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. For more information refer to Maximising your Pension Benefit.

How do I join the Plan?

Permanent Employees
Membership is mandatory if you work as a permanent full-time or permanent part-time employee of a SHEPP participating employer. Your employer will enrol you in SHEPP and start to deduct contributions from your pay effective the first of the month coinciding with or immediately following your appointment to permanent full-time or permanent part-time employment. If you were hired before your employer joined SHEPP, membership is optional. You can choose to join on the first of any following month, but membership is not retroactive.

Non-Permanent Employees
If you are not a permanent full-time or permanent part-time employee, there are two ways to become eligible to join SHEPP:

  • by working at least 780 hours in the preceding calendar year; or
  • by working at least 700 hours in each of the two preceding calendar years.

Your employer will keep track of your hours and notify you if you become eligible to join SHEPP. Once eligible, you can choose to join on the first of any month in that calendar year. If you qualify while you are on a leave of absence, you have the option to enrol on the first day of any month following your return to work. If you don't join in that year, you'll have to qualify again to become eligible to join the Plan.

If you choose to join SHEPP, you may also choose to purchase the eligible prior service you had accumulated during the qualifying period in order to increase your credited service. All else being equal, by increasing your credited service you will increase your pension and qualify for early retirement (Rule of 80) sooner. Refer to Purchasing Credited Service for more information.

How much are my contributions?

Two important concepts relating to contributions made into the Plan include:

CONTRIBUTION RATES UP TO THE YMPE ABOVE THE YMPE
Member Rate 8.1% of pensionable earnings 10.7% of pensionable earnings
Employer Rate 9.07% of pensionable earnings 11.98% of pensionable earnings

Member Required Contributions

All of your contributions are made through payroll deduction and are tax exempt, so they reduce the amount of income tax deducted from your employment earnings. 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 may be required to 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 recognise 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 will I be eligible to retire under the Plan?

RETIREMENT DATES & BENEFITS AT A GLANCE
RETIREMENT DATE RETIREMENT BENEFIT
Normal Retirement
Age 65. Your accrued lifetime pension.
Early Retirement
Age plus credited service equals 80 or more years (Rule of 80). Your accrued lifetime pension, plus a bridge benefit to age 65.
Early Retirement (with a reduced pension)
Age 55 or older with at least 10 years of continuous service. Your accrued lifetime pension, subject to a 3% reduction for each year of early retirement.
Age 55 or older with between two and 10 years of continuous service. Your accrued lifetime pension, subject to an actuarial equivalent reduction.
Postponed Retirement
Between Age 65 to 71 Your accrued lifetime pension.

How much will my pension be?

Your retirement benefit will be calculated based on your average contributory earnings and the credited service you've accumulated at retirement. Because SHEPP is a defined benefit plan that uses a formula to calculate your pension, you can estimate your future benefit based on expected earnings and service.

  • Find a pension estimate on your Annual Pension Statement
    You will find a pension projection on your Annual Pension Statement which is mailed to you each spring. The Annual Pension Statement provides a snapshot of your pension benefits as of December 31 of the preceding year.
  • Use SHEPP's Online Pension Calculator to estimate your pension
    Log in to SHEPPWeb and use the online Pension Projection Calculator to estimate your future pension benefit. Using this calculator, you can perform unlimited pension projection calculations to help you determine when your milestone dates will occur and what your pension benefit would look like based on your expected earnings and service.

Get started with SHEPPWeb.

Are there other Plan Benefits?

Click on any of the links below to learn more about the following Plan benefits: