As a CSS member, you have numerous paths to consider when making decisions about your funds – whether you’re wondering what type of retirement income option to choose or how to designate or change a beneficiary.
While these options are intended to give you flexibility so you can tailor your pension account to suit your specific life circumstances and goals, navigating them can be challenging – and members are not always aware of all their options when it comes to making decisions about their funds. For instance, we often hear from members who believe they must take an annuity (i.e. monthly pension) from CSS at retirement – but an annuity is only one of your options.
We asked our CSS Retirement and Pension Advisors (who are often members’ first point of contact) to debunk this myth and other common myths about CSS that come up in their daily conversations with members.
While these options are intended to give you flexibility so you can tailor your pension account to suit your specific life circumstances and goals, navigating them can be challenging.
1. Myth: I have to take an annuity (monthly pension) if I decide to take a retirement income option from CSS.
Reality: “While the majority of people understand that they can take a retirement income option from CSS, many assume that they have to take an annuity,” says Rhonda Rodh, CSS Retirement and Pension Advisor.
While you can choose to take a monthly pension from CSS, you also have the option to take Variable Benefit (VB) payments (depending on your jurisdiction).*
VB payments are different than monthly pensions. A monthly pension provides you with a fixed monthly income for life. VB payments, on the other hand, are periodic withdrawals from your CSS investments (either monthly or annually). These payments can be changed over time so you would have the flexibility that you may need in retirement, but there is no guarantee that you will receive an income for life.
However, since the VB payment option allows you to remain invested in the Plan’s investment funds, it also provides further growth potential. VB payments are similar to a Life Income Fund (LIF) or Prescribed Registered Retirement Income Fund (pRRIF) offered by your credit union or bank.
You are also free to set up retirement income payments outside of CSS with your financial institution when you retire – the choice is yours.
**VB payments are available in the following jurisdictions only: AB, BC, MB, NS, ON, SK and Federal
2. Myth: When I die, my CSS pension funds will not be left to my survivors.
Reality: This is a common misconception. Depending on whether you have a spouse, and whether you choose a CSS monthly pension or VB payments when you retire, your survivor benefits will vary.
No matter which option you choose though, you have the flexibility to ensure your beneficiary designation fits with your situation.
If you have a spouse (married or common-law) and you pass away before you retire, your spouse has first claim to your pension funds – even if you designate someone else as your beneficiary. Your spouse can waive this entitlement by signing a spousal waiver form. If your spouse signs a waiver (or if your spouse dies before you), any named beneficiaries will then receive your pension benefit.
If you die after you retire and chose a CSS retirement income option, your survivor benefits depend on the type of retirement income option you chose:
If you chose a monthly pension:
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You have the option to add a guarantee period of 10 or 15 years.
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If you die during the guarantee period, the value of your remaining guarantee payments would continue on to your spouse, beneficiary or estate.
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If you have a spouse and choose a Joint and Last Survivor Pension, your payments will continue after your death for the remainder of your spouse’s life.
If you choose VB payments:
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Your surviving spouse is automatically entitled to all the funds remaining in your VB account, if any, when you die (unless your spouse waives this entitlement).
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Your spouse can continue with the remaining payments or convert to a monthly pension, or transfer the balance out of the CSS Pension Plan.
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If you don’t have a spouse (or if your spouse waives entitlement), any balance left in your VB account is paid as a taxable lump sum to your beneficiary or estate.
3. Myth: CSS does not provide retirement planning services.
Reality: On the contrary, we have been offering retirement planning services to members since 2014.
The fact that CSS offers this service might surprise some – particularly since it is rare for defined contribution (DC) pension plans to offer advisory services.
“I didn’t realize there were advisors making proactive calls to members before I joined the team,” says Shontelle Flaman, who joined CSS as a Retirement and Pension Advisor in January 2022.
Whether you’re wondering if you’ve saved enough for retirement, or need assistance to determine how your funds should be invested leading up to retirement and in retirement, our Retirement and Pension Advisors are here to help you.
The Advisors can also prepare a customized retirement plan for you. Your personalized plan can include all your sources of retirement income (think your CSS funds, RRSPs, TFSAs, CPP and OAS), and your spouse's sources of retirement income too.
4. Myth: I can’t change my CSS investments to suit my risk tolerance and investment comfort.
Reality: When you become a member of CSS, you’re automatically invested into the Balanced Fund, but you have the option to change your investments if you choose to.
“Some members don’t realize they can change their investments,” says Marilyn Shipley, CSS Retirement and Pension Advisor.
We understand not all CSS members are alike. You might need a different investment mix than your co-worker so you can reach your own specific goals.
“New members default to the Balanced Fund, so some young people may be missing out on additional equity investments, for example,” says Shontelle.
You can move as much or as little of your pension funds to any of our four investment funds at any time, even if you're an inactive member.
To reallocate your funds:
Complete the online investment instructions form (available in myCSSPEN) anytime you'd like to re-allocate your funds. We recommend completing our online risk tolerance estimator or talking to a Retirement and Pension Advisor before moving your funds.
5. Myth: I must retire according to the retirement date that is shown on my annual statement.
Reality: The first page of your annual statement shows a normal retirement date and an early retirement date. Some members assume they have to retire according to these dates, but that is not the case.
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The CSS Pension Plan's normal retirement age is 60.
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You may qualify for early retirement when you reach age 50 or earlier if your age plus years of continuous service with one or more participating employers equals a factor of 75.
Whether you choose to retire at age 50, 60 or 71 (or somewhere in between), it’s up to you. The only catch is you must convert your CSS account balance into a retirement income before the end of the year you turn age 71 (as stipulated by the Income Tax Act).
How you choose to use your CSS funds is a complex decision. Our Retirement and Pension Advisors are here to help if you wish. Contact us if you need assistance.
Article from the Spring/Summer 2022 issue of TimeWise.
