Pension Surplus Update
(e-mail sent to McMaster Community on August 2, 2002)

Memo to Active Plan members

The time when the Financial Services Commission of Ontario is expected to approve our surplus sharing agreement is approaching.  If there are no unforeseen hitches, approval could come as soon as  mid-September.  However, the date of approval will be uncertain until the approval actually happens.  To that end, all the signatories to the original agreement have now agreed that it is in the interest of individuals approaching retirement to fix a date that will determine  the individuals' status for tax treatment pursuant to the surplus sharing agreement.
 
We have set this date at the end of August.  Individuals who give notice in writing to Human Resources that they wish to retire on August 30th (or earlier) will be treated as Inactive as far as the agreement is concerned.  Individuals who indicate a retirement date at the end of August midnight 
of August 31) or later (for example, the first of October or November) will be treated as Active Members under the agreement.  Giving notice for August 31 will permit pension cheques to begin on September 1 but notice for a later date will mean pension cheques begin on the first of the month following the month in which you retire.

Inactive members have the possibility of having pre-1991 contributions (plus interest) returned to them as a way of taking their surplus.  These funds can either be left in the Plan as Additional Voluntary Contributions or moved outside the Plan to an RRSP (immediately following FINAL SCO and CCRA approval or at a later date).  If you are changing status in this way, it is important that you let HR know as soon as possible as new SURPLUS option forms will need to be sent to you and completed.

Subject to CCRA approval, Active members have the option of receiving additional service if they meet the criteria spelled out in the Surplus Sharing information packet they received earlier this year.  If a member wishes to retire as soon as possible and yet retain the option of receiving additional service, she should let Human Resources know in writing that she wishes to retire at the end of August (i.e. August 31, 2002).  After the surplus distribution is approved, the pension the member has started to receive can be adjusted to reflect and additional permitted service.

Unfortunately, those individuals who need to add additional service so they will reach the "rule of 80" and be able to retire, are not helped by this fixing of the date of record.  They cannot receive additional service until after FSCO approves the agreement and will have to wait until the first of the month following that approval (likely Oct. 1, assuming FSCO approves in September but possibly later if approval is delayed).  Individuals needing additional service and wishing to retire as soon as possible should indicate to Human Resources in writing that they wish to retire at the first of the month following FSCO approval.

Finally, remember that it will still take some weeks after FSCO approval has been received to make all the payments (including the adjustments to pensions resulting from the crediting of additional service) and that all
surplus distribution options other than cash payments are still subject to final CCRA approval.
 

Les Robb for the Employee Groups
Simon Ouellet for the University