Types of plan pensions

A defined contribution pension plan must offer certain types of pensions. It can also offer other types as options.

A plan must provide all of the following:

• Normal pension: the pension payable at the normal retirement age (65 unless the plan provides otherwise)
• Deferred pension: the pension to which a member is entitled but which must be paid later because it is still too early for the member to receive a pension
• Early pension: a pension paid before the normal retirement age (between 55 and 65, unless the plan provides otherwise)
• Postponed pension : a pension paid after the normal retirement age (after 65 unless the plan provides otherwise)
• Additional pension: a pension amount added to a member's regular pension and based on sums transferred to his or her account from another plan

Your plan may provide:

• Additional pension: a pension amount added to the regular pension and based on a member's addition voluntary contributions (if any)

A plan may also give entitlement to cash payments (refunds).

Age is a deciding factor

A member's age is a deciding factor in determining the type of pension to which the member is entitled. Furthermore, the plan's normal retirement age must be considered. The normal retirement age is indicated in the plan summary.

The younger a member is when he or she retires, the lower the retirement income will be. Members should be sure that they have enough income for their retirement needs. They may want to see a financial planner.

• A member cannot be forced to retire when he or she reaches the normal retirement age under the plan.
• Payment of a retirement pension must begin no later than 31 December of the year in which the member reaches age 71, even if he or she continues to work.
• To receive a retirement pension, a member must make an application to the plan administrator.

Normal pension: the pension payable at the normal retirement age

The plan must provide for the payment of a "normal pension", that is, a pension payable as of the normal retirement age under the plan. It must be a life pension, that is, payable until death.

The normal pension is payable when a member stops working at the normal retirement age that is set under your plan (usually 65). It will not be paid automatically. The member must apply to the plan administrator.

Deferred pension: payment of a pension is delayed if it is too early for payment to begin

If active plan membership ends and a member is not yet old enough to receive a pension under the plan or if the member is old enough but does not want to begin receiving his or her pension right away, he or she is entitled to a deferred pension, whose payment will begin at a later date.

Payment of a pension can be requested when a member is 10 years or less away from the normal retirement age under the plan (for example, at age 55 if the normal retirement age is 65) whether the member continues to work or not.

Early pension: a pension paid before the normal retirement age

A member is entitled to an early pension if he or she stops working during the 10 years that precede the normal retirement age under the plan (whether or not active plan membership has ended).

A pension plan may give entitlement to an early pension at an earlier time, that is, before a member is at least 10 years away from the normal retirement age. For information about the plan's rules, consult the plan summary.

If active plan membership ends more than 10 years before the normal retirement age and a member wants to receive a pension before the normal retirement age, he or she can ask for payment of a deferred pension at any time, provided he or she is no more than 10 years away from the normal retirement age.

Postponed pension: a pension paid after the normal retirement age

A member is entitled to a postponed pension if, when he or she reaches the normal retirement age, he or she continues to work for the same employer. Payment of the pension will be delayed unless the member and the employer agree otherwise. It will begin when the member stops working or no later than 31 December of the year in which the member reaches age 71.

If a member continues working but his or her pay is reduced permanently, for example, because of a reduction in work hours, the member can immediately apply to receive a portion of his or her pension as a way to offset the reduction in pay.

Additional pension: a pension amount added to the regular pension and based on sums transferred to a member's account from another plan

A member is entitled to an additional pension based on sums that were transferred from a previous pension but that cannot be directly refunded to the member.

The additional pension will be added to the member's retirement pension.

Additional pension : a pension amount added to the regular pension and based on the member's additional voluntary contributions

If a plan so provides, a member may be entitled to an additional pension based on the conversion of his or her additional voluntary contributions (contributions made by the member and which were not accompanied by a corresponding employer contribution)

The additional pension will be added to your retirement pension.