Pension plans are based on complex legal documents which use very specific pension terms. Here is a list of important terms used throughout the website.
Accrued Pension Benefit is the amount of pension you have earned based on your salary and years of pensionable service.
Annualized Salary Rate is a representation of your current salary. The calculation is based on your current month’s salary times twelve months of pensionable service.
Average Year’s Maximum Pensionable Earnings means the average of the YMPE over the same periods of Pensionable Service as are used in determining Best Average Pensionable Earnings.
Best Average Pensionable Earnings means the average of your basic salary over any three, non-overlapping periods of twelve consecutive months of pensionable service which produce the highest figure. The three years do not need to be consecutive, and may not necessarily be your last three years of pensionable service. If you have less than three years of service, then the average is calculated using all your pensionable service. Also referred to as Best Average Earnings (BAE).
Commuted Value is the lump sum present value of the pension benefits to which a person is entitled under the Plan. The value is calculated in accordance with the Canadian Institute of Actuaries’ commuted value standards for Target Benefit Plans.
Continuous Employment means your period of continuous employment as a staff employee with UBC, including:
- leaves of absence with pay and benefits,
- absences during which you are receiving monthly disability income from the University’s Income Replacement Plan (IRP), the Canada Pension Plan or Workers’ Compensation,
- leaves of absence without pay and benefits, and
- legal strikes and layoffs, and other labour interruptions
Contribution Refund (also Minimum Contribution Refund or Minimum Refund) is the minimum amount the Plan provides to members when they leave the Plan. Contribution refunds are calculated at a minimum of 1.5 times the member’s contributions plus interest.
Members who have made contributions before and after July 1, 2009 will have their minimum contribution refund calculated using both of the formulas below:
- Contributions before July 1, 2009 are calculated at 2 times the member’s contributions plus interest.
- Contributions on and after July 1, 2009 are calculated at 1.5 times the member’s contributions plus interest.
Interest on contributions is based on a Five-Year Bank Rate and is compounded annually and credited to the employee contributions.
Credited Interest means the investment return on contributions based on a five-year bank rate. Interest is compounded annually and credited to the employee contribution.
CRA stands for Canada Revenue Agency.
Deferred Pension means a pension payable at a later date.
Eligibility Date is the date that you were first eligible to join the Plan. See the Eligibility page for the Plan’s eligibility rules.
Five-Year Bank Rate means the average of the yields of a five-year personal fixed term chartered bank deposit rates. This is the interest rate applied to member contributions. The specific rate the SPP uses is a CANSIM rate (V80691336) and is called the monthly five-year personal fixed term rate. The table below represents the historical five-year bank rates for the past five years:
| Year | Rate |
| 2019 | 1.5% |
| 2020 | 1.0% |
| 2021 | 0.7% |
| 2022 | 2.6% |
| 2023 | 3.1% |
Indexing refers to either Pre-Retirement Indexing and Post-Retirement Indexing. It is the amount of inflation adjustment applied to a member’s Plan benefit subject to the Plan’s ability to finance it. Plan benefits may be adjusted upwards or downwards if the Plan’s financial health falls outside limits defined in the Plan’s funding policy.
Locked-in means that funds must be used to provide a stream of income for life in an approved financial vehicle such as a life annuity or Life Income Fund (LIF). It does not mean that the funds must stay in the Plan.
Locked-in Arrangement means a retirement savings vehicle permitted by Applicable Legislation and includes another registered pension plan, a “Locked-in retirement account”, a “life income fund” or “retirement income arrangement” as defined under the Pension Benefits Standards Act and Regulation (BC).
Locked-in Retirement Account (LIRA) (formerly known as Locked-in RRSP) means a Registered Retirement Savings Plan (RRSP) which can receive locked-in money from a registered pension plan. You may not withdraw money from a LIRA until at least age 55 and no later than the year in which you turn 71. At that time, you must transfer funds from the LIRA to an approved financial vehicle that provides a lifetime stream of retirement income. See also RRSP
Pension Board means the board responsible for the general administration of the Plan. The board consists of nine board members: four elected members, four appointed members, and an independent non-voting chair.
Pensionable Earnings means regular compensation, before deductions for pension and benefit plans:
(a) including any or all of the following:
i. such compensation received during a Leave Of Absence with pay,
ii. Deemed Compensation,
iii. earnings with another employer where there is a reciprocal agreement specifying that such earnings will qualify as Pensionable Earnings under this Plan, and
(b) excluding
i. lump sum payments such as signing bonuses and vacation pay paid out on Termination Of Employment, and
ii. extra amounts such as those payable for overtime;
Pensionable Service means the periods of continuous service in which required contributions were made. This includes:
- Buy-back service, and
- Adjustments for periods of part-time employment and additional service.
Retirement Date means the first of the month immediately following the member’s retirement.
RRSP means Registered Retirement Savings Plan. This is a registered financial vehicle in which your contributions are tax deferred. The Income Tax Act places limits on the amount that can be contributed and these limits are affected by your membership in a registered pension plan. When you withdraw money from an RRSP, it becomes taxable. See also Locked-in Retirement Account (LIRA)
Small Pension (also referred to as Small Benefit for members under age 55) – If the commuted value of your pension is less than or equal to 20% of the Canada Pension Plan’s Year’s Maximum Pensionable Earnings (YMPE) for the calendar year in which the commuted value is determined, then your plan benefit is considered a small pension or small benefit. You must receive this benefit as a lump sum payment.
Spouse, for the purpose of the pension plan, means a person, regardless of gender, who at the relevant date is,
(a.) married to the Member, and has not been living separate and apart from the Member for a continuous period longer than 2 years; or
(b.) living with the Member in a marriage-like relationship for a period of at least 2 years immediately preceding the relevant date.
Withholding Taxes, means the income withholding tax that is applied to all Lump Sum Cash disbursements. The following is a table of withholding taxes in Canada (with the exception of Quebec).
| Amount | % Tax Withheld |
|---|---|
| $0-$5,000 | 10% |
| $5,001-$15,000 | 20% |
| $15,001+ | 30% |
Cash transfers to a foreign address may be subject to a different withholding tax rate. If this applies to you, please contact the Pension Administration Office for more information.
Note: The “% Tax Withheld” is an estimate of the income tax to be paid. The actual tax payable will be determined when you file your tax return and you should plan accordingly.
YMPE means the Year’s Maximum Pensionable Earnings on which contributions are made to the Canada Pension Plan.