An extension to your UBC Faculty Pension Plan (FPP), the Supplemental Arrangement has been in effect since December 1992. Although the plan is not registered, investment earnings in the plan accumulate on a tax-sheltered basis.
Membership
Membership is automatic once the total required contributions to the FPP have reached the maximum annual amount allowed under the Federal Income Tax Act. See the Canada Revenue Agency website for annual contribution limits.
Contributions
Once the annual contribution limit has been reached, required employee contributions will continue to the FPP and excess University contributions will be redirected to the Supplemental Arrangement. Contributions to the Supplemental Arrangement are not reported on tax slips. Members therefore maximize their registered pension plan contribution to the FPP.
Beneficiaries
Funds held in the Supplemental Arrangement are not covered by the British Columbia Pension Benefits Standards Act and spousal waivers are not required for members who wish to designate someone other than their spouse as their beneficiary(ies). Although beneficiaries are designated upon enrolment, members can make changes at any time by completing a Change of Records Form. This designation is separate and apart from your beneficiary designation under the FPP.
By completing a Change of Records Form, all previous beneficiary designations will be revoked. Therefore, all sections relating to beneficiary designations must be completed.
To confirm the change, your beneficiary information is available by signing into mysunlife.ca/ubcfpp. Under Investments, select Manage Plan > my Plan > Check on Account > View accounts > Click on your account number beside UBC Supplemental Arrangement > Make a change > Manage beneficiaries. Your quarterly statement of account also confirms your beneficiary information.
Investment
The Supplemental Arrangement funds are invested in the BlackRock Balanced Moderate Index DC Fund as of October 31, 2012. Investment fees and administration expenses are deducted from member account balances.
To estimate your annual Supplemental Arrangement contribution amounts, input your salary details into the Contributions Estimator, or sign in to your account at mysunlife.ca/ubcfpp (under Investments, select Manage Plan > my plan > Put money in > Contribute.
To estimate your future Supplemental Arrangement account balance, access the Retirement Income Estimator by signing in to your account at mysunlife.ca/ubcfpp, then under Investments, select Manage Plan > my plan > Tools > Retirement Income Estimator.
Note that the actual Supplemental Arrangement balance will differ based on the contributions credited to your account, future investment returns, payment commencement age, and the actuarial assumptions used. In addition to salary changes, contributions are affected by Canada Pension Plan contributions and maximums set by the Income Tax Act, both of which are assumed to increase at the rate of 3% annually.
Retirement Benefits
As the Supplemental Arrangement is not registered, the funds cannot be transferred to registered retirement vehicles such as an RRSP, RRIF, LIF or life annuity.
Upon retirement, three options are available:
- Lump sum payment of the full amount,
- Defer receipt of your funds until the month following your 71st birthday, or
- If you are over age 55, annual installments over a period of up to 15 years. Each year’s installment will be a fraction of the amount of your account balance in that year (i.e. year one payment will be 1/15th of your balance; year two payment will be 1/14th of your balance, etc.)
Payment amounts will vary based on the payment schedule chosen and fund returns. Note that your election cannot be changed once you have received your first payment.
To receive benefits following termination of employment, complete the Application for retirement/termination benefits – Supplemental Arrangement form and Direct deposit enrolment form (Canadian banks only) and submit the forms to the Pension Administration Office.
If you do not have a bank account at a Canadian financial institution, you may elect to have your payments wired to your financial institution. Enrol or update your banking information by completing the Sun Life Request for benefit payment by wire form. Please note: Your receiving financial institution may charge a fee to accept wire transfers.
Default: Members who fail to return the Application for retirement/termination benefits – Supplemental Arrangement form will receive 15 annual instalments commencing on the first of the month following their 71st birthday. However, if the balance is less than $500, the full amount will be paid in a lump sum.
Terminations Benefits
If you leave UBC prior to reaching retirement age, you have the same options as retiring members (see above).
There is no minimum age to receive a lump sum cash payment, however, annual cash instalments cannot start until the age of 55.
Taxes
Contributions and investment earnings are accumulated on a tax-sheltered basis and should not be included on income tax and benefit returns. Cash benefits are taxed, on both contributions and earnings, as regular income.
Cash payments are considered taxable income in the year that they are withdrawn. Tax will be deducted on any cash payment and will be withheld at source.
For Canadian residents, the withholding tax rate is between 10% and 30%. In Quebec, the rate is between 5% and 15% plus provincial withholding tax.
| If you withdraw: | Withholding tax rate (except Quebec) | Withholding tax rate in Quebec |
| Up to $5,000 | 10% | 5% |
| Between $5,001 and $15,000 | 20% | 10% |
| More than $15,000 | 30% | 15% |
If you are not residing in Canada at the time of payment, tax will be withheld at a fixed rate of 25%.
The above rates are set by the Canada Revenue Agency. These rates do not represent the actual tax that may be owed by an individual plan member. Taxes owing is determined by the plan member’s personal tax rate when filing his or her tax return for the year in which the benefit payment(s) is received.
Death Benefits
In the event of your death while you are still employed at UBC or before electing a payment option, your beneficiary(ies) will have the same options as retiring or terminating employees.
If you have already selected a payment option, payments to the beneficiary(ies) will continue under the terms you have chosen.
Administration
Sun Life has been retained to administer the Supplemental Arrangement accounts, apply investment earnings (losses), deduct investment fees and administration expenses, produce quarterly statements and pay benefits to the members or beneficiary(s) according to the provisions of the arrangement.
The funds in the Supplemental Arrangement are the general liability of the University and are subject to the general creditors of the University. The University invests the funds, and remains the sole legal and beneficial owner of the assets.
The Board of Governors of the University is responsible for the administration of the Supplemental Arrangement.