You have many options regarding when you can retire.
Normal Retirement: You can retire with your full target pension on the first of the month coinciding with or immediately following the date you reach age 65.
Early Retirement: You can retire as early as the first of the month coinciding with or immediately following the date you reach age 55. If you retire early, your monthly target pension will be permanently reduced by approximately 0.5% for each month payments start before your normal retirement date. This reduction reflects the additional payments you are expected to receive. We can use an example to illustrate.
Let’s assume you choose to retire at age 60 and total contributions to the plan would be $42,000 ($25,000 from your employer and $17,000 from you). Your monthly target pension would be: $42,000 ÷ 100 = $420. $420 X $1.55 = $651. $651 - $195 ($651 X 6% X 5 years from age 60 to 65) = $456/month or $5,472/year. In this scenario, you would receive a monthly pension of $456 at age 60, subject to any additional adjustments for the forms of payment you choose.
Level Pension Option – If you retire early, this option lets you increase your monthly target pension until age 65 when you begin receiving benefits under the Canada/Quebec Pension Plan (CPP/QPP) and the Old Age Security program (OAS). At age 65, your monthly target pension will be reduced to less than your original monthly target pension but the combination of MSPP and CPP/QPP and OAS will be approximately equal to the pension you were receiving before government benefits began. We have assumed that you will be entitled to full CPP/QPP and OAS.
Delay Retirement: If you continue to work for a Contributing Employer past age 65, your contributions to the Plan may continue and you can retire later. But, under current income tax rules, you must start receiving your pension no later than December 1st of the year in which you turn 71. Because your pension must start by this date, your contributions to the Plan will end.
Working after Retirement: If you are receiving a MSPP pension and you start working for a Contributing Employer in a job that requires contributions to the Plan, your pension will be stopped if you are under the age of 72. Current income tax rules prohibit drawing a pension from the Plan while contributing to the Plan at the same time.
Since your MSPP pension must start no later than December 1st of the year in which you turn age 71, contributions to the Plan after that date are not permitted. That means, working for a Contributing Employer after that date, will not stop your pension.
The Pension Estimate Calculator is a useful tool to help you estimate your projected pension amount at different retirement dates. You can use this calculator as a first step in helping you make a decision about your retirement date.
If you are at least age 55 and you’re ready to retire, you can request a Pension Application.
Please submit your request for a Pension Application approximately three months before your planned retirement date.
You must inform your employer of your planned retirement date.
If you have any questions about your steps to retirement, please contact InBenefits.
Contributions to the MSPP are based on your pensionable earnings. During a temporary absence, you stop working for the Contributing Employer and your earnings stop. Without earnings, your contributions to the Plan also stop. Fortunately, the MSPP lets you make independent contributions called “self-payments” to keep your pension growing under the following circumstances:
- You are absent due to illness or disability and remain on your employer’s payroll for seniority purposes.
- You are on maternity or parental leave to the maximum permitted by law or your Collective Agreement, whichever is greater.
- You are on an approved leave of absence without pay.
- You are on a period of layoff during which you have recall rights under your Collective Agreement.
- You are on strike or locked-out.
- You are moving to another Contributing Employer. This means you have stopped working for one Contributing Employer and started, or will start, working for another Contributing Employer without a Break In Service and before you have satisfied the qualifying hours to join the MSPP again.
- For a period following termination of employment if you dispute the termination and there is an outstanding grievance, arbitration or other proceeding that may result in reinstatement.
- A period of up to 12 weeks or such longer period as determined by the Trustees, following the last day of service in respect of which Contributions were made in respect of the Employee, provided the Employee is employed by and receiving remuneration from a Contributing Employer during such period and such period occurs between March 15, 2020 and the date determined by the Trustees.
Each type of temporary absence listed above is subject to specific limitations and conditions. Please contact InBenefits for more information
As long as you remain working for a Contributing Employer who makes contributions to the Plan on your behalf, you will remain a Participant in the Plan. If you stop working for a Contributing Employer, your participation in the Plan will continue until you elect to incur a Break in Service and terminate your participation in the Plan.
If you leave your employer and then decide to return to work for the same employer or another Contributing Employer after a Break in Service, you will have to once again satisfy all the requirements for new members in order to be eligible for participation.
If you terminate your participation in the MSPP by electing a Break in Service before age 55 you will be entitled to a Deferred Pension. You will have two options for payment.
- Deferred pension option You can leave your pension benefit in the Plan and start to receive it at age 65. Or, you can decide to start your pension as early as age 55.
Whether you wait until age 65 or receive your pension early, it will be calculated in the same way as a normal target pension, based on total contributions to the Plan on your behalf and the target benefit formula.
- Portability optionRather than leave your deferred pension in the Plan, you can take it with you when you leave. We will transfer the Commuted Value of your pension benefit to a:
- Registered pension plan of a new employer (if that plan accepts transfers in)
- Deferred life annuity (lifetime pension purchased from an insurance company)
- Locked-In Registered Retirement Savings Plan (RRSP)
- Life Income Fund (LIF)
Application For Portability: To choose the portability option, you must return your application within 60 days of receiving your Termination Statement from the plan. Otherwise, you’ll receive a deferred pension at a future retirement date.
Note: If you elect to transfer the Commuted Value of your pension benefit out of the Plan, the Commuted value will be reduced by the transfer ratio of the Plan in effect at the date of calculation for the provinces of Ontario, British Columbia and New Brunswick, as determined by the Plan’s actuary. If you select a transfer of the Commuted Value of your pension benefits from the Plan, you, your spouse or your beneficiaries will not be eligible for any further benefits from the Plan.
You may elect a Break in Service if you and your employer have not made contributions (including self-payments) to the plan for 24 consecutive months. This will be considered termination of your plan participation and will be effective as of the date your election is submitted to InBenefits [but not before 24 consecutive months of no contributions (including self-payments)].
It’s important to note that the periods listed under the Temporary Absences from Work section do not constitute a Break in Service and are excluded from this rule.
According to pension law, your contributions, plus interest cannot fund more than half the value of your pension. If your contributions, plus interest, are greater than 50% of the Commuted Value of your pension, any excess will be transferred or paid in a lump sum, as the case may be.
Because the Commuted Value represents the value of your pension, each of the transfer options discussed above are locked-in. This means they can never be paid out except in the form of retirement income. There are, however, some exceptions to this rule which we explain below.
Shortened Life Expectancy: If you are entitled to a Deferred Pension and you have a mental or physical disability that, according to medical evidence, is likely to substantially shorten your life expectancy, you may, subject to certain conditions, be entitled to receive the Commuted Value of your pension in lump sum. Note: If you work in a province other than Ontario, different rules may apply. Please contact InBenefits for more information.
Small Pension: If your pension is less than $80 per month at age 65, you will receive the value of your pension as a lump sum payment or as a monthly pension starting at age 65. A lump sum payment can be taken as a taxable cash payment or can be transferred tax-free to a non-locked-in RRSP. Note: If you work in a province other than Ontario, different rules may apply Please contact InBenefits for more information.
If you experience a spousal relationship breakdown (including, in some provinces, breakdown of a common-law relationship), the pension you earned under the Plan during your relationship will typically be considered property for purposes of valuing and sharing net family assets. This does not necessarily mean that your pension benefit will be divided between you and your spouse. In most provinces, other assets may be shared without affecting your pension (or the parties may simply choose not to divide a pension).
In some provinces, there are prescribed forms that must be used to request information about your pension for marriage/relationship breakdown purposes and/or to request a division of your pension. Before proceeding with a request for information or a division of your pension, you should contact InBenefits to determine whether a particular form is necessary to respond to your request.
If your pension is divided by a court order or separation agreement (or other legal document permitted in your province), it is your responsibility, and the responsibility of your former spouse, to file a copy of this document with InBenefits.
The pension division rules are complex and vary from province to province. You should obtain legal advice from a family law lawyer before entering into any arrangements with respect to your pension. InBenefits cannot provide legal or financial planning advice.
Note - Separation or divorce does not automatically revoke a designation of your former spouse as your beneficiary. Your former spouse will remain as your beneficiary until you name a new beneficiary.
In some provinces, your separated spouse will continue to have a right to any survivor benefits until you divorce or the expiry of a specified period.
The MSPP provides you with a lifetime pension at retirement. In addition, the Plan provides death benefits to your loved ones in the event you die before your pension starts to be paid.
In the event of your death after you start collecting your pension, a death benefit, if applicable, will be paid in accordance with the form of pension chosen at retirement.
In the event of your death before retirement, and if you have an eligible spouse, your spouse will receive the Commuted Value of the target pension benefit you earned to the date of your death.
Your spouse is the first person in line for the pre-retirement death benefit before any designated beneficiary.
Your spouse can choose to receive this benefit as:
- An immediate monthly target pension payable for your spouse’s lifetime, or
- A deferred monthly target pension beginning when your spouse reaches age 65 (or on a reduced early retirement basis anytime after age 55), or
- A single lump sum cash payment (less applicable taxes) or
- A tax-free transfer to a non-locked-in RRSP.
If you don’t have an eligible spouse or your spouse has waived the right to pre-retirement death benefits (where permitted by pension law), your beneficiary will receive a taxable lump sum payment equal to the Commuted Value of the target pension benefit you earned to the date of your death.
If you did not designate a beneficiary prior to your death, the pre-retirement death benefit will be paid to your estate. Estate payments are subject to probate fees, estate taxes and claims by your creditors.
Rules for pre-retirement death benefits may differ if you work in a province other that Ontario.
If you decide that you would like to name a minor child as a beneficiary, there are some important steps you need to take.
- If you have a spouse, he or she must sign a waiver giving up entitlement to the Plan’s death benefit.
- You should appoint a trustee or guardian to look after the minor’s benefit until he or she is 18 (a lawyer can help you choose and appoint this person).
If you don’t appoint a trustee, the Plan can pay the benefit to a legal guardian who has been appointed by the court. If the court does not appoint a guardian, current Ontario law states that any amount above $10,000 must be paid to the Accountant of the Superior Court who will hold the money until the minor reaches age 18. At that point, the beneficiary can withdraw the funds by filing an affidavit proving his or her age and paying the applicable fee.
