If you have earned five or more years of pensionable service in MEPP, you are considered vested in the Plan and entitled to a lifetime pension at retirement.
Should you leave your employer, MEPP will send you a Termination Statement outlining your options. You have 90 days to make a decision. If you do not respond within that time frame, your funds will remain with MEPP.
Time Sensitive Considerations
You have 30 days from the date you leave the Plan to apply to purchase a leave of absence. If you are already paying for a leave of absence, you have 90 days from the date you leave the Plan to complete that purchase.
If you intend to buy prior service, you must submit your application to do so before you leave the Plan. If you are already making prior service payments, you will have 90 days to complete your buyback purchase.
In either scenario, if you do not complete the purchase it will be prorated — only the amount of service you have paid for will be credited.
Should you re-join the Plan, any new pensionable service you earn will be added to your existing service, increasing your benefit.
Because you are vested in the Plan, with this option, you can begin collecting a MEPP pension once you reach 55 years of age and retire, or you can continue to keep your funds secure in the Plan until you choose to withdraw them; either way, the contributions will continue to earn interest in the meantime. You must start your pension by December 31 of the year in which you turn 71 years of age.
Choosing this option does not prevent you from removing your funds later on, even if you turn 55 years of age in the meantime, so long as you do not re-join the Plan.
Once you are vested, the lump sum of your pension is known as a commuted value (CV). In most scenarios, to remove these funds from the Plan (and not transfer them to another plan) means the CV must be transferred to a Locked In Retirement Account (LIRA). A LIRA is a special type of registered retirement savings account designed to hold locked-in pension funds as retirement income.
Your commuted value transfer options are:
There are strict rules about how and when the funds within a LIRA can be accessed. Normally, money cannot be taken from a LIRA until the owner reaches age 50. Your banking institution will have more information, or you can read more about converting LIRA funds on the Government of Alberta website.
If you transfer your commuted value out of MEPP, you are no longer entitled to a lifetime MEPP pension. Once the transfer to the LIRA is made, you will not be able to change your mind.
If you have a CPS relationship between MEPP and the Public Service Pension Plan (PSPP), you can withdraw funds from one plan while leaving them in the other, so long as you are no longer active in either plan. However, this will affect your future pension benefit. Please contact us for more information.
Note: Legislative limits establish the percentage of funds that must go to a LIRA and percentage that must go to other retirement savings or be paid to you as taxable income.
| Lump Sum Amount | Federal Income Tax Rate |
|---|---|
| $5,000 or less | 10% |
| Over $5,000 up to $15,000 | 20% |
| More than $15,000 | 30% |
A T4A will be issued with your payment to indicate the amount of income you have received and the amount of tax you have paid. The tax withheld will be based only on the value of this payment. Depending on any other income you have for the year, you might be required to pay additional tax when you file your income tax return. If the address we have on file for you is outside of Canada when you receive funds from the Plan, the tax amount withheld will depend on the country. Read more about income taxes and receiving tax slips.