85 Index or 85 Factor

85 Index or 85 Factor

The sum of a plan member’s age and pensionable service when the member applies to receive a pension. This number determines if that member will be eligible for an unreduced pension if he or she applies for a pension before age 65.  If this number adds up to at least 85, or if the member is at least age 65, the plan member will receive an unreduced pension.


To accumulate over a period of time. For example, pensionable service accrues with each month of participation in a pension plan.

Actuarial Purchase

A type of cost method where the cost to purchase eligible pensionable service equals the value of the increase in pension benefit as calculated on the date of application. The purchase is cost neutral, resulting in no subsidized cost to the plan member or the plan.

Actuarial Valuation

A study that assesses the value of a pension plan’s liabilities compared to its assets to ensure that the plan is adequately funded. This assessment of the financial position of the pension plan is completed by an independent actuary or actuarial consulting firm.


A business professional that specializes in measuring the probability and risk of a future event. In the context of pension plans, an actuary certifies the valuation of a pension plan’s liabilities based on appropriate assumptions for a number of factors including life expectancy.

Asset Smoothing

This is the averaging of market value changes over time to mitigate the impact of volatility. This generally leads to a smoother path of required contributions over time.

Canada Pension Plan (CPP)

​​​The federal pension plan administered by Service Canada. It applies to all provinces and territories of Canada except Quebec, where the equivalent Quebec Pension Plan applies.

Canada Revenue Agency (CRA)

The federal government department that is responsible for administering the tax rules.

Commuted Value

​The lump sum of money that needs to be set aside today, at current market interest rates, to provide your future pension payments. The lower the current interest rates, the higher the commuted value will be, because it is assumed that the amount today will earn less over your lifetime. Conversely, the higher the current interest rates, the lower the commuted value.

Cost-of-Living Adjustment (COLA)

An inflation adjustment to a pension, based on the measure of the change in the Alberta Consumer Price Index (ACPI) monthly values reported by Statistics Canada. For the pension payable on pensionable service to December 31, 1992, the COLA is calculated at 60% of the change from year to year in the ACPI. For the pension payable on pensionable service from January 1, 1993, the COLA is calculated at 70% of the change from year to year in the ACPI.

Deferred Pension

A pension that starts at some future date provided that a plan member leaves the accrued pension in the plan.

Defined Benefit Plan

A pension plan that provides a pension based on a predetermined formula tied to a plan member’s salaries and years of service. The pension is payable for the plan member’s lifetime, and is not impacted by market fluctuations. The plans administered by ATRF are both defined benefit plans.

Defined Contribution Plan

A pension plan in which a plan member, and in some cases their employer, contributes a set amount for the member’s future retirement. The member’s pension payments depend on factors such as investment performance and the pension stops once the funds have been depleted from the plan.


As defined in the Income Tax Regulations, a dependant of a plan member, at the time of the member’s death, means a parent, grandparent, brother, sister, child, or grandchild of the member who, at that time, is both dependent on the member for support and under 18 years of age and will not attain 18 years of age in that calendar year. Dependence includes full-time attendance at an educational institution, or dependent on the individual by reason of mental or physical infirmity.

Discount Rate

The rate used to convert the dollar value of payments expected to be paid at a given future date into a present value. This rate is used to convert the plans’ future payments into a present value.


A fundamental risk management technique involving investing in several different assets with distinct return streams. That is, it is putting one’s eggs in many baskets rather than just one.


ESG stands for Environmental, Social, and Governance. Responsible Investment involves the consideration of ESG issues in investment analysis.


An approximate calculation of a future benefit entitlement based on information that is known at the date the calculation is completed. As an estimate cannot account for future changes in a plan member’s employment status, changes in legislation and other factors, an estimate is not guaranteed. No money is paid out on the basis of an estimate.

Fiduciary Duty

A responsibility to act diligently in the best interests of another person or entity (called the beneficiary). In Canadian law, it is considered the highest standard of care owed to another person/entity and requires that the fiduciary use both care and loyalty to protect the interests it is responsible for and do so ahead of its own interests. As ATRF is a fiduciary to the Teachers’ Pension Plan and the Private School Teachers’ Pension Plan, ATRF must only take actions that it believes are in the best interests of these two plans.

Funds on Deposit

Plan members can opt to keep their funds in the plan when they end a teaching contract rather than withdrawing or transferring to another plan. They may be eligible for a pension at a later date if they keep their funds on deposit. Also, if a plan member returns to teaching and actively participating in the plans, they will retain their previous pensionable service and continue to accrue service and benefits in the plan.

Highest Average Pensionable Salary

The average of a plan member’s five highest consecutive years of pensionable salary. At the time a plan member’s benefit is calculated, the average of the member’s five highest years of salary are compared to the average maximum pensionable salary over that same time period. The years do not have to be continuous – there could be breaks in a member’s service. Usually, a plan member’s highest average pensionable salary occurs at end of the member’s career. For members that work less than a full-time equivalent (e.g. part-time) the pensionable salary during the school year is annualized to the full-time equivalent to calculate the five-year average.

Investment Management Agreement (IMA)

A contract specifying the agreed terms and conditions under which an asset owner engages an investment manager for investment management services.


The cost of a pension plan’s current and future benefit commitments (the amount required to pay for benefits that are currently being paid by the plan plus the amount required to pay for benefits that are expected to be paid in the future for pensionable service already earned).

The value of the amount expected to be paid to plan beneficiaries in the current and future years, considering the plan benefit formula and expectations of salary increases, inflation, work force growth, member longevity, and other factors that impact total payments over time.

Living Separate and Apart

Under the definition of spouse/pension partner, two individuals are considered living separate and apart if they are living separate and apart and either of them has the intention to live separate and apart from the other, or if:

  • they had been living separate and apart,
  • the separation was interrupted or ended by reason only that either of them became incapable of continuing to live separate and apart or of forming or having the intention to continue to live apart of that person’s own volition, and
  • the separation would probably have continued if that person had not become so incapable.
Locked-In Retirement Account (LIRA)

LIRAs are restricted RRSPs that require that funds be used to provide a lifetime pension on or after age 50 but before the end of the calendar year in which you reach age 71. Most financial institutions offer LIRAs. ATRF can only process a LIRA payment to a financial institution that appears on the Alberta Superintendent of Pensions’ List on the Government of Alberta’s website.

Maximum Pensionable Salary

The highest possible pensionable salary in a given year to ensure that the accrued pensionable benefit does not exceed the maximum benefit allowed by the tax rules. Also referred to as the Pensionable Salary Cap. Plan members who have earnings that are higher than this maximum do not pay contributions on their salary earned above this maximum salary, nor do they earn a pension on this portion of their earnings.

Net Investment Return

The return, in percentage terms, after accounting for investment management costs.


The individual designated to receive a member’s joint lifetime pension upon the death of the member. Note, that if an individual meets the definition of pension partner at the time of pension commencement, the pension partner must be designated the nominee unless they complete the Pension Partner’s Waiver of Pension at Pension Commencement form. In such cases the designated nominee must meet the criteria outlined under the Income Tax Act.

Old Age Security (OAS)

The basic federal income security program for seniors who are age 65 and older.

Past Service Pension Adjustment (PSPA)

As prescribed by Canada Revenue Agency, a PSPA arises when there is a past event/transaction that creates a benefit credit increase. In general, a PSPA is created when there is a purchase of service from a prior year. By increasing the credit, the annual pension payments would increase at retirement. A reduction to a plan member’s RRSP contribution room by the amount of the PSPA, could result from the service purchase.

Pension Adjustment (PA)

The pension adjustment (PA) amount is the value of the benefits earned in a calendar year in the pension plan, as defined by Canada Revenue Agency (CRA). Generally, the PA reduces the plan member’s registered retirement savings plan (RRSP) deduction limit for the following year. In a defined benefit plan, a PA for a given year is calculated using a fixed formula tied to the plan member’s accrued benefit for that year. The pension adjustment is used to ensure that there is fairness for those who contribute to RRSPs and those who participate in registered pension plans. It accounts for your benefit savings and is reported on your T4.

Pension Adjustment Reversal (PAR)

Defined by Canada Revenue Agency, a pension adjustment reversal (PAR) amount is used to restore an individual’s RRSP room when a member terminates their membership and removes benefits from a registered pension plan. A PAR occurs when the total PAs and PSPAs exceeds the funds leaving the plan.

Pension Option

The type of pension a plan member chooses at the time of application. The option chosen affects both the member’s monthly pension and the benefit paid in the event of the member’s death after retirement. The pension option may guarantee a certain number of payments to a beneficiary or provide for the continuation of monthly payments after the member’s death for the lifetime of another person (usually a spouse/pension partner).

Pension Partner

A member’s pension partner is a person who, at the relevant time, is married to the member and has not been living separate and apart from the member for three or more consecutive years. If there is no person that meets this criteria, a member’s pension partner is then a person who has been living with the member in a conjugal relationship for a continuous period of at least three years and is, during this period, recognized by the community they live in as being in that conjugal relationship.

Pensionable Salary

The salary used to determine your five-year average pensionable salary. The pensionable salary for a given year is limited to ensure that your benefit does not exceed the maximum benefit allowed by the tax rules.

Pensionable Service

The total number of years of service for which contributions have been deducted plus any service purchased through ATRF and service transferred from another pension plan under a reciprocal transfer agreement. Pensionable service also includes any service accrued during a period of disability which began on or after September 1, 1992. Pensionable service does not include service associated with a benefit that is no longer to a plan member’s credit.

Plan Deficiency

The amount by which the value of a plan’s liabilities exceeds the value of its assets.

Plan Member Statement

A statement that is sent annually to plan members who contributed to plans administered by ATRF in the preceding school year. The statement shows the following: the pensionable service and annual salary rate reported by an employer for the school year, the contributions deducted from salary paid and the interest credited to those contributions, and the benefits a plan member could have received if he/she had resigned at the end of the school year.

Policy Asset Mix

Also known as Policy Asset Allocation or Strategic Asset Allocation, this is the specification of how plan assets are to be invested. It combines asset category definitions with target proportions of total assets to be invested in each category.

Qualifying Transfer

A qualifying transfer reduces the amount of the PSPA related to a past service event. It is an amount that the member transfers to a defined benefit plan directly from an RRSP to fund post-1989 past service benefits. The transfer represents a shift of existing tax-sheltered amounts from one registered plan to another.

Registered Retirement Savings Plan (RRSP)

A retirement savings plan, approved and registered under the provisions of the Income Tax Act (Canada), under which taxes on the deposits and investment income may be deferred until the savings are withdrawn.

Responsible Investing

The incorporation of environmental, social, and corporate governance considerations into investment decision.


The earnings from investment, in percentage terms, due to price appreciation and interest or dividend payments received.

RRSP Deduction Room

RRSP deduction room is the portion of an individual’s annual RRSP deduction limit that remains after the individual deducts his or her RRSP contributions for the year. This is listed on your Notice of Assessment.


Salary is compensation for regular service, and includes administrative allowances, isolation pay, retroactive salary, and administrative vacation pay. It does not include car allowances, salary earned teaching night or summer school classes, early retirement incentives, or vacation payouts for administrative positions.

An organization or designated party that offers a pension plan to a specific group of individuals. The plans administered by ATRF have two plan sponsors – the Alberta Teachers’ Association and the Alberta Government.

Termination Benefit

An option available to a plan member to withdraw their funds from the plan. This option is only available to members who have either left their funds on deposit or have terminated a teaching contract.

Unfunded Liability

Occurs when there are fewer assets in the fund than liabilities.


A plan member is said to be vested if the member is eligible to receive a monthly pension. To meet the vesting criteria for the plans administered by ATRF a plan member must have at least: five years of pensionable service after August 31, 1992, or five years of pensionable service that includes a period of pensionable service in each of the 1991-92 and 1992-93 school years, or ten years of pensionable service.

YMPE (Year’s Maximum Pensionable Earnings)

An amount that is set annually by the federal government to establish the maximum earnings that participants of the Canada Pension Plan or Quebec Pension Plan must contribute towards.