Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Accrual Rate: The rate at which pension benefits are earned each year with credited service in a defined benefit plan.

Accrued Pension: The pension benefit credited to a Plan member based on their credited service and contributory earnings up to a given date.

Actuarial Assumptions: Predictions about the future made by the actuary to determine the contributions required to fund the benefit payable in respect of a period of credited service.

Actuarial Valuation : A mathematical analysis of the financial condition of the pension plan. The purpose of the valuation is to determine the financial status of the pension plan and, in certain situations, the future contribution rates needed to ensure its long-term funding. The amount of money required to pay future pension benefits is determined based on certain assumptions about future investment returns, future inflation rates, future salary increases, retirement ages, life expectancy and other factors.

Actuarially Reduced Pension: A pension that is actuarially reduced because it is payable earlier. The actuarially reduced pension is equal in value to the non-reduced pension payable at a later date.

Actuary: The Plan's actuary is responsible for determining solvency and contribution requirements of the Plan. In Canada, full professional recognition requires membership in the Canadian Institute of Actuaries.

Ancillary Benefits: Benefits in addition to regular pension benefits and survivor benefits, such as bridge benefits and enriched early retirement benefits.

Annual Pension Statement: The Pension Benefits Act, 1992 (PBA) requires that all active members receive an annual statement representing accruals to the end of the prior calendar year. SHEPP provides an enhanced statement including normal and early retirement pension projection estimates.

Asset Mix: Refers to the proportions of various types of investments held by the Fund, expressed as a percentage of total investments held in bonds, stocks, real estate, etc.

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B

Beneficiary: A person who may become entitled to a benefit under the Plan on the death of a Plan member or former member.

Benefit: A pension or any other benefit pursuant to the Plan, including the return of contributions.

Benefit Formula: Provision in the Plan for calculating a member's pension benefit according to years of credited service and contributory earnings.

Bridge Benefit: A temporary monthly payment designed to supplement a member's basic lifetime pension until age 65 when other sources of retirement income normally become available.

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C

Canada Pension Plan (CPP): A mandatory earnings-related pension plan implemented January 1, 1966, to provide basic retirement income to Canadians.

Canada Revenue Agency (CRA): Administers the Income Tax Act for the government of Canada and most provinces.

Commuted Value: The amount of a lump sum payment today that is estimated to be equal in value to future pension payments.

Continuous Service: This is the most recent uninterrupted period of employment with one or more SHEPP participating employers.

Contributory Earnings: The earnings a member receives from an employer on which SHEPP contributions were made. They are calculated by dividing contributions made in a calendar year by the applicable contribution rate.

Credited Service: Service that is credited under SHEPP for the purpose of determining both eligibility for, and the amount of, a member's benefits. Each month that a member makes contributions to SHEPP counts as one month of credited service. Credited service includes service credited during a period of approved-disability, service transferred to SHEPP from another pension plan, or service that is purchased. In order for a month to be credited you must work a minimum of three hours during the calendar month.

Current Service Cost: The current cost of providing future benefits to members, excluding any special payments. This amount is estimated by an actuary on the basis of a going-concern valuation, determined in accordance with the same methods and assumptions that are used to determine going-concern liabilities.

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D

Deferred Pension: A specified pension determined at the time of termination of employment, but not payable until a later date.

Defined Benefit Plan: A pension plan that defines the pension benefit to be provided (based on service and earnings), but contributions are variable. SHEPP is a defined benefit plan.

Defined Contribution Plan: A plan under which the amount of the employer contribution per plan member and, where applicable, the amount of the employee contribution is specified in advance. The benefits to be received by the pensioner are calculated at the date of retirement based on the accumulated contributions and the return on the investment of the contributions. SHEPP is NOT a defined contribution plan.

Discount Rate: The rate used to calculate the present value of future cash flows.

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E

Early Retirement - Reduced: The date which an active plan member reaches age 55 and has at least two years of service. A reduction is applied to a member's basic lifetime pension.

Early Retirement - Unreduced (Rule of 80): The date which an active plan member's age when added to credited service totals 80 years. A member who reaches their unreduced early retirement date is eligible to receive the basic lifetime pension benefit plus the bridge benefit to age 65.

Eligible Prior Service: Service that a member may voluntarily elect to purchase under SHEPP to increase credited service. Eligible prior service is restricted to service with a SHEPP participating employer, predecessor employer or related employer, which is not currently credited under any registered pension plan.

Excess Member Contributions: The positive amount by which a terminated SHEPP member's accumulated required contributions, plus interest exceeds 50% of the commuted value of the member's accrued pension on date of termination.

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F

Former Member: A person whose membership in the Plan has terminated and who retains a present or future entitlement to a benefit pursuant to the Plan.

Funding: The allocation of pension plan assets toward the fulfillment of the pension promised.

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G

Going-Concern Actuarial Valuation: An actuarial valuation prepared to determine the required contributions that must be paid into the Plan and to determine if the present assets are sufficient to cover the current accrued liabilities, calculated on the basis that the Plan remains a going-concern indefinitely into the future.

Going-Concern Assets: The value of the assets of the Plan as of the review date, determined on the basis of a going-concern valuation.

Going-Concern Liabilities: The present value, determined in accordance with accepted actuarial practice, of a plan's accrued benefits determined on the basis of a going-concern valuation.

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H

Highest Average Base Contributory Earnings (HABCE): The average of a member's contributory earnings up to the YMPE during the members five highest years of contributory earnings.

Highest Average Contributory Earnings (HACE): The average of the member's highest four years of contributory earnings.

Highest Average Excess Contributory Earnings (HAECE): The difference between the member's highest average contributory earnings (HACE) and their highest average base contributory earnings (HABCE).

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I

Investment Manager: A person or company hired to invest fund assets. This includes the discretion to select specific securities and instruments within the policies and goals set out by the SHEPP Trustees.

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J

Joint Life 100%: The pension is paid for your lifetime. Upon your death, 100% of your pension continues to your surviving spouse for the remainder of his or her lifetime.

Joint Life 100% - 10 year guarantee: The pension is paid for your lifetime. Upon your death, 100% of your pension continues to your surviving spouse for the remainder of his or her lifetime. 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.

Joint Life 100% - 15 year guarantee: The pension is paid for your lifetime. Upon your death, 100% of your pension continues to your surviving spouse for the remainder of his or her lifetime. 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.

Joint Life 100% - 5 year guarantee: The pension is paid for your lifetime. Upon your death, 100% of your pension continues to your surviving spouse for the remainder of his or her lifetime. 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.

Joint Life 60%: The pension is paid for your lifetime. Upon your death, 60% of your pension continues to your surviving spouse for the remainder of his or her lifetime.

Joint Life 60% - 10 year guarantee: The pension is paid for your lifetime. Upon your death, 60% of your pension continues to your surviving spouse for the remainder of his or her lifetime. If you die before the end of the 10 year guaranteed term, your surviving spouse receives an unreduced pension for the remainder of the guarantee term. At the end of the guaranteed term the pension reduces to 60% for the remainder of your spouse's life.

Joint Life 60% - 15 year guarantee: The pension is paid for your lifetime. Upon your death, 60% of your pension continues to your surviving spouse for the remainder of his or her lifetime. If you die before the end of the 15 year guaranteed term, your surviving spouse receives an unreduced pension for the remainder of the guarantee term. At the end of the guaranteed term the pension reduces to 60% for the remainder of your spouse's life.

Joint Life 60% - 5 year guarantee: The pension is paid for your lifetime. Upon your death, 60% of your pension continues to your surviving spouse for the remainder of his or her lifetime. If you die before the end of the 5 year guaranteed term, your surviving spouse receives an unreduced pension for the remainder of the guarantee term. At the end of the guaranteed term the pension reduces to 60% for the remainder of your spouse's life.

Joint Life 75%: The pension is paid for your lifetime. Upon your death, 75% of your pension continues to your surviving spouse for the remainder of his or her lifetime.

Joint Life 75% - 10 year guarantee: The pension is paid for your lifetime. Upon your death, 75% of your pension continues to your surviving spouse for the remainder of his or her lifetime. If you die before the end of the 10 year guaranteed term, your surviving spouse receives an unreduced pension for the remainder of the guarantee term. At the end of the guaranteed term the pension reduces to 75% for the remainder of your spouse's life.

Joint Life 75% - 15 year guarantee: The pension is paid for your lifetime. Upon your death, 75% of your pension continues to your surviving spouse for the remainder of his or her lifetime. If you die before the end of the 15 year guaranteed term, your surviving spouse receives an unreduced pension for the remainder of the guarantee term. At the end of the guaranteed term the pension reduces to 75% for the remainder of your spouse's life.

Joint Life 75% - 5 year guarantee: The pension is paid for your lifetime. Upon your death, 75% of your pension continues to your surviving spouse for the remainder of his or her lifetime. If you die before the end of the 5 year guaranteed term, your surviving spouse receives an unreduced pension for the remainder of the guarantee term. At the end of the guaranteed term the pension reduces to 75% for the remainder of your spouse's life.

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L

Latest Possible Retirement (Age 71): Members who work past the age of 65 must begin collecting their pension as of December 1 of the year in which they turn 71.

Locked-in Retirement Account (LIRA): An RRSP which holds money transferred from a pension plan and upon which certain contractual conditions have been placed. Funds transferred to a LIRA can be transferred to a Registered Retirement Income Fund (RRIF) or used to provide income any time after age 55.

Locked-in/Locking In: Legislative requirement that pension benefits cannot be withdrawn or otherwise forfeited on termination of employment if the employee is vested.

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M

Mortality Rate: Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in some population, scaled to the size of that population, per unit time.

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N

Normal Form of Pension: The terms by which the Plan's pension, based on the benefit formula, is payable on retirement. Under SHEPP, the normal form of pension is where payments are guaranteed for five years and the member's life thereafter.

Normal Retirement (Age 65): The age at which the member becomes entitled to retirement benefits without reduction or increase. SHEPP's normal retirement date is the first day of the month that coincides with or immediately follows your 65th birthday.

Normal Retirement Date: The date at which the member becomes entitled to retirement benefits without reduction or increase. SHEPP's normal retirement date is the first day of the month that coincides with or immediately follows your 65th birthday.

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O

Optional Form of Pension: The member at retirement will have other pension options to elect when they retire. Other forms include Joint Life 60%, 75% and 100% and guaranteed for 0, 5, 10 or 15 years. Optional forms of pension are the actuarial equivalent of normal form of pension.

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P

Participating Employer: An employer who has resolved to participate in the Plan in respect of eligible employees and is required to contribute to the Plan.

Past Service Pension Adjustment(PSPA): Used to reduce the member's RRSP room to take into account changes in past service. Arises when a member purchases post-1989 prior service under SHEPP or transfers post-1989 services to SHEPP from another pension plan.

Pension: Generally any periodic payment payable for the lifetime of a person who has become entitled to such a benefit pursuant to the terms of a pension plan.

Pension Adjustment (PA): Used to reduce the member's RRSP contribution room to take into account the value of the pension earned in the current year.

Pension Adjustment Reversal (PAR): Used to restore a member's RRSP contribution room where the member's post-1989 service termination benefit is less in value than the member's PA plus PSPA.

Pension Benefits Act (PBA): Saskatchewan's legislation regulating employment pension plans.

Pension Benefits Regulations: The regulations are the working document of the Pension Benefits Act.

Pension Factors: Pension factors used in the calculation of pension benefits include existing Plan rules, tax rules and the established Canada Pension Plan Year's Maximum Pensionable Earnings (YMPE).

Pension Plan: A plan, scheme or arrangement organized and administered to provide pensions for members and former members pursuant to which an employer is required to make contributions.

Pensionable Earnings: The regular earnings you receive from your employer while an active Plan member that are used to determine your required contributions. They include straight time pay, statutory holiday pay, vacation pay, sick pay and the pensionable earnings portion of retroactive pay in the year in which it is paid. Pensionable earnings do not include premium pay, such as overtime pay, shift premiums or bonuses.

Plan Text: A legal document that describes the terms and conditions of the Plan.

Portability: The right of an employee who terminates before retirement to transfer his or her pension entitlement to another pension plan, to a locked-in RRSP or other prescribed retirement savings arrangement.

Post Retirement Survivor Benefit: A benefit payable from the Plan on the death of a pensioner. The benefit payable depends upon the form of pension chosen by the member on retirement.

Pre-Retirement Death Benefit: An amount payable from SHEPP on the death of a member who passes away prior to retirement. The benefit is equal to the commuted value of the pension accrued by the member to date of death.

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R

Registered Retirement Savings Plan (RRSP): A personal retirement savings plan as defined by the Income Tax Act.

Retirement Income: Income from a pension and other sources to which a retired person is entitled. This may include both private and public pension payments, income from personal savings, government income supplements and other sources of income.

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S

Single Life - 10 year guarantee: The pension is paid for your life, and if you die before the end of the guaranteed term of 10 years, the pension will continue to your beneficiary or estate until the guarantee expires.

Single Life - 15 year guarantee: The pension is paid for your life, and if you die before the end of the guaranteed term of 15 years, the pension will continue to your beneficiary or estate until the guarantee expires.

Single Life - 5 year guarantee: The pension is paid for your life, and if you die before the end of the guaranteed term of 5 years, the pension will continue to your beneficiary or estate until the guarantee expires.

Solvency Deficiency: Refers to a shortfall in the Plan's assets relative to its liabilities at a particular point in time assuming that the Plan was terminated at that point.

Solvency Ratio: The ratio of the market value of the Plan's assets to its liabilities as measured on a plan termination basis.

Solvency Valuation: An actuarial valuation performed to determine the financial status of the Plan in the event it was wound-up on the valuation date.

Spouse: A person to whom the member is legally married at the relevant time. If the member is not married, then a person to whom the member has been cohabiting with as a spouse for at least one year prior to the relevant time. The relevant time means "at date of death" with respect to the pre-retirement survivor benefit and "at date of retirement" with respect to the post-retirement survivor benefit. A person who first becomes a member's spouse after the member's pension commencement date is not and cannot be considered that member's spouse for the purposes of this Plan. If the member's spouse no longer has claim or entitlement to a benefit pursuant to a court order or a written interspousal contract, that spouse cannot be considered a spouse for any purpose of this Plan.

Surplus: If the Plan's assets exceed the Plan's liabilities, the difference is called a surplus.

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T

Termination of Membership or Employment: Severance of the employment relationship for any reason other than death and retirement.

Transfer Deficiency Holdback: The percentage that is held back from certain termination benefits. The holdback is based on the Plan's solvency ratio at a given point in time.

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U

Unfunded Liability: Any amount by which the assets of the Plan are less than its liabilities on a going-concern basis.

Unreduced Early Retirement Date: The date which an active plan member's age when added to credited service totals 80 years. A member who reaches their unreduced early retirement date is eligible to receive the basic lifetime pension benefit plus the bridge benefit to age 65.

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V

Vested Benefits (Vesting): Benefits to which an employee has unconditional entitlement under the Plan as a result of satisfying age or service requirements. Vesting with SHEPP occurs after two years of continuous employment or upon the credit of two years of service, whichever occurs first.

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Y

YMPE (Year's Maximum Pensionable Earnings): Term used in the Canada Pension Plan which refers to the earnings from employment on which CPP contributions and benefits are calculated. YMPE is changed each year according to a formula based on average wage levels. YMPE is published annually by Human Resources and Social Development Canada's Income Security Division.

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