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Defined Benefit Pension Plan | Defined Contribution Pension Plan

Defined Contribution Component of the LCC Pension Plan

The Defined Contribution Pension Plan (DC) is a type of plan that provides you with a retirement account in your name to which contributions are made based on your earnings. You control the investment of your account and you assume the investment risk (gains and losses). You choose where to invest your money from a number of professionally managed investment funds with a range of risk and reward potentials. The money that has accumulated in your account when you retire is transferred out of the plan to a retirement vehicle from which you will be able to draw an income. Retirement vehicles include an annuity (a monthly pension), or a Life Income Fund. The amount in your DC Account will depend on how well your investment funds performed, and how much you contribute over your working lifetime.

Member hired after December 31, 2012 are enrolled as members of the DC plan. All DB members became DC Plan members effective January 1, 2013 except members age 55 or older whose age and service equals 80 points as of December 31, 2012. In this latter situation, members continued their membership in the DB component and continue to earn future DB service. Participation in the DC Plan is voluntary for members of the DB Plan and provides an opportunity for members to supplement their DB pension. DB members can join the DC Plan during the annual open enrolment period.

Summary of Benefits

If you are newly hired after December 31, 2012 or if you are transferred into the DC Plan effective January 1, 2013 you will receive an employer contribution of 6% of your pensionable earnings to your DC account. You are required to contribute 4% of your pensionable earnings.
Both DB and DC members can make Optional Contributions up to 4% of pensionable earnings. DB members who are high income earners may be limited as to what they can contribute under the Income Tax Act. You are given the choice to participate or to change your level of optional contributions every year during the 2 week FlexBenefit enrolment period in November.
You can add to your DC account by allocating excess FlexBenefit credits left over after making your FlexBenefit choices during the annual re-enrolment. Flex Credits directed to your DC Account are on a pre-tax basis.
You choose how both your contributions and the employer contributions are invested from a variety of investment options, offering various ranges of risk and return potential.
At retirement, the accumulated money in your account can be used to buy an annuity, or can be transferred to a locked-in retirement vehicle such as Locked-in Retirement Account (LIRA) or a Life Income Fund (LIF).
If you leave before retirement, you have the option of transferring your funds to a Locked-in Retirement Account (LIRA) or to another registered pension plan, if that plan permits it or you can transfer your funds to an insurance company to buy an annuity.
In most provinces vesting is immediate (in some provinces it is after two years of credited service). This means you own not only your own contributions but also the employer contributions. Benefits are also locked in immediately in most provinces (required to be ultimately used to provide a retirement income).

Where is the Money and Who Manages it?

As our custodian and record keeper, Sun Life Financial, holds your DC Account and is responsible for the day-to-day management and administration of member accounts. They are responsible for keeping your account record, acting on your investment instructions, distributing investment returns to your account etc. You may get further information on your funds, change the investment directions of current contributions, or move past contributions into different funds, at any time by contacting Sun Life.

The investment options are managed by professional fund managers who are selected by the Board of Managers. They invest your DC account in various asset classes such as bonds, Canadian equity etc. Fund managers are selected from the investment funds available from Sun Life Financial, based on a number of criteria such as investment approach, organizational strengths, historical performance and service capabilities.

The Board of Managers regularly monitors and reviews the performance of each investment fund manager and compares their performance to established benchmarks, other similar investment fund managers and the fund objectives.

Where Can I Find Information on My Investment Fund Choices?

Detailed information about your investment fund choices can be found by logging into your Sun Life account on the Sun Life website. You will need a personal access ID and password to access your account online or by phone. (If you don’t have an access ID or password, sign in to the website using your account number which can be found on your statement or your welcome letter, and select the “Register” link.)

What Are My Investment Choices?

You have a number of options when it comes to directing your DC Pension contributions and those made by your employer. You can choose your own mix of funds from the following categories:

Cash & equivalents - typically money market funds or guaranteed investments with low risk but low returns
Fixed income funds (or Bond funds) - typically invest in bonds issued by governments, companies and organizations. The value of bonds fluctuates as interest rates change
Canadian equity funds - invest primarily in stocks of Canadian companies
U.S. equity funds - invest primarily in stocks of American companies
International equity funds - invest primarily in companies within various developed markets (e.g. the United Kingdom and Japan)
Foreign/Global equity funds - invest in a combination of U.S. and International equities
Target Date funds - asset mixes that adjust automatically as you get closer to your target date (usually your retirement date).

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