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CONTRIBUTIONS AND CONTRIBUTION SCHEDULESThe Act contemplates that pension plans may be designed to be either contributory or non-contributory, at the Employer’s option. An Employer may choose to make the required Employee contribution in addition to its own required contribution. When only the Employer contributes, the plan is said to be non-contributory. When the Employer and the member both contribute, it is called a contributory plan.

Defined Benefit Pension Plan

A member of a defined benefit plan and his or her Employer shall contribute in accordance with the provisions of the pension plan and the Regulations, such amounts as are required to fund the benefits accruing under the pension plan. The Act sets out the minimum annual defined benefit accrual rates.

Defined Contribution Pension Plan
The Act requires a defined contribution pension plan member and his or her Employer to contribute equally to the pension fund of the pension plan for the benefit of that member. The Act sets out the minimum annual contribution rates.
Defined Benefit & Defined Contribution

Schedules                              

Defined Benefit & Defined Contribution Schedules  

 Defined Benefit PlansDefined Contribution Plans
 Annual Defined BenefitContribution
 Accrual RateRate

Date

(% of final average earnings)(%of pensionable earnings)
1 January 2000

0.25%

1%

1 January 2001

0.50%

2%

1 January 2002

0.75%

3%

1 January 2003

1.00%

4%

1 January 2004

1.25%

5%

  Self-employment Contribution Schedule                                                        

 Self-employment Pension Plans
 Contribution Rate

Date

(% of pensionable earnings)
1 January 2000

2%

1 January 2001

4%

1 January 2002

6%

1 January 2003

8%

1 January 2004

10%

 

Vesting
A pension plan member becomes vested when the vesting criteria, as set out in the pension plan documents, have been met. Once meeting these criteria, the pension plan


Vested Pension Benefits
Subject to certain exceptions, once pension benefits become vested in accordance with the Act, the contributions (plus interest, if any) cannot be taken out of the pension fund as a cash lump sum at any time; as such, vested funds can only be used to provide a retirement income to the plan member (or to be distributed to the member’s beneficiary in accordance with the Act).
Portability options are available in respect of vested pension benefits when a plan member terminates employment before reaching retirement age. You should know however that the vested pension contributions may not be withdrawn in cash.
Sometimes plan members have only a small vested benefit in the plan when they terminate their employment. If the plan permits, the Act allows former members to receive their entitlements in cash if the commuted value of their pension (in the case of a defined benefit plan) or their account balance (in the case of a defined contribution plan) is not more than 5% of the average employment income as prescribed in the Regulations, in the year that the former member terminated his employment.
In certain circumstances, benefits that accrued prior to January 1,2000 may be available to a member if the plan documents permit.
It is recommended that you speak to the plan administrator if you would like more information, as plan documents are individually tailored

member is entitled to the benefits accrued to him or her, under the pension plan: –
In the case of a defined benefit pension plan the vested member is entitled to the benefit accrued according to the benefit formula of the plan.
The vested member of a defined contribution pension plan will be entitled to the pension benefit derived from both the Employer contributions (on the member’s behalf) and his or her own contributions (plus interest earned).
The Act specifies the MAXIMUM period of time after January 1, 2000, that members must wait before becoming vested; pension benefits, for the member, shall be fully vested no later than 2 years after pension plan membership. However, pension plans may provide earlier vesting than required by the legislation.

A Non-Vested Member
A former member (a person who has terminated employment or membership in a pension plan) who leaves a pension plan before becoming vested will receive, as a minimum, a refund of…
the former member’s contributions made to the defined benefit pension plan together with interest at the prescribed rate, or
the former member’s portion of the account balance attributable to his or her contributions made to the defined contribution pension plan.

  
 
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