2012 reminders

February 13, 2012

It's 2012, and that means new legislative changes and deadlines will come into effect this year.

Here are six things to keep on your radar.

1. Introduction of the Family Law Statute Amendment Act

Beginning Jan. 1, 2012, numerous amendments to the Pension Benefits Act and the Family Law Act came into effect. These amendments are designed to streamline the pension division process for couples facing the end of their relationship.

The two major changes taking effect this year are:

  1. Teachers' to provide pension valuation — You no longer have to hire an external actuary to do this. Teachers' will prepare a Statement of Family Law Value for you, saving you time and money.
  2. Lump-sum payout for ex-spouse — If you're separating before receiving your first pension payment, you now have the option to transfer a lump-sum payout to your ex-spouse instead of having to wait for your first pension payment. The lump-sum can be transferred to a life income fund, a locked-in retirement account or another registered pension plan of which your ex-spouse is a member.

Does the Family Law Statute Amendment Act apply to you?

If you have signed your separation agreement on or after Jan. 1, 2012, you and your spouse will fall under the new rules. Once you receive your Statement of Family Law Value, you will need to decide if you want to use your pension to settle your equalization obligation.

2. New contribution rates in effect

Don't forget that new contribution rates are now in effect. Working teachers now contribute 10.8% of their annual salary up to the Canada Pension Plan (CPP) contributions and benefits limit, plus 12.4% of any salary above the CPP limit. The limit, which changes annually, is $50,100 in 2012.

Additional contribution increases are scheduled for 2013 and 2014 to help address a 2011 funding shortfall.

The Ontario government and designated employers will continue to match total member contributions at the new, higher rates.

Members will contribute 0.35% more of their salary to their pension in 2013 and 0.35% more in 2014.

3. Considering a buyback? April 30 is an important date

If you purchase credit after April 30 of the calendar year following the year your absence ended, and you have not declared your intent to purchase credit, you will receive a past service pension adjustment (PSPA).

A PSPA must be certified by the Canada Revenue Agency (CRA). The CRA will approve or deny the PSPA based upon your available RRSP room in the year that it is certified. If the PSPA is denied, it will limit the amount of credit you can purchase.

Tax tip

You can increase the chances of CRA approval of a PSPA by paying for your purchase of credit through an RRSP transfer. An RRSP transfer will lead to a corresponding reduction in your PSPA.

If you are thinking about buying back credit or wish to declare your intent to purchase a buyback, visit iAccess Web. All the tools, personalized information and advice you need to make your decision can be found in your online Buyback Centre. You can also contact us directly.

4. Changes to breaks in service

As of Dec. 30, 2011, only breaks in service due to disability are eligible for purchase. If you want to buy back a break in service due to disability, please be aware of the following:

  1. A break in service is different from a leave of absence. You must resign from employment in education to be eligible to purchase a break in service due to disability.
  2. You have two years from your resignation date to apply for a buyback.*
  3. Effective Dec. 2, 2010, there is a five-year maximum on the years you can buy back. That means the eligible period for purchase ends the later of Dec. 2, 2015 or five years from your resignation date.

*If you resigned from education due to disability more than two years ago, you may still be eligible to buy back your service. We must receive your application and all supporting documentation by June 30, 2012.

"Disabled" means, in relation to an individual, suffering from a physical or mental impairment that prevents the individual from performing the duties of the employment in which the individual was engaged before the commencement of the impairment.

The rules regarding breaks in service can be complex and are unique to each individual. Call us to find out more about your buyback options.

EXAMPLES

Teresa resigned due to disability - Dec. 15, 2009
Application deadline: June 30, 2012

Darius resigned due to disability - Jan. 15, 2012
Application deadline: Jan. 14, 2014

Note that we will require a full medical report from an Ontario-licensed medical doctor which confirms that you were disabled at the time of your resignation. We will also require ongoing proof of disability.

5. Re-employment rules change Sept. 1

Beginning Sept. 1, 2012, you will be able to work directly or indirectly for a participating employer without affecting your Teachers' pension for up to 50 days in each school year you work following retirement.

In addition, employers will be required to report reemployment service beginning in the 2012/13 school year. Retired members will still be required to track their days and contact Teachers' if they exceed the new re-employment limit of 50 days.

Pension suspension rules remain the same

If you continue to work after the month in which you exceed the limit, you are no longer entitled to receive your pension until after you stop working. We will suspend your pension for as long as you continue to work, even if you worked for only part of a day.

Even though the re-employment rules won't affect you until after you retire, it's important that you know the rules before your pension begins. This is because if you plan on working, your "arrangement" to return to work directly or indirectly for a participating employer has to be made after the later of the date we receive your pension application or the date of your resignation.

6. If you're preparing to retire

If you've already started the countdown to retiring in June 2012, there are few things you should be doing now to prepare. Ask yourself these questions:

  • Have you submitted all required documents to us?
    Check our list to see what personal documents we need to process your pension application.
  • Have you transferred or bought back all eligible service?
    Doing so could increase the size of your pension.
  • Have you made a final decision on your survivor benefit?
    Remember that your eligible spouse is automatically entitled to a 60% survivor pension unless you choose otherwise. If you wish to increase or decrease your survivor benefit, you must do so before you start collecting your pension.

Opting for the 10-year pension guarantee can be done when you apply for your pension.

Planning tips

  • Ensure that your service record is accurate and complete. Review your personal details on iAccess Web. Make sure your personal and contact information is up-to-date.
  • Arrange for supplementary medical coverage. Some employers extend health benefits to their retired employees, while others use insurance available from the Ontario Teachers Insurance PlanRetired Teachers of Ontario, or Active Retired Members. If you won't be extending your coverage with your employer, contact the insurance providers directly for more information.