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Glossary
This is a short glossary of terms you will find in the material on this web site. If you find a term you don’t understand and it is not included here, please let us know. All definitions have been written with Canada Life in mind and care should be taken in using these definitions in any other context.
Actuarial adjustment/reduction A pension started before or after normal retirement date and/or in a different form to the standard form has to be adjusted so as to have the same value as the standard benefit. The change in amount is referred to as the actuarial adjustment
Administrator Generally, the person or group running the plan. Specifically, under the OPBA, the Administrator is Canada Life.
Annuity A series of payments generally based upon the continuation of the life of one or more persons.
Beneficiary The person who receives the balance of any benefits after the death of the member and the spouse.
CCRA Canada Customs and Revenue Agency. These are the tax collectors who used to be called Revenue Canada. If the plan is to be treated as a “registered” plan under the income tax rules, it has to meet certain requirements. The Canada Life plan meets all these requirements.
Cost Certificate (See triennial valuation) The cost certificate shows what contributions the employer must make in the next three years so as to maintain approval under the OPBA
Commuted Value The cash amount which is the present value of a pension benefit earned under the plan. Under the OPBA there are rules as to how this must be calculated which restrict the Administrator’s range of options.
Contribution holiday A period during which no actual contributions are required or made. Currently Canada Life is enjoying a contribution holiday but the employees are not.
Deferred Pension When a member elects not to start a pension that s/he has a right to start collecting, s/he is said to have elected a deferred pension. More generally, this term applies to any pension which has a start date in the future.
Early Retirement Age The plan defines a normal retirement age but it also allows a pension to commence at an earlier age.
Full benefit retirement age The plan provides for long service employees to retire early without loss of benefit through an actuarial reduction. The employee has to be over age 60 and have more than 30 years of service to qualify for the full benefit.
Indexing The process by which the value of the pension in course of payment is made to keep pace with inflation.
Joint Life and Last Survivor Pension/Annuity A pension payable for as long as one of two persons is alive. Under the OPBA a married member has to take a JL&LS pension under which the pension reduces by 40% on the death of the member which is also the standard pension under the plan for married members.
OPBA The Ontario Pension Benefits Act. This Act is the baseline for all plan benefits the only exception being that where a person works outside Ontario and the Act covering the work location requires a more expensive benefit then the greater benefit must be provided.
PA/PSPA Pension Adjustment/Past Service Pension Adjustment. These are adjustments to your RRSP contribution room to reflect the value of the pension being earned under the Canada Life plan.
PAR Pension Adjustment Reversal. This is a reversal of the adjustments made by the PA which reflect the actual value of your pension after termination of employment. (PA’s reduce RRSP contribution room; PAR’s increase it.)
Pension Same as an annuity but this term is generally restricted to the annuity which is paid in recognition of some form of service.
Portability A process by which a pension may be moved from one investment or annuity provider to another. Because a pension is portable does not mean that the member can actually get cash to spend except by way of an annuity.
Spouse A tricky term. In the Canada Life plan it means a married spouse or partner as defined in the plan. As far as the benefits are concerned, you cannot gain a spouse after leaving service, but you can lose one. On the other hand, spouse is defined differently under the OPBA. So it is possible that Canada Life will not recognize your spouse for benefit purposes but you will be forced to take a Joint Life and Last Survivor pension because the OPBA does see that you have a spouse.
Surplus The excess of the value of the assets over the value of the benefits earned. There are a variety of ways by which either of these amounts can be computed or defined so the context in which the word “surplus” is used is all important.
Triennial Valuation By law the plan must be formally valued at least once every three years and be issued a cost certificate. Under the OPBA there are very specific rules the actuary must follow in the valuation and the accompanying certificate. The valuation report and the cost certificate are two documents that must be made public and plan members are entitled to view them.
Trust The plan assets are owned by a trust. Not by Great-West or Canada Life, although both organisations do have some control of the Trust.
Trustees The persons responsible for the management and investment of the fund and for certain aspects of the running of the plan. There are currently three trustees, all appointed by the Company. One of the trustees is independent, as defined under the OPBA. So the Company will always win a 2 to 1 vote.
Wind-up Group This is the set of members who are included in a partial wind-up. At any one time there could be more than one wind-up in progress, each with different conditions and benefits.
Page Last Revised 07 Dec 2009 |
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