If you leave your employment with a CSS Pension Plan employer member, you'll have to decide what to do with any pension funds you've accumulated in the Plan. But navigating your options can be challenging. Let's be honest – pensions are complex (and not very exciting).
Thankfully the CSS Pension Plan makes it easier for you to make decisions about your funds when you're going through an employment transition. You can contact one of our Pension Plan Consultants to help answer your questions, check out our website to review your options, or simply do nothing. That's right – just leave your funds in the CSS Pension Plan until you are ready to decide how to use them. This could be as late as retirement, since you are not required to make a decision until the end of the year you turn 71.
Many members are not aware they can leave their funds in the Plan when terminating their employment – a common misconception. There are many benefits to keeping your membership with CSS, depending on your own goals and circumstances of course.
Below, we debunk this myth and others commonly associated with this termination option.
Reality: As stated above, you can choose to leave your funds in the CSS Pension Plan. If you change your mind later on, you can still apply to withdraw or transfer your funds out. You can keep your funds in the Plan right up until the end of the year you turn 71 (as in accordance with income tax legislation), otherwise there is no time limit in which you need to make a decision about your funds.
If you decide to keep your funds in the Plan, you'll become an "inactive" member, but you'll still benefit from the Plan's low management expense ratio (MER), or low fees. The Plan's Balanced Fund had an MER of just 0.31% last year, one of the lowest in Canada's defined contribution pension sector. Over the long term, even a small difference in the MER can have a big difference in the amount of funds available at retirement.
You'll also have continued access to support from our experienced, non-commissioned Pension Plan Consultants who can create a retirement plan tailored to your own unique needs.
Reality: We understand not all CSS members are alike and often need different investment plans to help them reach specific goals. While all members of the CSS Pension Plan are automatically invested into the Balanced Fund upon enrollment, you can move as much or as little of your pension funds to any of our four investment funds at any time – even if you're an inactive member.
Each fund offers different levels of risk and return to help you create an investment plan that aligns with your own retirement goals. Simply complete and return an Investment Instructions form anytime you'd like to re-allocate your funds. Our Pension Plan Consultants can help you with your investment decisions, and we also encourage you to try our online risk tolerance estimator to help you assess your comfort with risk.
Reality: While the CSS Pension Plan has traditionally offered three different types of monthly pensions (i.e. annuities), we have offered the Variable Benefit (VB) payment* retirement income option for over a decade. VB payments allow you to keep your funds invested in any or all of the Plan's investment funds and access them through regular withdrawals, either monthly or annually. This gives you the flexibility to continue to decide how to invest your pension funds among the Plan's options while continuing to benefit from a low MER.
As the name suggests, the amount of your VB payment may change each year. It is also important to note that unlike an annuity, you are not guaranteed to receive an income for life when choosing VB payments.
*VB payments are available in the following jurisdictions only: AB, BC, MB, SK, NS and Federal
Reality: The CSS Pension Plan allows you to arrange survivor benefits in the event of your pre- or post-retirement death. Keep in mind if you haven't retired yet and have a spouse, your significant other is automatically entitled to 100% of your pension funds under pension law.** The Plan also allows you to designate your estate or general beneficiaries, like your children, in the event your spouse pre-deceases you, waives the right to the automatic entitlement noted above or if you do not have a spouse.
**Except for employee additional voluntary contributions, which are paid to your designated beneficiary(ies) or estate.
Reality: You can still keep your pension funds in the Plan even if you move to a different province. In this case, your pension funds would be subject to the pension laws of the province where you last worked while contributing to the Plan, regardless of where you may have moved.
As a multi-jurisdictional Plan, we have employer members across Canada. So if you happen to work for another CSS Pension Plan employer in a different province, you may be able to take your pension with you to your new job. So long as your break in service between your previous employer and new employer is less than one year, you may be able to start contributing to the CSS Pension Plan immediately.
So there you have it. Leaving your funds in the CSS Pension Plan when you terminate your employment is certainly an option for you. Of course, you also have other options with respect to withdrawing/transferring your funds out of the Plan, or transferring them to your new employer's registered pension plan (RPP). The best decision for you depends on your own life circumstances and goals, and our Pension Plan Consultants are here to help if you need.
Remember – once you transfer out of the Plan, you cannot transfer back in (unless you work for a CSS employer member again in the future).