Your Retirement Benefits HRM Retirement Seminar – October 8, 2013 Angela White-Rushton, CEBS

1. Your Retirement Benefits HRM Retirement Seminar – October 8, 2013 Angela White-Rushton, CEBS HRM Pension Plan

2. Disclaimer This presentation is not complete without commentary. It is being provided for education purposes only and is not intended to give advice. If you have specific questions about your personal situation, you should not rely upon this presentation but should contact the HRM Pension Office.

3. Session Topics • Organizational structure • How is my retirement benefit calculated? • What about my Defined Contribution account? • When can I start receiving my retirement benefit? • What happens to my retirement benefit if I leave employment before being eligible to retire? • What benefits are payable if I pass away before I retire? • What benefits are payable if I pass away after I retire?

4. Organizational Structure • Pension Committee • Joint representation • 12 voting members and their alternate members • Union, non-union, management, retired • 13 non-voting Participating Employer representatives • Quarterly Pension Committee meetings • Annual General Meeting held in June of each year • HRM Pension Plan Office • Pension Plan staff (CEO, Manager of Finance & Operations, Manager of Pension Services, Pension Consultant, Pension Assistant, Senior Investment Associates, and Executive Assistant)

5. How Is my retirement benefit calculated? • defined benefit pension plan • promises to pay members of the Plan a specific monthly benefit at retirement that is based on a formula • able to transfer commuted (lump sum) value to Locked-In Retirement Account prior to Normal Retirement Date • pension benefit from the Plan is in addition to Canada Pension Plan, Old Age Security, and personal retirement savings

6. Retirement Benefit Formula BAE = average of annualized earnings over the 3 highest paid, consecutive years credited service • period of time employed while a member of the Plan and making contributions as required by the Plan • no maximum number of years 2% x Best Average Earnings (BAE) x Credited Service

7. Retirement Benefit Example Best Average Earnings = $50,000 Credited Service = 25 years = $25,000 pension per year 2% x $50,000 x 25 years

8. Maximum Pension • The maximum pension that can be earned for each year of credited service is the maximum set by the Income Tax Act. (exception for pre-1990 purchased service) • For retirements in 2013, the maximum pension is $2,696.67/year • based on earnings of $134,834 attributable to the HRM Pension Plan pension formula ($134,834 x 2% = $2,697) • required pension contributions capped at earnings which support maximum pension earnings ($134,834)

9. Types of Service • Credited Service • period of time continuously employed while a member of the Plan and contributions made as required by the Plan • the service used in the pension benefit formula • Continuous Service • period of time during which a person is continuously employed, including leaves of absence • Used to calculate Rule of 80 or 75

10. Service Purchases (Buybacks) Subject to certain limits under the Income Tax Act, you can purchase credited service under the plan. Such periods of service include: • approved leaves of absence with your employer during which you did not contribute to the plan; • service with your employer prior to joining the plan; • service with employers with whom the plan has a reciprocal transfer agreement; • certain periods of employment with other employers; and • prior periods of service under the HRM plan for which you have received a refund when your employment ended. Purchasing credited service will only increase your pension, it will not allow you to retire earlier.

11. Defined Contribution Accounts • may elect to make contributions on overtime earnings that will be matched by the employer • conversion accounts (former Dartmouth plan service) • may be transferred to Locked-In Retirement Account at termination/retirement or • may be used to provide additional pension which can be “purchased” with account value at retirement

13. Sources of Retirement Income HRM Pension Government-SponsoredPrograms Personal Savings

14. Retirement Benefits Example Age: 55 Credited Service: 25 yearsBest Average Earnings: $50,000 OAS $6,612 (est. max) OAS CPP (reduced) $7,776 (est. max) CPP (reduced) Unreduced Lifetime Pension $25,000 Unreduced Lifetime Pension $25,000 Age 55 Age 60 Age 65

15. When can I start receiving my retirement benefit? • Early Retirement Date • Age 55 (50 for Public Safety Occupation (“PSO”) members) • Subject to a reduction if member has not reached optional retirement date • Optional Retirement Date • Rule of 80/Rule of 75 (for some PSO members) • Continuous employment service + age = 80 (or 75) • Age 60 • No reduction in pension • Normal Retirement Date • Age 65 (age 60 for PSO) • No reduction in pension • Postponed Retirement Date • Retirement after Normal Retirement Date • If member is still employed at age 71 he/she is considered to have retired on his postponed retirement date (member’s pension must commence in the year the member attains age 71)

16. Retirement Dates • Unreduced pension • Rule of 80 (Rule of 75 for some PSO Members) with no minimum age; or • age 60 • Reduced pension • must be at least age 55 (50 for PSO Members) • Reduction of 6% per year measured from date of retirement to earliest unreduced retirement date

17. Indexing of Pensions After Retirement • Subject to Committee approval • Benefit increase would be subject to a cap equal to the lesser of Consumer Price Index or 6% per year

18. What happens to my retirement benefit if I leave employment before I am eligible to retire?(for vested members – more than 2 years of Plan membership) Members who are not eligible to retire may elect a: • Deferred pension starting at age 65 (60 for PSO members), or as early as age 55 (50 for PSO members) but with a 6% per year reduction that the pension starts before age 65 (60 for PSO members); or • Transfer of the commuted (lump sum) value of deferred pension to: • Locked-in retirement account • An insurance company to purchase an annuity • Another registered pension plan, if accepted by plan

19. Death Prior to Retirement • Member with a Spouse or Common Law Partner (CLP) • If member was eligible for a pension • 66.67% survivor pension payable for life to spouse or CLP; • Additional lump sum may be paid • If member was not eligible for a pension • Commuted value of member’s deferred pension payable to spouse or CLP in lump sum (same amount as if member terminated employment at date of death) • Member without a Spouse or CLP • Designated beneficiary or estate receives the commuted value of the member’s deferred pension (same amount as if member terminated employment at date of death)

20. Death After Retirement • Member with a Spouse or Common Law Partner (CLP) • 66.67% of the member’s pension continues to the surviving Spouse/CLP for life after the member’s death(has to be the Spouse/CLP that was named at date of retirement) • Minimum guaranteed payments of at least the member contributions with interest to date of retirement • Member without a Spouse or CLP • payments guaranteed for 10 years, with balance of guarantee period after death payable to designated beneficiary or estate

21. Spouse / CLP / Beneficiary Designation • Spouse means either of a man and woman who, • are married to each other, • are married to each other by a marriage that is voidable and has not been annulled by a declaration of nullity, or • have gone through a form of marriage with each other, in good faith, that is void and are cohabiting, or if they have ceased to cohabit, have cohabited within the 12-month period immediately preceding the date of entitlement. Where applicable, Spouse shall also include registered domestic partners within the meaning of the Vital Statistics Act. • Common Law Partner of an individual means another individual who has cohabited with the individual in a conjugal relationship for a period of at least one year, neither of them being a Spouse. For purposes of the Plan, an individual may have only one Common Law Partner at any given time.

22. Spouse / CLP / Beneficiary Designation • designated beneficiary can be changed • always ensure administrator is informed of changes • entitlement can be contentious

23. Retirement Information Retirement estimate • Estimates for certain possible retirement dates can be found on your annual pension statement • Estimates can be calculated by members using the “Retirement Calculator” tool on the HRM Pension Plan website • Pension Office staff can calculate estimates, on a request basis (gross and net of taxes benefit information provided) • Earnings and service estimates are used in calculations

24. Retirement Information Other retirement considerations: • Do you have any pension benefits in a former employer’s pension plan? • Have you talked to a financial advisor? For example, do you know what options you have for other retirement savings? • How much can you expect to receive from government plans (ex. CPP, OAS)? • Are you eligible for any lump sum payments (ex. pre-retirement leave, severance pay, accrued vacation)from your employer? If so, what are your options? • How much tax will you pay on your retirement income? • Will your benefits coverage (medical, dental, life) continue? • Do you have a will? • Are you mentally prepared for retirement? Employer-sponsored EAP may provide pre-retirement counselling

25. Retirement Information • Annual pension statement • HRM Pension Office • phone:902-490-6213/1-888-490-6213 • fax: 902-490-5597 • e-mail: hrmpension@halifax.ca • Website: www.hrmpensionplan.ca

26. Annual Pension Statement

27. Annual Pension Statement

28. Annual Pension Statement

29. Website – www.hrmpensionplan.ca

30. HRM Pension Plan Website

31. Retirement Calculator Website

32. When you decide to retire… • Advise your “supervisor” and Human Resources department • Send written notice of intent to retire to HRM Pension Office • (3-6 months before effective date) • Receive retirement statement and forms approximately 45 days prior to actual retirement date • Copies of documents you will require: • birth certificates - you and spouse (if applicable) • void cheque for direct deposit • Northern Trust Canada Ltd. will commence pension on 1st of month following date of retirement (most members choose to retire at the end of the month to avoid a break in income) • Contact information: Reach Northern Trust directly at 1-800-711-1101 or Jeanette Huck at the HRM Pension Plan Office at 490-6213 or 1-888-490-6213

33. The information in this presentation illustrates the current provisions of the Plan, and is subject to change where allowed by the rules of the plan text and pension law. • Questions?