Sometimes, a Pension Plan member’s Required Contributions to their regular Western pension account, combined with the University’s contribution to the member’s account, exceed the total contributions permitted under the Canada Revenue Agency (CRA) contribution limit for the year. The Supplemental Pension Arrangement (SPA) is a plan that provides a notional account for contributions to a member’s pension account that are in excess of the CRA limit.
This occurs for higher earners – if you made more than $175,000 in 2015, you may be impacted. This is based on a 5.5% required contribution rate and a 9% employer contribution rate. If your contribution rates are lower than that, the threshold to exceed the CRA limit would be higher for you. In determining whether there is a SPA amount, voluntary contributions are not considered - only the member’s required contributions and the employer’s contributions.
The SPA account is a notional account. A SPA account holder does not direct the investment options for this account. Instead, the University sets aside and invest sums of money equal to the contributions credited to the notional SPA accounts. The SPA accounts are credited with the same return realized by The University of Western Ontario’s Operating and Endowment funds.
Members receive an annual SPA statement outlining the amounts added to and deducted from their notional contribution accounts.
A member leaving Western may elect to receive the balance in the notional SPA account in equal annual installments over a number of years designated by the member (not more than fifteen). A one-time lump sum payment option may also be available.
If the account balance of a terminating member is less than 20% of the Year’s Maximum Pensionable Earnings (YMPE) then the University will settle the account as a lump sum payment to be made at the end of the month following the end of employment. For example, the YMPE in 2016 was $54,900. If a terminating member’s SPA account balance is less than $10,980 the account will be settled in a lump sum.
Members planning to leave Western should contact Western Human Resources at 519-661-2194 to discuss options and any restrictions that may apply to payout of the SPA account.
The SPA is credited with the same return realized by Western’s Operating and Endowment funds. Here are some links to view returns.