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A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

There are a number of words and phrases that have very specific meanings when used to describe the pension plan. Here's an explanation of those special terms, to help you understand the plan better.

A

     
  Annuity   An annuity is a regular monthly pension that you buy from an insurance company.
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B

 
  Balanced Fund  

An investment fund that “balances” its portfolio by including bonds, stock and cash in varying proportions, depending on the fund’s investment outlook.

 
  Beneficiary  

In all provinces and territories, pension laws require that your spouse, if you have one, receive survivor benefits in the event of your death.

If you have a spouse, you can still designate a beneficiary. This "non-spouse" beneficiary would receive your pension benefits if your spouse dies before you.

In certain provinces, your spouse may sign a form waiving survivor benefits payable in the event of your death before retirement. If your spouse signs a spousal waiver, then your beneficiary would receive the survivor benefits in the event of your death before retirement.

If you don't have a spouse, your beneficiary receives survivor benefits when you die.

You can designate any beneficiary: individuals or organizations.

If you do not designate a beneficiary, survivor benefits will be paid to your estate.

You may name a minor child as your beneficiary. However, the plan cannot pay survivor benefits directly to a minor, because minors can't legally sign a release. You may wish to appoint a guardian or trustee to receive the survivor benefit and handle the child's affairs until he or she reaches the age of majority. In Québec, however, the court will appoint a tutor for the child after your death; any trustee appointment made during your lifetime will merely record your wishes.

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  Bond  

A debt instrument that obligates the issuer to pay the bond holder a specified sum of money, usually at specific interval, and repay the principal amount of the loan at maturity.

       
  Book Value  

The actual cost of an asset recorded at the time of purchase.

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C

 
  Canada Revenue Agency (CRA)  

The government branch responsible for promoting and enforcing compliance with Canada ’s tax, trade and border legislation and regulations.

   
  Canada/Quebec Pension Plan (CPP/QPP)  

A government–sponsored plan that provides retirement benefits for working Canadians, whether they are employees or self-employed. The amount of the benefit depends on how long you have been contributing, your income level and when you start to take the benefits.

   
  Capital Gain  

The profit that results when an asset is sold for more than its purchase price.

   
  Capital Loss:  

The loss that results when an asset is sold for less than its purchase price.

   
  Consumer Price Index:  

A statistical measure of inflation that documents the change in the cost of living for consumers to illustrate the extent that prices have risen.

   
  Contribution Limit:  

This is the total amount you can contribute to a registered plan for which you can receive a tax deduction. For RSPs the Canada Revenue Agency communicates your allowable contribution limit on the Notice of Assessment you receive after your tax return is processed each year.

 

D

 
 
  Defined Benefit Pension Plan   A registered pension that promises an employee a specific benefit upon retirement, usually based on earnings and years of service. Typically, a member’s benefit calculation involves a combination of number of years’ membership, salary and actual retirement date.
 
  Distributions   A fund’s payments to investors from its income and/or profits realized from the sale of securities. Distributions may be made monthly, quarterly or annually.
 
  Diversification   Investing in a number of different securities, companies, industries or geographic location to attempt to reduce the risks inherent in investing.
 

E

 
  Earnings   For the purposes of the plan, your earnings are made up of your basic pay and do not include bonuses, shift premiums, or overtime pay.
 
  Equities  

The common or preferred shares of a corporation, which represent the investor’s ownership in the corporation, also called stocks.

 
  Equity Fund   An investment fund in which the portfolio consists primarily of common and preferred stocks, also known as a stock fund.
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F

 
  Fixed Income Securities  

Investments, including bonds and debentures issued by federal, provincial and municipal governments and corporations, as well as mortgages, that pay a regular interest income at a fixed rate over varying terms to maturity.

 
  Forfeiture account   The account containing funds to which members are not eligible because of termination of employment or death before the vesting date.
 
  Foreign Content   According to Canada Revenue Agency (formerly Revenue Canada) regulations, there are no limits on foreign investments.
 
  Fund Manager  

The fund manager oversees the investment selection and management of the fund.

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G

 
  Guaranteed Investment Certificate (GIC)  

An investment instrument that guarantees the principal amount and pays a predetermined rate of interest for a specified term, from one to 10 years.

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H

 
  Homebuyer’s Plan  

If you qualify, you may make a tax-free withdrawal from your RSP to purchase a home. A portion of your withdrawal must be repaid each year, usually over a period of 15 years. Otherwise, that year’s repayment becomes taxable as income.

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I

 
  Income Fund  

An investment fund that invests primarily in fixed income securities such as bonds, mortgages and preferred shares. The objective is to produce income for investors while preserving capital.

 
  Index Fund   An investment fund that matches its portfolio to a specific financial market index, with the objective of duplicating the general performance of that index.
 
  Interest:   The amount of money you earn from a borrower in exchange for a specified amount of money.
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L

 
  Lifelong Learning Plan  

If you qualify, you may make a tax-free withdrawal from your RSP to further your education. A portion of your withdrawal must be repaid each year, usually over a period of 10 years. Otherwise, that year’s repayment becomes taxable as income.

 
  Locked-in  

Your benefits are locked-in once they are vested. When 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 can never make lump-sum cash withdrawals when benefits are locked-in.

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M

 
  Management Fee  

The money paid to the investment company for supervising a portfolio and administering its operations. This fee is component of the Management Expense Ratio.

 
  Market Value  

The price an investment might be expected to bring if offered for sale in a fair market.

 
  Mutual Fund  

A pool of money contributed by many individuals and invested by professional investment managers.

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O

 
  Old Age Security (OAS)  

A government income benefit that is based on age and how long you have lived in Canada . The program has three parts:
1) The OAS pension
2) The Guaranteed Income Supplement (GIS)
3) Allowance
4) Allowance for the Survivor
To receive the full OAS benefit you must have lived in Canada for 10 years prior to your application. However, there is a “clawback” which means that if your income exceeds a certain limit each year, your OAS pension will be reduced accordingly. The GIS is a monthly benefit paid to people who receive OAS, but have little or no other income.The Allowance and Allowance for the Survivor are paid to the spouse of someone receiving OAS who is between ages 60 and 64 and whose family income does not exceed certain limits.

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P

 
  Pension Plan  

A formal arrangement through which the employer, and in most cases the employee, contributes to a fund to provide the employee with an income after retirement.

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R

 
  Rate of Return  

The level of earning attained from an investment over a period of time. Generally speaking, it is the amount of an investment’s payments (dividends, interest, etc, which may be reinvested) and its changes in market value (if applicable) expressed as a percentage of your original capital investment.

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S

 
  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, as outlined below:

Alberta
The legislation uses "pension partner" in lieu of "spouse." "Pension partner" means, in relation to another person,

  1. a person who, at the relevant time, was married to that other person and had not been living separate and apart from that other person for 3 or more consecutive years, or
  2. if there is no person to whom subclause (i) applies, a person who, immediately preceding the relevant time, had lived with that other person in a conjugal relationship
    1. for a continuous period of at least 3 years, or
    2. of some permanence, if there is a child of the relationship by birth or adoption.

British Columbia
"Spouse" means, in relation to another person,

  1. a person who at the relevant time was married to that other person, and who, if living separate and apart from that other person at the relevant time, did not live separate and apart from that other person for longer than the 2 year period immediately preceding the relevant time, or
  2. a person who was living and cohabiting with that other person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender, and who had been living and cohabiting in that relationship for a period of at least 2 years immediately preceding the relevant time.

Manitoba
"Spouse" where used in relation to another spouse means the person who married to that other spouse and "spouses" means two persons who are married to each other.

"Common-law partner" of a member or former member means

  1. a person who, with the member or former member, registered a common-law relationship under section 13.1 of The Vital Statistics Act,
    or
  2. a person who, not being married to the member or former member, cohabited with him or her in a conjugal relationship
    1. for a period of at least three years, if either of them is married, or
    2. for a period of at least one year, if neither of them is married

A common-law partner shall be considered to have survived a member or former member with whom he or she had a common-law relationship only if they were cohabiting with each other immediately before the death of the member or former member.

New Brunswick
"Spouse" means either of a man and a woman who

  1. are married to each other,
  2. are married to each other by a marriage that is voidable and has not been avoided by a declaration of nullity,
  3. have gone through a form of marriage with each other in good faith that is void and have cohabited within the preceding year, or
  4. not being married to each other, have cohabited
    1. continuously for a period of not less than three years in a conjugal relationship in which one person has been substantially dependent upon the other for support, or
    2. in a relationship of some permanence where there is a child born of whom they are the natural parents, and have cohabited within the preceding year.

Newfoundland and Labrador:
"Spouse" means a person who:

  1. is married to the member or former member,
  2. is married to the member or the former member by a marriage that is voidable and has not been voided by a judgment of nullity, or
  3. has gone through a form of a marriage with the member or former member, in good faith, that is void and is cohabiting or has cohabited with the member or former member within the preceding year.

"Cohabiting partner",

  1. in relation to a member or former member who has a spouse, means a person who is not the spouse of the member or former member who has cohabited continuously with the member or former member in a conjugal relationship for not less than 3 years, or
  2. in relation to a member or former member who does not have a spouse, means a person who has cohabited continuously with the member or former member in a conjugal relationship for not less than one year,
    and is cohabiting or has cohabited with the member or former member within the preceding year.

Nova Scotia
"Spouse or a common-law partner" means either   of a man and woman who

  1. are married to each other,
  2. are married to each other by a marriage that is voidable and has not been annulled by a declaration of nullity, or
  3. have gone through a form of marriage with each other, in good faith, that is void and are cohabiting or, if they have ceased to cohabit, have cohabited within the twelve-month period immediately preceding the date of entitlement.

Yukon Territories, Northwest Territories, and Nunavut:
The federal pension legislation applies to these jurisdictions.
"Spouse",in relation to an individual, includes a person who is party to a void marriage with the individual.

"Common-law partner", in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year. Where a member or former member has a spouse from whom they are separated and a common-law partner with whom they are cohabiting, a reference to a "spouse or common-law partner" in respect of that member or former member means the common-law partner.

Ontario
"Spouse" means either of two persons who,

  1. are married to each other, or
  2. are not married to each other and are living together in a conjugal relationship,
    1. continuously for a period of not less than three years, or
    2. in a relationship of some permanence, if they are the natural or adoptive parents of a child, both as defined in the Family Law Act".

Prince Edward Island:
Prince Edward Island has not enacted pension legislation. The Canadian Blood Services Defined Benefit Pension Plan states:
"Spouse", in relation to a Prince Edward Island Member, means persons who, at the relevant time:

  1. are married to each other;
  2. are married to each other by a marriage that is voidable and has not been annulled by a declaration of nullity;
  3. have gone through a form of marriage with each other, in good faith that is void and are cohabiting or, if they have ceased to cohabit, have cohabited within the year preceding the relevant time; or
  4. not being married to each other and neither being married to another person have lived together in a conjugal relationship for three years and are living together at the relevant time.

Quebec
The spouse of a member is the person who,

  1. is married to or in a civil union with the member;
  2. has been living in a conjugal relationship with a member who is neither married nor in a civil union, whether the person is of the opposite or the same sex, for a period of not less than three years, or for a period of not less than one year if
    • at least one child is born, or to be born, of their union;
    • they have adopted, jointly, at least one child while living together in a conjugal relationship; or
    • one of them has adopted at least one child who is the child of the other, while living together in a conjugal relationship.

Saskatchewan
"Spouse" means

  1. a person who is married to a member or former member; or
  2. if a member or former member is not married, a person with whom the member or former member is cohabiting as spouses at the relevant time and who has been cohabiting continuously with the member or former member as his or her spouse for at least one year prior to the relevant time.
 
  Stock  

The common or preferred shares of a corporation which represent the investor’s ownership in the corporation; also called equities.

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V

     
  When you become vested  
  • Vesting refers to your right to receive CBS's contributions from the Defined Contribution (DC) plan.

  • Your benefits are locked in once they are vested.

  • Generally, your benefits are vested once you've been a plan member at least two years. In certain provinces, another date applies related to continuous service (unbroken employment in Canada with CBS and the Canadian Red Cross Society, including approved periods of leave of absence and disability).

If you work in...Your pension benefits are vested as soon as.
New Brunswick
  • you have 2 years of plan membership, or
  • you have 5 years of continuous service whichever occurs first
Manitoba or Saskatchewan
  • you have 2 years of plan membership, or
  • you have 2 years of continuous service whichever occurs first
Any other province
  • you have 2 years of plan membership

Benefits for all employees who were members of the Canadian Red Cross Pension Plan on November 1, 1997 were immediately vested on joining the CBS Defined Contribution (DC) plan.

What happens to your account when you retire

  • When you retire, you can use the money in your retirement account (remember, this amount includes your required and optional contributions, and those that CBS has made on your behalf, along with the income they've earned while you've been in the plan) to buy an annuity from an insurance company, which will begin no later than December 31st of the year you reach age 71.
  • Alternatively, you can choose a lump-sum transfer to a locked-in RRSP, another registered pension plan, or another approved retirement savings arrangement. This latter option, in most jurisdictions, allows you to receive a regular income but doesn't lock in the capital involved. This means you have the option of purchasing an annuity at a later date.
  • To increase flexibility and benefit from good annuity rates, you can choose to buy the annuity up to two years ahead of the date you actually retire. Remember, the amount of annuity you are able to buy depends greatly on the interest rates in effect when you purchase the annuity. In addition, you should consult a number of sources in the insurance industry to determine the best annuity quotation for the funds you have at your disposal.
  • If you have a spouse when your annuity starts, it must be paid in a form that - if you die - provides at least 60% of the amount of pension you were receiving before death to your eligible surviving spouse. (If you work in Manitoba, under current pension law, the annuity must be adjusted to provide a 66°% pension to your eligible surviving spouse.)
  • If you have a spouse and wish to choose a different form of annuity, you and your spouse must both sign a form waiving this automatic pension.
  • When you retire, Head Office will inform you if you are eligible for any post-retirement insurance benefits.
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Y

     
  YMPE   YMPE stands for Year's Maximum Pensionable Earnings. This is the amount the government sets each year, and uses to base your contributions and those of CBS to-as well as benefits from-the Canada or Québec Pension Plan. The government revises this amount every year, based on increases in the Average Industrial Wage in Canada.
 

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