Defined Benefit Pension Plan | Defined Contribution Pension Plan

Pension

The Lutheran Church–Canada Pension Plan (LCCPP) is an important part of your future retirement benefits along with government benefits and your own personal savings. Important changes are being made to the pension plan that will come into effective January 1, 2013 for existing employees and will affect new employees hired after January 1, 2012. These changes are described in the document titled “Important Changes to Your Lutheran Church Canada–Pension Plan.” The following is only a summary of your plan, for detailed information please see the LCC Pension Plan handbook.

There are two parts or components to your Pension Plan:

• Defined Benefit Pension Plan (DB) – Regular full-time and part-time employees (working 24 hours per week) are enrolled in the DB plan on the first of the month following their date of hire, if they are hired prior to January 1, 2012. All DB members will be transferred to the DC component of the pension plan effective January 1, 2013 except members age 55 or older whose age and service equals 85 points as of December 31, 2012. In this latter situation members will continue their membership in the DB and continue to earn future DB service.
• Defined Contribution Pension Plan (DC) – Regular full-time and part-time employees (working 24 hours per week) are enrolled in the DC plan on the first of the month following their date of hire, if they are hired after December 31, 2011. Employees hired after December 31, 2011 and those transferred into the plan January 1, 2013 will have employer contributions made into the plan on their behalf and they will be required to make contributions. Both DB and DC members can make optional contributions. There are two ways to contribute to this pension fund:
  1. DC – Payroll: These funds are submitted by payroll deduction as a percentage of your annual compensation.
  2. DC – Flex: These funds can be added to your DC account by allocating excess Flex Benefit credits left over when making choices during your annual Flex Benefit re-enrolment.

When Can I Retire?

Your normal retirement date is your 65th birthday. You may choose to postpone your retirement up to the end of the year in which you reach age 71. Under the DB plan you can retire as early as age 55 with a reduction to your pension income, provided you have completed at least two years of credited service. However, if you are age 62 and the total of your age plus credited service equals 85 or more at the time your employment terminates, you can retire without any reduction to your pension. Under the DC plan you can retire as early as age 55, however, the longer you remain employed and contributing to the DC, the greater the amount in your account from both the contributions and the effect of compounding investment returns in your account.

What Can I Expect from my Pension Plan?

Under the DB plan, your pension plan will provide a lifetime monthly pension based on a formula. Some factors which affect your monthly pension benefit are:

• Your age at retirement
• Your years of credited service
• Your best average earnings

Under the DC plan the amount in your plan will depend on how well your investment funds performed, and how much you contribute over your working lifetime. The money that has accumulated in your account at the time you retire is transferred out of the plan to a retirement vehicle from which you will be able to draw an income.

I’m Retiring!! – Now What?

Once you’ve made the decision to retire, complete the Application for Retirement Benefits form at least 3 months prior to your planned retirement date and forward it to the Worker Benefit Plan Office. After you submit your application, you will receive a statement outlining your benefits and options.