5 Common Misunderstandings and Misconceptions about your Pension
Misunderstanding 1: The value of my pension benefit will equal the contributions.
The TCPP is a defined-benefit multi-employer plan that determines the amount of the benefit ahead of time based on a pension formula.
Employer contributions are required by all Divisions. Some Employers share the cost of providing a pension benefit with the members by requiring member contributions as well. Some Employers have incorporated member contributions in order to provide larger pension benefits.
If member contributions are required under your Employer of the TCPP, you will see a summary of your required contributions with interest on your annual benefit statement.
Members are not entitled to individual account balances based on the Total Employer and/or Employee contributions, but rather the contributions are made to the TCPP and they are invested to provide all members of the TCPP a pension that is payable for life!
The value of your pension benefit is based on your age, the pension benefit formula, and various assumptions such as interest and mortality rates.
Misunderstanding 2: The date I terminated my employment is my date of termination from the TCPP.
Terminating employment does not necessarily coincide with the date your membership in the TCPP terminates.
Most Divisions of the TCPP require two calendar years with less than 350 hours worked before your membership in the TCPP terminates. Your annual statement indicates the termination provisions that apply to you under your Division.
If you return to work with the same or another participating TCPP employer, before your membership terminates, your membership will continue.
You will not be able to transfer your entitlement out of the TCPP until your membership has terminated. Furthermore, you must be under age 55 to do so.
Misunderstanding 3: Union membership, or paying Union dues, means being a part of the TCPP.
Union dues go towards your Union membership and are not contributions made to the TCPP.
Union membership does not automatically activate membership in the TCPP.
Review your collective bargaining agreement to understand the rules for becoming a member of TCPP
There may be a set number of hours worked requirement.
Certain job specifications, such as part time or summer employment may be excluded from joining the TCPP.
Depending on when you participated in the TCPP, there may have been different vesting requirements.
Meaning that even if you became a member of the TCPP but did not stay in the TCPP for long enough, you may not have been entitled to any pension benefits.
Misunderstanding 4: On retirement, there is a “best choice” or “worst choice” for your pension option.
There is no perfect answer.
The overall expected value of your pension under all options is the same. You need to make the best choice for your personal situation as the actual value will depend on how long you live and any benefits that are payable upon your death.
Misunderstanding 5: On death after retirement, the guaranteed period starts from the date of your death.
The guaranteed period starts from the date of your retirement.
For example, if on retirement you elect a life pension guaranteed for 10 years and you die prior to receiving 10 years of payments, then your beneficiary or estate will receive the balance of the payments remaining between the date of your death and 10 years after the date of your retirement. If you die after 10 years of retirement, there will be nothing payable to your beneficiary.