Benefits - Sawmill - Pension Plan

 HIGHLIGHTS OF THE SAWMILL DIVISION JANUARY 2019

This Booklet is a summary of the Plan provided for informational purposes and is not intended to replace or otherwise qualify the Plan Text or Trust Agreement. The Plan Text and the Trust Agreement are the governing documents of the Plan and in the event of any dispute they will prevail.

WHEN DO ELIGIBLE EMPLOYEES BECOME PARTICIPANTS?
New employees become Plan participants after 6 months of employment, and contributions are made by both the employee and the employer from the day they become participants.

CONTRIBUTIONS 
Effective January 1, 2022 employees are required to contribute 2% of earnings.  Participating Employers are required to remit 11.25% to the Plan on behalf of the member.  Prior to this date the Employer was the only contributor to the plan.

VESTING 
Under the terms of the Plan and the B.C. Pension Benefits Standards Act an Employee's benefit is vested from the first hour worked after they become participants.

RETIREMENT DATES 
Under the Plan normal retirement date is the first day of the month following an Employee's 65th birthday. The only exception to this is if his or her birthday happens to be on the first of a month. In that case the 65th birthday is the normal retirement date.

An Employee may elect to retire at the normal retirement date or the first day of any month following the normal retirement date. Pension benefit payments will commence on the first day of the month in which the Employee elect to retire. If for some reason he or she chooses to delay taking their pension, the Income Tax Act dictates that it must commence before the end of the year in which he or she turns 71.

Upon written application to the Trustees an Employee may elect to retire early with a reduced pension on the first day of any month between the ages of 55 and 65.

A retired participant receiving or entitled to receive a pension benefit under the Plan, will not be credited with hours of employment or accrue pension benefits as a result of re-employment with a participating employer. However, the previously earned pension will continue to be paid during such periods of re-employment.

AMOUNT OF PENSION 
For each year of Plan membership the benefit earned is determined as a percentage (currently 1.22%) of total annual earnings. This benefit is expressed as a monthly pension at retirement. As an example:

  • Joe's annual income for 2018 was $60,000 and he earned a full year's credit

  • The value of the pension he earned during the year was - $60,000 times 1.22%, divided by 12 = $61.00 of monthly pension at retirement.

EARLY RETIREMENT 
The early retirement pension is a reduced pension benefit equal to the pension earned to date, reduced on an actuarial basis (which takes into account the fact that payments will be starting earlier and will likely continue for a longer period).

TERMINATION OF MEMBERSHIP 
Membership in the Plan will terminate if an Employee has no contribution for 12 consecutive months.

When membership terminates , then he or she becomes a vested former member and is entitled to a pension benefit payable at age 65 equal to that benefit earned up to the date of termination.

Note that if you become entitled to a deferred pension benefit under the Plan it is your responsibility to maintain a current address with the Plan Office and apply for your benefit prior to your 71st birthday.

If vesting occurs and membership in the Plan terminates before age 55, an Employee may elect to transfer the lump sum value of their vested benefit to another pension plan or to a locked-in R.R.S.P. A "Terminated Vested" member is advised of their options at the time their membership in the Plan terminates.

If an Employee leaves the Plan but rejoins before they break service, then his or her membership will not terminate. The benefit earned during this new period of membership will simply be added to the benefit earned previously.

PERIODS OF DISABILITY 
If an employee becomes totally and permanently disabled so as to be unable to continue active employment and is so certified by a medical practitioner, then he or she will continue to be treated as an active participant under the Plan and will earn pension benefit credits based on his or her salary at the date he or she ceased work. The credits are based on the disability being ongoing for a minimum of 9 complete calendar months, and can continue until age 65 if the disability is severe.

DEATH BEFORE RETIREMENT 
In the event of an Employee dies prior to commencing their pension, there will be a death benefit paid to their spouse equal to the value of the vested monthly benefit earned up to the date of death. This death benefit can be paid to the surviving spouse as follows:

(a) in the form of an immediate life annuity with or without a guarantee period (not to exceed 15 years), or

(b) as a lump sum locked-in transfer to another registered pension plan, a registered retirement savings plan, or an insurance company licensed to transact business in Canada to purchase an immediate or deferred life annuity (with no cash loan or assignment rights), or

(c) as a cash payment or a non locked in transfer. This option is generally available only if the accrued benefit is small.

In the event the Employee dies and does not leave a spouse, then the death benefit shall be paid in a lump sum to the designated beneficiary or estate. The same conditions will apply to a former participant whose membership in the Plan has terminated.

In compliance with the Regulations of the B.C. Pension Benefits Standards Act all participants must sign an Appointment of Beneficiary Form at the time of enrollment.

DEATH AFTER RETIREMENT 
The amount of the death benefit payable to a beneficiary, or joint annuitant if an Employee dies after they begin receiving their pension depends upon the form of pension benefit the Employee elected to receive when they retired.

The Normal Form of benefit under the Plan provides that following retirement benefit payments will be made for as long as the Employee lives. In the event of their death prior to receiving 60 monthly payments then payments will be continued to their beneficiary until a total of 60 monthly payments have been made to the Employee and their beneficiary.

OPTIONAL FORMS OF PENSION BENEFIT 
At retirement an Employee may elect to receive their pension benefit in one of a number of optional forms of pension rather than the Normal Form. All optional forms must by law be a type of annuity providing monthly payments for life. However, the guarantees incorporated into the form may be varied to suit an individual's circumstances. Note: The choice of optional form of pension benefit will impact the amount of monthly pension received. The following types of optional benefit are available:

(1) Joint and Last Survivor Pension Benefit Benefits payable under this option are payable as long as the Employee lives. Upon death, the benefit payments continue to their spouse, if alive, at a minimum of 60% of the Employee's benefit amount.

(2) Canada Pension Plan Adjustment Option If an Employee retires prior to age 65, when Canada Pension Plan and Old Age Security benefits commence, they can elect to receive an pension benefit that is increased by the amount they will be expected to receive from CPP and OAS. When they reach age 65 the pension under the Plan is reduced by the same amount. The purpose of this option is to permit a participant who retires prior to age 65 to receive level pension benefits throughout their retired life. Note: If this option is elected the pension benefit under the Plan will cease with the payment made on the first day of the month in which death occurs.

(3) Other Options The Plan also permits a number of other optional benefit forms (for example, a life pension guaranteed for a minimum of 120 months). These other optional benefit forms must conform to the tax laws in effect at the time the participant retires and the provisions of the B.C. Pension Benefits Standards Act. Prior to retirement every Employee is provided with a complete explanation of the various optional benefit forms and an estimated amount of benefit payable on each optional form.

BENEFIT PAYMENT AND INVESTMENT 
All contributions made by participating employers and employees are paid to, and all benefits are paid from a pension trust fund.  The Trustees have appointed CIBC Mellon as custodians of the assets of the fund.  TD Greystone, TD Asset Management, Phillips Hager & North, Axium Infrastructure, IFM Investors, Fengate Asset Management, and Northleaf Capital Partners have been appointed by the Trustees as investment managers of the assets of the pension trust fund.  Investment Policy is established by the Trustees in consultation with the investment managers and the actuary of the Plan.

ANNUAL MEMBER STATEMENTS 
Each year all members of the Plan receive a detailed statement showing their accrued membership service pension benefits under the Plan, along with a summary description of the various entitlements under the Plan on termination, death and retirement, the Plan's investment policy, its funded status and the assets held under the Plan's Trust Fund.

GOVERNING DOCUMENTS 
This booklet outlines the general provisions of the Pension Plan. Employees' rights and benefits are governed by the provisions of the Interior Lumbermen's Pension Plan and Trust Agreement. These documents are available to any member of the Plan, simply by contacting the Interior Lumbermen's Benefit Group.

The Plan is also governed by the terms and conditions of the B.C. Pension Benefits Standards Act and Regulations.

MISCELLANEOUS 
This Plan is designed and intended for all eligible employees of a participating employer. The Plan provides that eligibility ceases if an Employee becomes a participant in another pension or retirement plan offered by his or her employer.

The Plan and Trust Agreement clearly provide that all assets held under the trust fund are for the exclusive benefit of the participants and other individuals with entitlements under the Plan and that no surplus assets that may arise can be paid to the participating employers.

If for some reason a Division, or the Plan as a whole, is wound up and the assets are not sufficient to pay for the benefits earned, then benefit entitlements will be reduced proportionately.

GLOSSARY OF PENSION TERMS 

  • VESTED - in every pension plan there is a period a member must participate before they own the benefit earned. This period is called the vesting period. In our Plan vesting is immediate.

  • BREAK SERVICE - when a member leaves the Plan after becoming vested (other than by retiring), they must have 12 consecutive months with no contributions in each year before they can transfer their benefit out.

  • LOCKED-IN - if a member transfers their benefit out of the Plan it may be locked-in. This means their money cannot be withdrawn until retirement. This term is most commonly used when referring to RRSP's.

  • COMMUTED VALUE - the benefit earned in the Plan is shown as a monthly pension amount as of age 65 on a member's annual statement. When a member leaves the Plan and transfers their benefit, the monthly pension has to be converted to an equivalent cash value as of the time they terminate membership. This equivalent value of a future pension is called a commuted value.

  • GUARANTEE PERIOD - a pension payment is normally tied to the life of a plan member. The guarantee period is the time the pension will be paid if the retired member dies before that period is over. For example: a pension payable for "Life, guaranteed 10 years" will be paid to the retired member for their life, and if they die within ten years of their retirement, their beneficiary will receive payments for the balance of the guarantee period.

  • NORMAL FORM OF PENSION - the pension amount shown on annual statements is what is called the "normal" form of pension. In the Plan this is a pension for the life of the member, with a 5 year guarantee.

  • JOINT AND SURVIVOR - this is another type of pension payment. It means the pension will be paid for the life of the retired member and the life of his or her spouse. In this form if the spouse dies first, the pension will end when the retired member dies.

FURTHER INFORMATION 
Any inquiries about your pension should be directed to the Interior Lumbermen's Benefit Group at: 340 - 1855 Kirschner Road, Kelowna, B.C. V1Y 4N7 Tel: (250) 860-3738 or 1-800-668-9943 Fax: (250) 868-2977 E-mail: penadmin@iflra.com