Pension and Benefits – FAQ & Glossary

Actuary: A business professional who applies their knowledge of mathematics, probability, statistics and risk theory to real-life financial problems involving future uncertainty.

Beneficiary: An individual, institution, trustee or estate that receives, or may become eligible to receive, benefits under a will, insurance policy, retirement plan, annuity, trust or other contract.

Commuted value: Commuted value (CV), also known as ‘cash value’ or ‘transfer value’, is the estimated amount of money needed today to provide a specific amount of monthly lifetime pension beginning at an assumed retirement date (typically age 65). The calculation is done by an actuary and is based on prescribed assumptions and methods. The commuted value will depend on your age and applicable interest rates at the date of calculation.

Deferred pension: When you leave before age 55 and choose to leave your earned benefits in the plan, this is referred to as a deferred pension. You can start taking your pension benefits any time after you reach age 55, subject to early retirement reductions (where applicable).

Defined Benefit Pension Plan: A plan that defines the pension to be provided (based on service, average earnings, etc.) but not the total contributions. If a plan is contributory, employees must contribute to the plan at a specified rate, with the employer paying the balance of the cost. The PCC has a Defined Benefit Pension Plan.

Defined Contribution Pension Plan: A plan that defines contributions to be made by the employer and possibly employees, but not the benefit formula. Accumulated contributions and investment income are used to purchase an annuity for the member.

Employer: Your employer can refer to the Church, a Synod, a Presbytery, a congregation, or an organization directly under control of the Church – or any other authorized employer that contributes to the DB pension plan.

Excess contributions: When you retire or leave the DB pension plan, the Church’s pension administrator will calculate whether the total contributions you made after 1986 (1984 in Manitoba), plus interest, is greater than 50% of your commuted value earned over the same period. Any excess contributions will be refunded to you with interest. Basically, the contributions you make to the plan cannot pay for more than 50% of the pension you earned for this period of service. These funds may also be transferred tax-free to an RRSP or taken as a taxable cash payment.

Going Concern: Measures the long-term financial condition of the plan; assumes the plan will continue indefinitely.

Income ratio: The ratio of your pensionable income to the maximum qualifying income. If your pensionable income is equal to or greater than the maximum qualifying income in a given year, your income ratio for that year is one. However, if your pensionable income is lower than the maximum qualifying income in a given year, your income ratio for that year is less than one.

Joint and Survivor (J&S) pension: The payment options available to you depend on whether you have a spouse when you retire. If you do have a spouse when you retire, your payment options include survivor benefits for your spouse. This is called a Joint and Survivor (J&S) pension.

Locked-in Retirement Income Account (LIRA): An LIRA is a registered retirement savings plan from which no withdrawals are allowed, as the funds must be used to provide an income at retirement or a death benefit for retirement. When you are ready to retire, you can transfer the money from your LIRA to a Life Income Fund (LIF) or use the money to buy an annuity.

Maximum Qualifying Income (MQI): Used to calculate the maximum pension and group insurance contributions. The MQI for each year is equal to 160% of the top level of the minimum stipend as established each year by General Assembly (rounded to the nearest multiple of $60).

Normal Retirement Date: The first day of the month following your 65th birthday.

Pension Adjustment (PA): While you don’t pay income tax on contributions made by you to the DB pension plan, the amount you’re allowed to contribute to an RRSP in the current year is reduced by a prescribed value of the pension you earned in the pension plan in the previous year. This prescribed value is the Pension Adjustment, or PA, which uses a formula established by the Canada Revenue Agency (CRA) and is reported on your T4.

Pensionable Income: Pensionable income is your stipend plus an allowance of 60% (in lieu of housing, utilities and other allowances) – or your salary (excluding your bonus or overtime payments, but including health and dental insurance payments) up to the maximum qualifying income. If you’re working part-time during any calendar year, your pensionable income will be equal to the pensionable income you would have received if you’d worked full time.

Pensionable Service: Pensionable service is the time in a given year where contributions are made to the plan (measured in complete months). If you’re working part-time during any calendar year, your pensionable service will be pro-rated based on your part-time percentage.

PfAD (Provision for adverse deviations): Amount required to be funded by Ontario pension legislation for the going concern valuation, in addition to the cost of pension benefits. The PfAD is determined as a percentage of liabilities and normal cost, and is dependent on certain criteria: asset allocation of the plan and whether a plan is open or closed (as defined by pension legislation)

Registered retirement savings plan: Contributions are made using your taxable income (up to the government limit), which can greatly reduce the amount of income tax you pay. Your RRSP savings grow in a tax-sheltered environment – and are only subject to income tax once you withdraw assets from the plan.

Small pension:  If your pension qualifies as a ‘small’ pension (approximately $238 or less per month in 2025; this depends on your province of employment and when you retire), the value of your DB pension will be paid to you as a single lump sum instead of monthly installments. You can take this money as a taxable cash payment or make a tax-free transfer to an RRSP.

Solvency Ratio: Ratio of solvency assets to solvency liabilities. For purposes of determining the solvency ratio, solvency liabilities may exclude the value of some ancillary benefits, such as indexation.

Solvency: Measures the financial position of the plan if it were to wind-up on the valuation date.

Special Payments: Payments required to be made to a pension fund in accordance with pension legislation to eliminate deficits in accordance with the going concern or solvency valuations.

Valuation: An actuarial examination of a pension plan to determine whether contributions are being accumulated at a rate sufficient to provide the funds out of which the promised pensions can be paid when due.

Vesting: When you’re vested, this means you ‘own’ the benefit. It’s yours to take with you – as long as that’s within the allowable plan rules – if you leave. Vesting status is determined by pension legislation, which may include the length of time you’ve been a plan member.

Wind-up: The termination or discontinuance of a pension plan. The wind-up of a pension plan stops the accrual of benefits and requires a disposal of all plan assets and liabilities.