Terminating Your Contract
If you’ve resigned or your contract has been terminated, this means your active participation in the plans has ended and now you must decide what to do with your termination benefit. Your options are outlined below.
If you’ve resigned or your contract has been terminated, this means your active participation in the plans has ended. Now you must decide what to do with your termination benefit.
Your options depend on your age and whether you have enough pensionable service in the plan to be eligible for a pension. Further, you will want to consider if you plan to return to teaching on a contract within the province of Alberta. The four options you will want to think about are described in detail next–two relate to keeping your funds in the plan and two relate to removing your funds from the plan.
In order to terminate your participation in the plans with ATRF, you will need to fill out an Employee Termination Notice Form (see the bottom of the page) and return it to ATRF. You can also do this by signing in to your MyPension account.
Keeping Your Funds in the Plan
If you have enough service to be eligible for a pension, you can keep your funds in the plans and defer your pension until you’re ready to retire. If you’re under 55 years of age and are eligible to receive a pension when you turn 55, you have the option to withdraw your commuted value from the plan. If you don’t have enough pensionable service to be eligible to receive a pension, you can remove your contributions and interest from the plans at any time, regardless of your age.
Once you reach 55, you are entitled to an immediate pension and are no longer eligible to apply to withdraw your commuted value from the plan. You must receive an immediate pension. To begin receiving your pension, you should contact ATRF four months before your 55th birthday.
Leave Funds on Deposit
Even if you don’t have enough service to be eligible for a pension, you can still keeps your funds in the plan (also known as leaving funds on deposit). Your contributions will continue to earn interest and you can decide to remove your funds at a later date (if you’re under age 55) or transfer that service to another plan (see more below). By leaving your funds in the plan, you retain the pensionable service that you’ve earned thus far and if you return to a teaching contract in Alberta, you will once again begin earning pensionable service in the plan.
Leaving the Plan
If you are planning on teaching in another province or changing careers, but working for a organization that has a pension plan with a reciprocal transfer agreement, you may be eligible to transfer the pensionable service and funds that you’ve accumulated in our plans to your new registered pension plan. Deadlines for transfer may apply. More information can be found on the Transferring Service page.
Removing Your Termination Benefit
When you resign from your job or your contract is terminated, you have the option of receiving your termination benefit. If you decide to withdraw from the plan, the benefit paid to you can differ greatly depending on whether you are vested or not.
If You Don’t Have Enough Service to be Eligible for a Pension
Your termination benefit is equal to your contributions with interest and may be:
- transferred directly to a Registered Retirement Savings Plan (RRSP), with no income tax deducted. This direct transfer will not affect your RRSP deduction room, or,
- paid to you in cash, with income tax deducted.
If You Do Have Enough Service to be Eligible for a Pension
If you are entitled to a deferred pension (see section above), the benefit is different for pensionable service before and after September 1, 1992.
The benefit payable for pensionable service before September 1, 1992 is equal to your contributions with interest and may be:
- transferred directly to a RRSP, with no income tax deducted. This direct transfer will not affect your RRSP deduction room, or,
- paid to you in cash, with income tax deducted.
The benefit payable for pensionable service after August 31, 1992 is the greater of:
- your contributions with interest, or
- the commuted value of your pension. The is a lump-sum amount in today’s dollars which equals the value of your future pension payments.
This benefit must be transferred directly to a Locked-In Retirement Account (LIRA) up to the maximum permitted in accordance with the Income Tax Act. LIRAs are restricted RRSPs that require that funds be used to provide income on or after age 50 but, at the latest, by the end of the calendar year in which you turn age 71. Most financial institutions offer LIRAs. A list of these financial institutions is available on the Employment Pensions website.
Income tax will not be deducted from the direct transfer to your LIRA and it will not affect your RRSP deduction room. Any benefit above the maximum permitted to be transferred to a LIRA in accordance with the Income Tax Act will be paid to you in cash, with income tax deducted according to the Canada Revenue Agency’s withholding rates for lump-sum payments.
Pension funding, rules, and legislation can get very complex but, when in doubt, remember that we’re here to keep things as straightforward as possible. So, if you have any questions about your plan, please contact our office for more information – we’re always here and happy to help.
There are a number of things to consider when choosing this option. Please refer to the Removing Your Funds from the Plan for a detailed overview of the benefits and drawbacks.
No Further Benefits
When you withdraw your funds or transfer your service from the plans, you will no longer have any pensionable service in the plans and you will not be entitled to receive a pension from the plans. You may reinstate previously refunded service if you join the plans again in the future and are eligible to buy back that service. The cost of purchasing prior service at a later date will likely be more expensive than the termination benefit you originally received.