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Glossary of Benefits & Pension Terms

Employee Benefits






Actuarial Valuation


An examination of a Defined Benefit pension plan by an actuary to determine whether contributions and investment earnings are being accumulated at a rate sufficient to provide the funds out of which the promised pension benefits can be paid when due.


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Basic Salary


Amount of regular annual salary excluding: overtime, stipends and lump sum salary payments other than those in respect of a retroactive salary increase.


If you are on a leave of absence, Basic Salary means the amount of annual salary on which your pension contributions are based.


If you are receiving benefits from the Long Term Disability Plan, Basic Salary means the annual rate of salary paid to you immediately prior to the commencement of these benefits.


If you are employed on less than full-time basis, Basic Salary means the annual salary that would have been paid to you had your employment been on full-time basis.


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Canada Pension Plan Average Earnings


The annual average of that part of the Plan member's Basic Salary in the same 60 months as were used to calculate the Final Average Earnings which is less than the Year's Maximum Pensionable Earnings during those months.


Where the Basic Salary has been at the same level for a period of longer than 60 months due to the Plan member receiving benefits from the Long Term Disability Plan, the Year's Maximum Pensionable Earnings used in the calculation of the Canada Pension Plan Average Earnings will be that for the 60 months during which the Plan member first attained that level of salary.


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CANSIM Rate


The average yields of 5-year personal fixed term chartered bank deposit rates published in the Bank of Canada Review as CANSIM Series V 12215.


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Commuted Value


The commuted value, calculated on the date of termination of employment, death, retirement or at the late pension commencement date, is the amount that has to be invested today to pay for the pension that is payable in the future. The value is calculated on the advice of the Plan actuary in accordance with regulatory requirements and takes into account several variables such as life expectancies and interest rates relevant at the time of payout.


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Credited Service


The period of Service for which you make or have made contributions to the Defined Benefit component of the University of Winnipeg Trusteed Pension Plan and its predecessor plan. It also includes Service while a Plan member is employed and in receipt of benefits from the University of Winnipeg Long Term Disability Plan.


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Deferred Pension


The annual amount of pension, commencing at the Normal Pension Commencement Date, to which a Plan member, whose employment with the University has terminated prior to retirement age, is entitled. The Deferred Pension is calculated on the basis of the Plan member's years of Credited Service, Basic Salary and Year's Maximum Pensionable Earnings up to the date of termination.


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Defined Benefit Plan


A Defined Benefit (DB) plan has a prescribed formula in accordance which pension benefits are determined, taking into account service, average earnings, maximum benefit under the plan, etc.


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Defined Contribution Plan


Also known as a Money Purchase plan, a Defined Contribution (DC) plan provides an individual account for each member. The contributions made by the member and the employer are defined, but the plan benefit is unknown. The benefit is the amount of accumulated member and employer contributions and investment earnings at time of termination or retirement.


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Excess Surplus


The Income Tax Act does not permit the employer to make contributions where the plan is in "excess surplus" position, meaning that the surplus in the plan is in excess of a certain level. That level is the lesser of:


  1. 20% of the plan liabilities, and
  2. the greater of:
    1. 10% of the liabilities, and
    2. 2 years' contributions (member and employer)

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Final Average Earnings


The annual average of the Plan member's Basic Salary in the 60 months of Service when such Basic Salary was highest during the 15 years prior to the date of death, retirement or termination of employment.


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Geometric Average


The geometric average calculation is different from a simple arithmetic average calculation which is the sum of a series of numbers divided by the count of the numbers in the series. The arithmetic average is used when each number in the series is independent and has no relationship to the other numbers, such as average test scores for a group of students.


However, there are instances where it is not appropriate to use the arithmetic method to calculate the average of a series of numbers, such as when calculating average investment returns where compounding is a factor.


For example, if you used the arithmetic method to calculate the average return on the pension fund for a four year period (assuming the following rates of return: year one -23%, year two 18%, year three 20%, and year four 15%), the result would look like this: (-23% + 18% + 20% + 15%) /4 = 7.5% average return per year over the four year period. However, investment returns are not independent of each other; the investment return earned in one year changes the total value of the pension fund and therefore has an impact on the return earned in the following year. For example, if you have a significant loss one year, you have less money to invest the following year, and the reverse applies if you have a significant gain. For this reason, a geometric average is used to calculate investment returns where compounding is a factor.


Calculating a geometric average is a bit more complicated than calculating the arithmetic average. The formula is as follows: you add one to each number (this eliminates the problem of negative percentages), then multiply all the numbers together, next you raise the product to the power of one divided by the count of the numbers in the series, and finish by subtracting one from the result.


Using the above investment return example, the calculation using the geometric average would look like this: [(.77 x 1.18 x 1.20 x 1.15) ^ (1/4)] - 1. This calculation results in a geometric average annual return of 5.819%. This is considerably different from the arithmetic average of 7.5%, but none-the-less a more accurate reflection of the actual average annual returns over the four year period.


The following table illustrates the difference between arithmetic average and geometric average by showing the result of applying the arithmetic average of 7.5% per annum, versus the geometric average of 5.819% per annum to $1,000 over a four year period, as compared to the actual investment earnings.


Investment
Return
Arithmetic
Average
Geometric
Average
Year 1 Value at start of period 1,000.00 1,000.00 1,000.00
Invest. Return of (23%) (230.00) 75.00 58.19
Value at end of period 770.00 1,075.00 1,058.19
Year 2 Value at start of period 770.00 1,075.00 1,058.19
Invest. Return of 18% 138.60 80.63 61.58
Value at end of period 908.60 1,155.63 1,119.77
Year 3 Value at start of period 908.60 1,155.63 1,119.77
Invest. Return of 20% 181.72 86.67 65.16
Value at end of period 1,090.32 1,242.30 1,184.93
Year 4 Value at start of period 1,090.32 1,242.30 1,184.93
Invest. Return of 15% 163.55 93.17 68.95
Value at end of period 1,253.88 1,335.47 1,253.88
Total Returns 335.47 253.88
Four year average 83.87 63.47
Average annual return 7.5% 5.819%

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Locked-In Contributions


Contributions made by you and the University on your behalf, which cannot be received as a cash refund in accordance with the Manitoba Pension Benefits Act. You must receive a Deferred Pension with these Locked-In contributions unless the Deferred Pension will be less than 4% of the Year's Maximum Pensionable Earnins (YMPE), or if the Commuted Value of the Deferred Pension is less than 4% of the YMPE (20% of the YMPE after May 31, 2010). Locked-in contributions may be transferred on termination of employment to your Locked-In Retirement Account (LIRA) which is a special type of a Registered Retirement Savings Plan administered in accordance with regulations of the Manitoba Pension Benefits Act.


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Normal Pension Commencement Date


Academic Employees - September 1st coincident with or next following attainment of age 65 (up to May 31, 2010). For Academic employees who attain their NPCD after May 31, 2010, the NPCD is the first of the month coincident with or next following attainment of age 65.


Support Employees - First of the month coincident with or next following attainment of age 65.


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Reduced Appointment


A Reduced Appointment means a workload that is reduced by a mutually agreed upon factor and for a mutually agreed upon period as described in the UWFA Collective Agreement Article 27, UWFA-Collegiate Collective Agreement Article 29, and AESES Collective Agreement Article 20. Pension accumulation during a Reduced Appointment is subject to the limitations outlined in paragraph 8507 of the Income Tax Regulations.


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Service


The length of time you have been employed by the University of Winnipeg including paid and unpaid leaves of absence.


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Spouse


"Spouse" means a person who is married to the Plan member or, for a Plan member who is not married, a person who is publicly represented by the Plan member as his/her Spouse


(i) for a period of not less than 3 years where either of the persons is prevented by law from marrying the other or,

(ii) for a period of not less than 1 year where neither of them is prevented by law from marrying the other.


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Total Disability


To be considered to be totally disabled, you must be under the continuous care of a physician. You are considered to be totally disabled during the first 24 months of disability if you are deemed by the insurer to be unable to do the substantial portion of the regular duties for your own occupation.


After the first 24 months of disability, you are considered to be totally disabled if you are deemed by the insurer to be unable to earn at your own or any other occupation for which you are reasonably fitted by education, training or experience, and for which the current earnings are more than 75% of your pre-disability earnings.


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Trusteed Plan


A plan whose funds are held and invested by trustees. All trustees are charged with the fiduciary responsibility of discharging their duties with respect to the plan solely in the interests of participants and beneficiaries.


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Vesting


Defined Benefit - The right of a Plan member on termination of employment to a Deferred Pension under the Defined Benefit component of the Plan, calculated in accordance with the provisions of the Plan.


Defined Contribution - The right of a Plan member on termination of employment to the required contributions made by the member and the required contributions made by the University on the Plan member's behalf.


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Year's Basic Exemption (YBE)


The amount from year to year as defined as such under the Canada Pension Plan ($3,500 for 2017).


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Year's Maximum Contributory Earnings


The maximum amount of your earnings that is subject to pension contributions.

(i) for calendar years 1997 to 2004 inclusive, $95,000; and

(ii) for each subsequent year, the sum of :

a) $86,111; and
b) 30% of the YMPE for that year.
2005 $98,441
2006 $98,741
2007 $99,221
2008 $99,581
2009 $100,001
2010 $100,271
2011 $100,601
2012 $101,141 - Defined Benefit Plan members
2012 $110,141 - Defined Contribution Plan members
2013 $101,441 - Defined Benefit Plan members
2013 $120,441 - Defined Contribution Plan members
2014 $101,861 - Defined Benefit Plan members
2014 $120,861 - Defined Contribution Plan members
2015 $102,191 - Defined Benefit Plan members
2015 $121,191 - Defined Contribution Plan members
2016 $102,581 - Defined Benefit Plan members
2016 $121,581 - Defined Contribution Plan members
2017 $102,701 - Defined Benefit Plan members
2017 $126,701 - Defined Contribution Plan members

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Year's Maximum Pensionable Earnings (YMPE)


The amount from year to year as defined as such under the Canada Pension Plan ($55,300 for 2017).


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