Choosing a Form of Pension


What are "forms" of pension?

Pensions come in different shapes and sizes called "forms." This means you can tailor your pension to meet your particular needs.

Choosing the form of your pension is one of the most important decisions you will make when retiring. Your decision is irrevocable once your pension payments have begun. That is, once you've elected an option and retired from employment, the Plan does not allow a change in the form of your pension. You may wish to speak with a financial planner or other retirement professional who can help you decide which form of pension is best for you.

At retirement, SHEPP will provide you with a retirement package that shows the amount of pension payable to you in the various forms of pension available under the Plan. The options available to you will depend on whether you have a spouse or not.

Single Life

If you do not have a spouse at retirement or your spouse has waived their right to your pension by signing the prescribed form, you will be required to choose a Single Life form of pension, of which there are three options:

  • Single Life pension guaranteed for 5 years;
  • Single Life pension guaranteed for 10 years; or
  • Single Life pension guaranteed for 15 years.

Under all three options, the pension is paid for your life, and if you die before the end of the guaranteed term, the pension will continue to your beneficiary or estate until the guarantee expires.

Joint Life

If you have a spouse on the date of retirement, unless your spouse waives their entitlement, you are required to elect a form of pension where no less than 60% of your pension is payable to your spouse for their life following your death. There are 12 Joint Life options:

  • Joint Life 60% survivor pension guaranteed for 0, 5, 10, 15 years;
  • Joint Life 75% survivor pension guaranteed for 0, 5, 10, 15 years;
  • Joint Life 100% survivor pension guaranteed for 0, 5, 10, 15 years.

Under all Joint Life options, your pension is paid for life. On your death, the percentage you select will continue to your surviving spouse for life. To this, you can add a guaranteed term of 5, 10, or 15 years. If you die before the end of the guaranteed term, your full pension will continue to your surviving spouse until the end of the term. When the guarantee expires, the pension reduces to the survivor percentage you selected at retirement.

If you and your spouse both die before the end of the guaranteed term, pension payments remain payable until the end of the guaranteed term. Settlement of the balance of the guaranteed pension payments is determined based upon whether you or your spouse dies last.

You must elect a form of pension by completing and returning the forms in your retirement package to SHEPP four to six weeks before your retirement date. Only your spouse on the date of your retirement is entitled to a Joint Life survivor pension. Your spouse may waive their entitlement by signing and submitting to SHEPP the Spouse's Waiver of 60% Post-Retirement Survivor Benefit form no more than 90 days prior to your retirement.

It is important to keep in mind that, in general, the longer the guarantee period, or the larger the survivor benefit you want for your spouse, the smaller your monthly pension payments will be. However, all forms of pension are calculated to be equal in value to the Single Life pension guaranteed for 5 years option.

To assist in your retirement planning, SHEPP offers a pension estimate calculator through SHEPPWeb that provides estimated pension amounts for each pension form. However, keep in mind that these are estimates only and actual pension amounts may vary. For help using this calculator, watch the How to Estimate Your Pension on the Video Tutorials page.

How does SHEPP define a spouse?

A spouse is:

  • a person to whom you are legally married at the relevant time; or
  • if you are not married, a person with whom you are cohabiting as spouses at the relevant time and who has been cohabiting continuously with you as your spouse for at least one year prior to the relevant time.

"Relevant time" refers to the date of death with respect to the pre-retirement death benefit, and the date of retirement with respect to the post-retirement survivor benefit.

If you have a spouse as defined above when you retire, you must choose at minimum the Joint Life 60% form of pension unless your spouse has waived their entitlement by signing the Spouse's Waiver of 60% Post-Retirement Survivor Benefit form.

If my spouse passes away and I remarry in retirement, will my new spouse receive the benefit when I die?

Only your spouse on date of retirement is entitled to Joint Life survivor benefits.

What if I want any benefit payable to go to my children when I die?

You may designate your children as beneficiaries. However, they would only receive a post-retirement survivor benefit if:

  • you are not survived by a spouse or your spouse has waived their entitlement; and
  • you elected a form of pension that included a guaranteed term and that guarantee has not yet expired.

When and how do I choose which form of pension I want?

You must elect a form of pension by completing and returning the form to SHEPP by the specified date.

At retirement, SHEPP will provide you with a retirement package that shows the amount of pension payable to you in the normal and optional forms of pension available under the Plan. In addition, SHEPP will provide the Spouse's Waiver of 60% Post-Retirement Survivor Benefit form.

 
MEMBER WITHOUT A SPOUSE (OR MEMBER WHOSE SPOUSE HAS SIGNED A WAIVER)
 
Single Life pension guaranteed for 5 years: Single Life pension guaranteed for 10 years: Single Life pension guaranteed for 15 years:
  • paid for your life;
  • guaranteed for 5 years;
  • paid for your life;
  • guaranteed for 10 years;
  • paid for your life;
  • guaranteed for 15 years;
 
MEMBER WITH A SPOUSE
 
Joint Life 60% guaranteed 0, 5, 10 or 15 years: Joint Life 75% guaranteed 0, 5, 10 or 15 years: Joint Life 100% guaranteed 0, 5, 10 or 15 years:
  • paid for your life;
  • on your death, 60% continues for your surviving spouse's lifetime;
  • if you die before the end of the guaranteed term you select, the pension continues to your surviving spouse until the end of the term; then it reduces to 60% for your surviving spouse's lifetime.
  • paid for your life;
  • on your death, 75% continues for your surviving spouse's lifetime;
  • if you die before the end of the guaranteed term you select, the pension continues to your surviving spouse until the end of the term; then it reduces to 75% for your surviving spouse's lifetime.
  • paid for your life;
  • on your death, 100% continues for your surviving spouse's lifetime;
  • If your spouse predeceases you, and you die before the end of the guaranteed term you select, your pension continues to your beneficiary until the guarantee expires.
  • If having survived you, your spouse dies before the end of the guaranteed term, the balance remaining on the guaranteed term of pension payments will be commuted and paid to your spouse's estate.