Infosheet No. 3
The Teachers’ Pension Plan
This Infosheet is designed to give a summary of the provisions of the Teachers’ Pension Plan. For more detailed information, consult the booklet “Plan Member Guide (Pension Plan Booklet)”, available on the Teachers’ Pension Plan Corporation (TPPC) website at www. tppcnl.ca/ FormsResources. Individual contact may be made through the NLTA Programs and Services staff or through the Teachers’ Pension Plan Corporation, 130 Kelsey Drive, Suite 101, St. John’s, NL A1B 0T2; Tel: 709-793-8772 or toll free: 1-833-345-8772; Fax: 709-793-4055; email: firstname.lastname@example.org.
All persons who are employed by a school board or the Special Services Division in any teaching appointment are eligible. The exception to this is substitute teachers who are participating in a separate substitute plan through the Government Money Purchase Pension Plan (GMPP). Once a member substitutes more than 19 consecutive days, they participate in the main Teachers’ Pension Plan for the entire period of continuous service.
Effective September 1, 2015, the contribution rate for members is 11.35 percent of salary. The employee contribution is matched by government.
A member is eligible to receive a pension once they reach one of the following “triggers”. The pension entitlement will be the percentage accrual at the time of retirement times the annual average of the best eight years’ salary.
- At Age 60
Provided the member has attained at least five years of pensionable service, pension can be payable the month following the 60th birthday.
Note: Members who retire prior to age 60 with between 5 and 25 years of pensionable service will not be eligible for a pension until the month following their 62nd birthday.
- At Age 55
Provided the member has at least 25 years of pension service, pension can be payable the month following the 55th birthday.
- “30 and Out”
Provided the member has at least 30 years of worked service and pension contribution has been made for the entire period, pension can be payable regardless of age.
Note: University years purchased prior to 1991 for pension purposes are not counted as worked years required for 30 and Out, but count as pension service.
- “29+1” – Reduced Pension
Provided the member has 29 years of worked service and at least 30 years of pensionable service (i.e. at least one university year purchased for pension purposes), pension can be payable regardless of age. However, there is a reduction factor applied to the member’s pension depending on the number of months by which the actual retirement precedes the teacher’s 55th birthday. The maximum reduction is 15 percent. This reduction factor ceases to apply after the member reaches age 55.
- Actuarial Reduced Pension
Provided member has at least five years of pension service, but less than 24.5 years of pension service, actuarially reduced pension can be payable the month following their 55th birthday.
Regardless of which retirement eligibility trigger applies, pension is only payable in the month following resignation and application for a pension. For example, a member who retires effective June 30 and a member who retires effective June 5 will both be eligible to start receiving a pension in July. This holds true no matter when or in which month a member chooses to retire.
Pension payments to retired members are made bi-monthly, on the 15th and last day of each month.
Normal Retirement Pension
A member must have completed five years of pensionable service in order to receive a pension. If they leave the profession with less than five years of pensionable service, they are entitled to receive a refund of their contributions plus interest.
A member who retires due to disability (pursuant to the definition of disabilities in the TPPC – Plan Text Document) is entitled to a pension based on their pension accrual determined by the number of years of pensionable service accumulated at the date of disability, provided at least five years of pensionable service has been accumulated.
Termination of Services – Payment Options
A member who terminates employment after they have completed at least five years of pensionable service and prior to reaching a trigger for retirement pension under “Retirement Provisions” (see previous section), is entitled to the option of receiving a deferred pension payable upon reaching a trigger or receiving a lump sum payout of the commuted value of their pension service calculated at the time of termination. Effective September 1, 2016, a member who terminates employment with less than 25 years of pension service is entitled to receive a pension payable the month following their 62nd birthday. The following changes are effective as of November 1, 2021:
- If you already have 20 or more years of pensionable and past service as of November 1, 2021 you will still have the option to take your commuted value until you become eligible for an unreduced pension (i.e. no change from the existing provisions).
- If you have less than 20 years of pensionable and past service as of November 1, 2021, you will no longer have the option to take the commuted value once you do have 20 years of pensionable and past service (or are eligible to retire with an unreduced pension if that should occur sooner).
Service accrued before January 1, 1991 has a value of 2.22 percent per annum; accrued service on or after that date has a value of 2 percent per annum. Calculation of pension benefit is done by multiplying the total accrued percentage by the average of the best eight years’ salary.
Integration of Benefits
All benefits in respect of service accrued under the TPP shall be integrated with Canada Pension Plan benefits using an offset factor of 0.6 percent. The annual dollar amount of offset integration is calculated the day a member retires. However, the plan contains a “bridge benefit” which is paid from the age of retirement until the member’s 65th birthday. This means that a member does not experience a reduction in their pension as a result of integration until the month following their 65th birthday.
A partial indexer became available in September 2002 only for those pensioners whose pension benefits are integrated with CPP. Integration is applicable to all members contributing to the Teachers’ Pension Plan since 1998. Each September following the member’s 65th birthday, the annual pension will be increased by 60 percent of the Consumer Price Index (CPI), to a maximum of 1.2 percent, for all pensioners and survivors whose benefits are integrated with CPP on all service accrued prior to September 1, 2015. Future indexing accrual is suspended effective September 1, 2015.
- Before Retirement (at least 5 years of pensionable service)
In the event of pre-retirement death of a member, the surviving spouse/partner is called the principal beneficiary and has the option to receive (1) a monthly survivor pension equal to 60 percent of the member’s accrued pension, including the bridging benefit (which will cease on the first day of the month following the month in which the member or Deferred Pensioner would have reached 65 years of age), payable until the surviving spouse’s death; or (2) to receive a lump sum payout based on commuted value of the pension. Surviving spouses/partners should consult a financial planner prior to exercising their option.
Where there is no surviving spouse/partner (principal beneficiary) entitled to a survivor benefit, any Dependent Children are entitled to share in the 60% survivor pension for the eligible period under the Plan, never to exceed the annual pension amount of what would have been paid to the Principal Beneficiary.
If there are no Dependent Children, any named Other Dependents, who meet the eligibility criteria, are entitled to the survivor pension for the eligible period under the Plan, never to exceed the annual pension amount of what would have been paid to the Principal Beneficiary.
If there is no surviving spouse/partner, no Dependent Children or Other Dependents, the Designated Beneficiary would be entitled to the Commuted Value of the member’s pension, calculated at the date of death, less the actuarial value of other benefits.
If there are no beneficiaries applicable or named, any remaining amounts will be paid to the member’s estate. Members are advised to contact the Teachers’ Pension Plan Corporation for advice on selecting beneficiaries according to their individual circumstances.
- After Retirement
If a pensioner dies, leaving a surviving spouse or partner, a survivor pension equal to 60 percent of the teacher’s actual pension, including the bridging benefit (which will cease on the first day of the month following the month in which the member would have reached 65 years of age), is payable to the surviving spouse until the surviving spouse/partner’s death.
In the event of no surviving spouse or the death of the surviving spouse, the survivor benefit shall be paid to any surviving children under the age of 18, or under the age of 24 while they are in full-time post-secondary school attendance.
In the case of a pensioner who dies leaving no surviving spouse or dependent children or designated other dependents, pension payments cease. If the amount which the pensioner has received in benefits is less than the total amount of contributions plus interest paid by the pensioner, the difference is paid to the designated beneficiary(ies) named by the member or to the estate of the deceased in accordance with the Teachers’ Pension Plan Text.
- Designated Beneficiary
In the case of a member who does not have a designated beneficiary (no spouse/partner, dependent children, or designated other dependent entitled to a survivor benefit), the member may designate one or more named beneficiaries.
Credit for Pensionable Service
Credit for pensionable service can be given for a number of reasons other than service as a member in Newfoundland and Labrador. Years of pensionable service in the public sector, for example, may be transferable. In addition, time spent on unpaid leave, including maternity or adoption leave and unpaid educational leave, can be purchased as credit for pensionable service. Members may transfer service from pension plans that have a reciprocal pension transfer agreement with the Newfoundland and Labrador (NL) Teachers’ Pension Plan. Where no reciprocal agreement exists, a direct plan to plan transfer of termination benefits to the NL plan is possible, provided the member has left their contributions in the former registered pension plan. The member has the option of accepting the amount of time the termination benefit buys, based on actuarial value, or paying the deficiency, if there is one, to obtain full service credit.
Steps for Application of Benefits
Pension benefits are not received automatically upon retirement. Application must be made. The steps to take are as follows:
Step 1: Establish eligibility for benefit prior to resignation – usually done at the pre-retirement seminars.
Step 2: Submit resignation to the school board by giving three months’ notice (or one month if retiring prior to Christmas).
Step 3: Make application for pension benefits prior to the effective date of your resignation.
This Infosheet describes the Teachers’ Pension Plan as constituted in accordance with the “Plan Member Guide (Pension Plan Booklet)” and the TPPC – Plan Text Document. Where there is a question of interpretation, the provisions of the Plan Text and relevant legislation will apply.
This Infosheet is one of a series which are updated periodically and which provide information of a general nature only. Documents such as Collective Agreements, legislation and policies referenced in Infosheets will govern the specific rights and benefits of members. For further information, please contact: Programs and Services, NLTA Office, 3 Kenmount Road, St. John’s, NL A1B 1W1. Telephone: 726-3223 or 1-800-563-3599 (toll free) • email@example.com • www.nlta.nl.ca