Understanding Your Pension Plan
What is a defined benefit pension plan?
SHEPP is a defined benefit plan, which means your pension is determined by a formula based on your highest average contributory earnings and years of participation in the Plan, or credited service.
This means as your average contributory earnings and years of credited service grow, so does your pension.
Watch: Your SHEPP Pension Explained
How much are my contributions?
Two important concepts relating to contributions made into the Plan include:
- Pensionable Earnings; and
- Year’s Maximum Pensionable Earnings (YMPE). Visit the Government of Canada’s website to find the current YMPE.
| CONTRIBUTION RATES | UP TO THE YMPE | ABOVE THE YMPE |
|---|---|---|
| Member Rate | 7.30% of pensionable earnings | 10.40% of pensionable earnings |
| Employer Rate | 8.176% of pensionable earnings | 11.648% of pensionable earnings |
Member required contributions
As a member, you are required to make contributions through payroll deduction on pensionable earnings, which are essentially regular pay and do not include overtime. Your contributions lower your overall taxable income for the year, meaning you pay less tax on each paycheque with no extra effort on your part. You cannot make voluntary contributions over and above your required contributions, except to purchase service.
Employer required contributions
Your employer contributes 112% of what you contribute. So for every dollar you contribute toward your pension, your employer contributes $1.12.
What if I work for more than one SHEPP employer?
If you work for more than one SHEPP participating employer, you will join the Plan at all of the participating employers for whom you work. When you participate in the Plan either through sequential or concurrent employment with two or more employers, the Plan does not require employers to recognize the member’s pensionable earnings with any other employer when determining the member and participating employer contributions due to the Plan.
This means your total contributions to the Plan in a year may be less than they would have had you earned the same amount from just one employer. Your contributory earnings, used in SHEPP’s pension formula, are calculated based on the total contributions you’ve made to the Plan from all employers. Therefore, if you participate in the Plan with more than one participating employer or you change from one employer to another in a year, your contributory earnings in that year may be lower than the pensionable earnings in that year.
If the year in question is one of your highest average contributory earnings years, your SHEPP pension benefit may be impacted. For more information, please contact SHEPP.
When can I retire?
Retirement eligibility is determined based on your age and years of service. See Choosing a Retirement Date for more information.
How much will my pension be when I retire?
Your retirement benefit will be calculated based on your average contributory earnings and the credited service you’ve accumulated at retirement. See Understanding Your Retirement Benefit for more information.
Are there other Plan benefits?
Click on any of the links below to learn more about the following Plan benefits: