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This section answers a variety of questions frequently asked about the Canadian Blood Services Defined Contribution (DC) Pension Plan.

General questions

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 Quebec Pension Plan. Changes in this amount are based on increases in average Canadian industrial wages.

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What does "locked-in" mean?

Your pension benefits are locked-in once they are vested. When pension benefits are locked-in, the money must be used to provide a pension or pension-like payout (for example, an annuity) or transferred to a locked-in retirement plan. You cannot generally make lump-sum cash withdrawals when benefits are locked-in.

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's a Pension Adjustment?
  • Your Pension Adjustment — or PA — is the value, indicated on your T4 slip, that reduces your RRSP contribution room. Under the Defined Contribution (DC) plan, the PA is simply the total amount you and CBS contribute to the plan in a particular year.

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What's a Pension Adjustment Reversal?
  • If you leave CBS before your benefits are vested, you may be entitled to a Pension Adjustment Reversal (PAR). Through PARs, Canada Revenue Agency compensates you for any contributions made by CBS on your behalf that you are not eligible to receive. You don't receive money; what you get is RRSP contribution room.

  • Your PAR from the Defined Contribution (DC) plan equals CBS's contributions to the plan during your membership if you leave before your benefits are vested.

  • If you leave CBS once your benefits are vested, you don't get a PAR.

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What role do my personal savings play?
  • Personal retirement savings are an important building block in your retirement income. Many people use registered retirement savings plans (RRSPs) to build these savings. You can make tax-deductible contributions to a personal or spousal RRSP, up to specified limits.

  • Your RRSP contribution limit is set by the Canada Revenue Agency (CRA). The total you can contribute for the year-your "contribution room"-depends on your earned income, your Pension Adjustment (PA) (see Tax Issues in the next section for more information), and any Pension Adjustment Reversals you may have. CRA lets you know your RRSP contribution room on the Notice of Assessment you receive when you file your income tax return. You can carry forward unused contribution room. This may allow you, for example, to contribute a larger amount to your RRSP in a future year.

  • You can turn your RRSP into income at the same time you retire, if you wish. Or, you can maintain it until the end of the year in which you reach age 71. At that time, you have to convert it into retirement income. You may wish to discuss the options available for converting your RRSP into retirement income with your personal financial advisor.

  • Another way to build your retirement income is with a Tax-Free Savings Account (TFSA). With a TFSA, you may make annual contributions up to a specified limit. In 2009, this limit is $5,000. Here are some of the highlights of a TFSA:

    • Contributions to a TFSA are not tax deductible.
    • The income generated in a TFSA is tax free when withdrawn.
    • You can generally withdraw any amount from a TFSA at any time and for any reason, with no tax consequence.
    • Any unused contribution room is added to your TFSA contribution room for the next year.
    • Most withdrawals made from a TFSA will be added back to the TFSA contribution room at the beginning of the year following the withdrawal.

  • Consult your personal financial advisor for more information on TFSAs.

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Who administers the Defined Contribution (DC) plan?
  • The Canadian Blood Services Defined Contribution (DC) Pension Plan is administered by Canadian Blood Services. An Advisory Committee assists CBS by monitoring investment performance and plan administration, and by making recommendations for any changes in the fund manager(s) involved in the investment of the funds.

  • The Advisory Committee consists of six representatives appointed by CBS. These representatives include individuals nominated by the unions who represent employees who participate in the DC Plan. The number of union representatives is in proportion to the number of plan members represented by the unions, to a maximum of three representatives.

  • For questions on day-to-day plan administration or your own pension entitlements, you should contact Morneau Shepell at
    1-877-252-4442 between 8:30 a.m. and 5:30 p.m. (ET).

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What is the future of the plan?
  • Although CBS intends to continue the Defined Contribution (DC) plan indefinitely, it does have the right to terminate or amend it at any time. No amendment will affect the benefits you already have in the plan, unless required by applicable legislation.

  • Each time the plan is amended, you will receive an explanation of the amendment.

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Joining questions

What is the difference between the Defined Benefit (DB) and Defined Contribution (DC) plans?
  • A DC (defined contribution) plan is one where the amount of your contribution to the plan is fixed. You choose how to invest your contributions, along with CBS' contributions, from a variety of investment options. You can change your investments as often as you like and you should review them periodically to ensure they are appropriate for your age and your tolerance for risk. Your pension, consequently, depends on how well your investments perform. Under the CBS DC plan, you contribute 4.75% of your earnings (excluding bonuses, shift premiums, and overtime pay) to the plan each year. CBS contributes 6.75% of your earnings to the plan as well.

  • Under the CBS Defined Benefit (DB) Pension plan, however, the amount you and CBS are required to contribute depends on the total cost of the plan and may change periodically. If the total cost of the plan is between 9.5% and 11.5% of pensionable earnings (the earnings recognized for pension purposes of all CBS employees who are members of the plan), then you contribute 4.75% of your earnings and CBS contributes the difference, up to 6.75% of pensionable earnings. If the cost rises above 11.5% of pensionable earnings, the plan members and CBS will share the additional cost equally. If the cost falls below 9.5%, the members and CBS will benefit equally from the reduction below that amount. Under the DC plan, the contributions you and CBS are required to make remain fixed.

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Should I join the Defined Benefit (DB) Plan or the Defined Contribution (DC) Plan?
  • We can't advise you about which plan to join. It is your personal choice and you may want to contact a financial advisor to guide you.

    However, here are some issues you may want to consider when making your choice:

    Are you represented by one of the Participating Unions?

    How much risk are you willing to accept?

    • Under the Defined Contribution (DC) plan, you will assume all of the investment risk. If your investments perform poorly, you may receive a smaller pension than you might have under the DB plan. If your investments perform well, you may receive a larger pension than under the DB plan. If you choose the DB plan, you are guaranteed a pension amount calculated according to your earnings and your years of service. If the DB plan investments perform well, the surplus may be used to improve benefits, to reduce contributions or may be held as a reserve against fluctuations in investment performance.

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How do I join the Defined Contribution (DC) plan?
  • Shortly before you're eligible to join, a Human Resources representative will contact you and provide you with the enrolment form. You'll use this form to provide personal details and to designate a beneficiary to receive benefits from the plan in case of your death.

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If I join the Defined Contribution (DC) plan, can I later decide to switch to the Defined Benefit (DB) plan?
  • No. Once you've joined the Defined Contribution (DC) plan, you remain in the plan as long as you are employed by CBS.

  • That's why it's important for you to read the DC and DB Pension plan information carefully, to ensure that you make the decision that's right for you.

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Contributing questions

Are my pension contributions tax-deductible?

Yes. All your contributions to the DC plan are fully deductible from your income tax. Contributions to the plan are deducted from your pay before Payroll calculates your income tax, so you benefit right away.

Is there a limit on the amount I can contribute to the plan?

Under income tax legislation, the total contributions to the DC plan (described earlier in this section) may not exceed 18% of your total earnings. There is also a dollar limit maximum, which is $22,000 in 2009, and is scheduled to increase every year in line with the average wage index. These limits include your contributions and Canadian Blood Services' contributions to this plan. Head Office Payroll will keep track of your contributions to the DC plan and ensure that you do not contribute more than allowed. If, at the end of the year, the total contributions exceed the limits, Canadian Blood Services will refund your excess contributions will be refunded to you at the end of the year.

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If I decide later that I don't want to take part in the Defined Contribution (DC) plan, can I stop contributing?
  • No. Once you are a member of the Defined Contribution (DC) plan, you continue to contribute as long as you keep working at CBS and your money stays in the plan until you leave CBS, retire, or die.

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What happens to the optional contributions after November 30, 2004, when this feature ended?
  • You may have made optional contributions to the plan until November 24, 2004, when this feature was closed to new contributions. If you did, your contributions and CBS's corresponding contributions, along with investment income, will remain in the pension fund and continue to earn investment income, until your retirement, termination of employment, or death. You will receive updates on these contributions separately on your quarterly statement.

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Can I withdraw funds from the Defined Contribution (DC) plan?
  • No. You may not withdraw any contributions from the Defined Contribution (DC) plan, either your own contributions or those CBS makes, as long as you are employed by CBS. They stay in the plan until you leave CBS, retire, or die.

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Investing questions

Are my investments safe under the Defined Contribution (DC) plan?
  • Although Canadian Blood Services provides the DC plan to help you reach your financial goals for retirement, you are responsible for the savings that you accumulate under the plan. Canadian Blood Services takes great care in selecting the financial institution where your investments are kept and in choosing the investment options to be offered. Canadian Blood Services and the Advisory Committee also periodically review and evaluate the performance of the fund managers and make changes, when necessary.

  • As with any investment, you reap the rewards if investment returns are high and bear the risk if investment returns are low. Some of the funds offered under the plan entail more risk than others. You must be certain that you're comfortable with the level of risk you assume with your asset allocation. You may wish to discuss your investments with your personal financial advisor.

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How do I get information on my account, change my investment choices, and transfer my money among the different options?
  • To get information about your account, change your investment choices, or transfer money between funds, log in to the Members Only section of the site and use the tools provided there. You can also contact Morneau Shepell at 1-877-252-4442 between 8:30 a.m. and 5:30 p.m. (ET).

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Spouse and beneficiary questions

Who is my spouse for the purposes of the Defined Contribution (DC) plan?
  • The term spouse includes your legally married, common-law, or same-sex spouse. Pension legislation in each province defines spouse slightly differently and, since the plan applies across Canada, the definition will depend on where you work. See the Glossary for the definition of spouse in each province and territory.

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What happens to my pension if I separate or divorce from my spouse?
  • If your marriage or common-law relationship ends, provincial legislation may require that the pension benefits you've built up during your marriage be shared with your former spouse.

  • The actual split of the benefits will be according to a court order or separation agreement. If this situation arises, your legal counsel can advise you of the steps to follow.

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Can I designate anyone other than my spouse as beneficiary for my death benefit?
  • All death benefits will paid to your spouse (unless you are living separate and apart from your spouse), even if you have designated someone else as your beneficiary. Based on your province of legislation, you may waive this requirement be signing a prescribed form. Your spouse must consent and sign the form as well. If you have a spouse, you should still designate a contingent beneficiary in case your spouse predeceases you.

  • If you don't have an eligible spouse, you may name anyone as your beneficiary. If you don't designate a beneficiary, on your death, the total value of your Defined Contribution (DC) plan entitlement would be paid in cash to your estate.

  • Your eligible surviving spouse may transfer the benefit tax-free to another retirement plan.

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How do I change my beneficiary?
  • To change your beneficiary, contact Morneau Shepell at 1-877-252-4442 between 8:30 a.m. and 5:30 p.m. (ET).

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