Joint and Survivor and Other Monthly Pension Payment Options
Upon retiring from the Teamsters Canadian Pension Plan, you can choose among various payment options that offer different levels of protection to you and to your spouse/beneficiary. With each option, the monthly amounts will be different, but the overall value of the benefit is the same. Understanding your monthly pension payment options prior to retirement is key: once the monthly payments commence, changes cannot be made.
The various payment options are described below to assist you in your choice.
Life Only Pension
This pension is payable monthly for as long as you live with the last payment being made in the month of your death.
Joint and Survivor Pension
This pension is payable monthly for as long as you live. After your death, if your Spouse is still living, pension payments of a percentage of the amount you were receiving will continue for your Spouse’s remaining lifetime. Joint and Survivor options, such as 50%, 60%, 75% and 100%, may be offered. Since the overall value of your pension under all options are the same, the higher the percentage to be attributed to your spouse’s lifetime amount, the lower the monthly amount will be for your lifetime. In addition, the difference in age between you and your spouse will have an impact on the amount you receive (e.g. if your spouse is younger this will lower your monthly amount as they are expected to live longer).
For example, you have elected a Joint and Survivor 60% option and your monthly pension is $1,000 for your lifetime. Should your spouse outlive you, your spouse will receive $600 (i.e. $1000 x 60%) per month for their remaining lifetime.
Under a Joint and Survivor 100% option you may receive something like $950 per month for your lifetime and $950 (i.e. $950 x 100%) per month payable after your death for your spouse’s lifetime.
If you have a spouse at your date of retirement, you will be required to elect a Joint and Survivor 60% (or higher) pension option, unless your spouse waives their right and allows you to choose from any of the other options provided.
Life Pension with a Guaranteed Period
This pension is payable monthly for as long as you live. If you die before receiving the guaranteed monthly payments, pension payments in the same amount as you were receiving will continue to be paid to your beneficiary for the balance of the guaranteed months, or a one-time lump sum amount equal in value to the remaining guaranteed payments will be paid to your beneficiary or estate. Guaranteed Periods of 5, 10, or 15 years may be offered. The more years that payments are guaranteed, the lower the monthly amount will be.
For example, you have elected a Life Pension with a 5 Year (60 Month) Guarantee Period and your monthly pension is $1,000 for your lifetime. Should you die before the 60th monthly payment has been made, your beneficiary will receive $1,000 per month until the 5th anniversary of your retirement. Alternatively, your beneficiary or estate could receive a one-time lump sum amount equal in value to the remaining guaranteed payments.
Under a 10 Year Guaranteed Period option you may receive something like $980 per month for your lifetime. This pension is guaranteed for 10 years (120 months).
The overall expected value of the pension options will be the same, no matter what option you elect. Your personal situation will help you determine which option might be more suitable for you.
Deciding when to retire is a personal and important decision, so we encourage you to seek financial advice. And as always, the Divisional Administrator is here to help explain your options.