) Sports services

4) E-mail services

Other Benefits

SUMMARY OF BENEFITS AT RETIREMENT

ü  Pension payable from the University of Ottawa Pension Plan ü  Pension payable from the Canada/Québec Pension Plan ü  Voluntary contributions ü  Retiring allowance ü  Life insurance ü  Medical insurance health/dental/hospitalization ü  Health Care Spending Account ü  Other benefits

Summary of retirement benefits

Example of Summary

THE UNIVERSITY OF OTTAWA RETIREMENT PENSION PLAN PROJECTED OPTIONAL RETIREMENT Estimation of projected retirement benefits

Name: Retiree Employee Number: 100000000 Projected Retirement Date: 2009 Age at Retirement Date: 60.0000 years old Date of Employment: 1985 Seniority Date: 1985 Current Salary: $55,000.00 Credited service for Pension: 18.0000 years (includes buyback of past service) Employment Service: 22.0000 years

Estimated projected monthly pension from UO pension plan, before statutory deductions

$1,100.00

The calculation of your pension is based on the pension formula in force at January 1, 2004. The projection shown above assumes that you will participate in the pension plan at 100% until your Projected Retirement Date. This projection is based on your current salary and does not take into account any future salary increases. For service credited since January 1, 2004, the calculations are based on the current Yearly Maximum Pensionable Earnings (YMPE) under Canada Pension Plan (CPP). The current actuarial factors have been used to determine the actuarial reduction, if applicable. The actuarial factors are subject to change monthly. Estimated monthly benefit from Canada Pension Plan Current Maximum benefit at age 65 is $908.75/mth for 2009 Current Maximum benefit at age 60 is $636.13/mth for 2009

$636.13

For more information on CPP benefit, you may contact Human Resources Development Canada, Income Security Programs at 1-800-277-9914 or visit the website at www.hrsdc.gc.ca. Registration: http://www.servicecanada.gc.ca/en/online/mysca.shtml Early Retirement Allowance - Lump sum Formula: $49,013.00 * 0.006 * 22.0000 * 5.0000 As per Policy 53 or your Collective Agreement; http://www.hr.uottawa.ca/

$28,000.00 transferable to an RRSP under paragraph 60(j.1) of the Income Tax Act (ITA) $4,348.58 excess retirement allowance, subject to income tax $32,348.58 total retirement allowance

The early retirement allowance has been calculated based on the provision in effect at the time of calculation. Voluntary Contributions - Lump sum

$1,000.00

The interest rate for the current year has been used to project the value of your voluntary contributions at retirement.

.../2

- 2 - Life Insurance - premium paid by UO - taxable benefit to member

$5,000.00

Supplementary Health Insurance At member's expense: premiums are deducted from monthly pension Current monthly rate: End Date: This option is available only if you are covered for Supplementary Health Insurance on your retirement

Family coverage $185.05 per month May 1, 2014

Dental Insurance Terms/Grants/GFT are not eligible At member's expense: premiums are deducted from monthly pension Current monthly rate: End Date: This option is available only if you are covered for Dental Insurance on your retirement

Family coverage $64.02 per month - Basic $42.62 per month - Optional May 1, 2014

Hospital Room Insurance At member's expense: premiums are deducted from monthly pension Current monthly rate: This option is available only if you are covered for Hospital Room Insurance on your retirement

Family coverage $21.49 per month - Private room $13.20 per month - Semi-private room End date not applicable

Health Care Spending Account (HCSA) Terms/Grants/GFT are not eligible This benefit is prorated for first year of retirement Eligible Medical Expenses as per Canada Revenue Agency http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/return/completing/deductions/lines300-350/330/allowable-e.html

$96.00 per year

PLEASE NOTE THAT ALL INSURANCE RATES ARE SUBJECT TO CHANGE AS THE PREMIUMS ARE REVIEWED EVERY YEAR.

Other Benefits available to you: • Tuition Fee Exemption: For you, your spouse and your eligible dependents under the age of 26,

until you reach the age of 70 • Use of Libraries • Access to Sports Services • Email account

01 April 2009

Personal Statement and Annual Report

HR Web Site: www.hr.uottawa.ca/pension

Fact Sheet Series

Financial Planner

QUESTIONS

UNIVERSITY OF OTTAWA PENSION PLAN ADMINISTRATIVE STAFF

Documents

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