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This section answers frequently asked questions about how the Canadian Blood Services Defined Benefit (DB) Pension Plan is calculated.

What does YMPE mean?
  • YMPE stands for Year's Maximum Pensionable Earnings. This is the amount the government sets each year, and uses to base your contributions to—as well as benefits from—the Canada or Québec Pension Plan. Changes in this amount are based on increases in average weekly earnings in Canada.

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What does "annualized earnings" mean?
  • Earnings, for the purposes of this plan, are always calculated on a full-year, full-time equivalent basis for those who work on a less than full-time basis.

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What does "locked-in" mean?
  • Benefits are locked-in once they are vested. When this occurs, the money may not be withdrawn in cash, but must be used to provide you with retirement income or transferred to a locked-in retirement plan.

  • If you want to transfer your benefit to a locked-in plan or account, the administrator of that plan must complete and sign a form agreeing to abide by this rule.

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What are my "pensionable earnings"?

Your pensionable earnings are your regular base pay. They do not include overtime, shift premiums, or bonuses.

If you are on a leave of absence, you may or may not have any earnings for the period of leave, depending on the type of leave and whether or not you continue to make contributions while on leave.

  • If you are receiving long-term disability benefits, you no longer make contributions. Your "deemed" earnings are based on the regular base pay you received immediately before you began receiving benefits. CBS contributes both the employer and employee base contributions on your behalf.

  • If you are on maternity leave, parental leave, workers' compensation, or are receiving short-term disability benefits, you will have "deemed" earnings only if you continue to contribute to the plan while on leave.

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How is my pensionable service calculated if I work on a less than full-time basis?
  • Pensionable service reflects the actual time you work for CBS or are on a recognized leave of absence. If you work on a less than full-time basis, pensionable service is prorated.

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How are my best average earnings calculated if I've worked less than five years for CBS?
  • If you've worked for CBS less than five years, your best average earnings will be the average of your actual annualized earnings.

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Is there a maximum pension payable from the plan?
  • Yes. The Income Tax Act limits the amount of annual pension payable from registered pension plans like the DB plan.

  • For 2004, this maximum is $1,833 for each year of pensionable service.

  • In 2005, the amount increases to $2,000 per year of pensionable service.

  • Thereafter, the limit will be indexed annually following increases in the average weekly earnings in Canada.

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How is the "value" of my pension calculated?
  • First, the amount of pension you are entitled to—based on your years of pensionable service and your best average earnings—is calculated. The value of your pension is the amount of money the actuary estimates it will cost, in today's dollars, to purchase the amount of pension you're entitled to. The calculation is based on your age, using assumptions like average life expectancy, interest earnings, and other relevant factors.

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What is a Pension Adjustment?
  • A Pension Adjustment—or PA—is the approximate value of the benefits you've earned under this plan in a year.

  • The Canada Revenue Agency limits the tax-deductible contributions that you can make to retirement savings plans in any year. The amount is 18% of your earned income in the previous year, up to an annual dollar limit, minus the previous year's PA. This percentage is the total amount you can save under all tax-sheltered retirement plans, including this plan and your personal RRSPs.

  • The PA isn't related—in a dollar-for-dollar sense—to the amount you and CBS pay into the plan. Instead, these benefits are calculated in a manner set out in the Income Tax Act. Here's how your PA is calculated:

  • 9
    benefit earned
    (according to pension formula formula from November 1, 1997, 1.6% x your pensionable earnings)
  • If not already a multiple of a dollar, the PA is rounded to the nearest dollar.

Here's an example of how the PA affects the calculation of RRSP contribution room.

Last year, Cheryl's salary was $50,000 and her maximum tax-shelter room was 18% of $50,000, or $9,000. Her PA from the DB plan was $6,600.

Pension benefit1.6% x $50,000 = $800
Pension adjustment(9% x $800.00) - $600 = $6,600
RRSP contribution$9,000 - $6,600 = $2,400

This year, Cheryl can contribute the difference, $2,400, to her RRSP.

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What is a Past Service Pension Adjustment?
  • When the pension plan is improved retroactively or when pensionable service is credited retroactively, a Past Service Pension Adjustment (PSPA) may be issued.

  • The PSPA equals the increase to the sum of past pension adjustments (PA) resulting from the plan amendment or additional service.

  • The PSPA reduces your unused RRSP room.

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