TIMEWISE: Future Focus

The wait is over: Contributing to your new pension plan six months or more into your job

May 24, 2023


After learning the ropes of your new position, you are starting to settle into your new job.  


Depending on your employer’s rules, you had to wait at least six months or more to join your new pension plan. But the wait is finally over! You have now joined your new pension plan with the Co-operative Superannuation Society (CSS).


After your waiting period, you may have noticed your employer has started to deduct your pension contributions from your pay. This means moving forward: 


  • You and your employer will both make contributions towards your pension account.
  • The funds in your account will be invested so your pension can grow over time.
  • Your employer matches your required contributions, dollar for dollar. So, if you contribute 6%, your employer will contribute 6% each pay period. 
  • Your personal contributions, plus any additional voluntary contributions (which are not matched by your employer), are tax-deductible. 
  • Once you are ready to retire, you can use your pension account (all your contributions plus investment earnings) as retirement income.

How much will you contribute?

In a defined contribution (DC) pension plan like yours, the amount that you and your employer contribute are based on a percentage of your pay. These contributions can vary by location and employer. 


How much your employer deducts depends on the matched contribution rate they set. The matched contribution rate usually is between 1% and 9% of your salary or compensation. 


If you have any questions about your contribution rate, please discuss it with your employer. 

Your contributions + investment earnings = retirement income

Your retirement income is determined by how much you put into your pension account and the investment earnings (gains/losses) over time.

Your pension funds always belong to you

The contributions made by your employer become vested immediately. Vested means they are owned by you and the total value of your pension funds always belongs to you. 


The required contributions and investment earnings made by you and your employer do become locked-in at some point, as do the investment earnings on those contributions. 


Locked-in pension funds cannot be withdrawn as cash if you leave the Plan. These funds must be used to provide an income for your retirement.

Consider additional voluntary contributions (AVCs)

AVCs are an easy way to increase your retirement savings. Just like your required contributions, they come off your pay. 


If you plan to make AVCs, make sure that your regular contributions (both employee and employer contributions) plus any voluntary contributions do not exceed the contribution limits set out in the Income Tax Act (Canada)


Any AVCs you make and it’s investment earnings are not locked in, but they may not be withdrawn until you terminate your employment. 


To set up AVCs, talk to your employer’s payroll department.

Maximum contribution limit

The combined amount you and your employer are allowed to contribute to the Plan each year cannot exceed the limit set by the Canada Revenue Agency (CRA). 


The maximum contribution limit is the lesser of: 


  • 18% of your employment compensation for the current year, or
  • The money purchase (MP) limit for the current year (see the CRA website for the most recent contribution maximums).


We encourage you to contact CSS and speak to our Advisory team regarding any of your contribution or pension related questions.


"The contributions made by your employer become vested immediately. Vested means they are owned by you and the total value of your pension funds always belongs to you."



Four things to do once you start contributing

  1. Locate your Member ID number: Once you receive your welcome letter from CSS, you will receive your Member ID number. This is your identification as a member of the CSS Pension Plan.

  2. Access your pension account with myCSSPEN®: Use your Member ID and sign up for your online account where you will be able to find your pension account balance, update your account, investments, member information, beneficiary information and more.

  3. Make an investment decision: A key characteristic of a DC plan is the investment decisions are yours to make according to your own risk tolerance – choose to allocate your contributions from CSS’ four investment funds – a Money Market Fund, Bond Fund, Balanced Fund and Equity Fund. If you do not choose an investment fund, you will be automatically invested in the Balanced Fund. 

    To help with your investment decision, use the online Risk Tolerance Estimator to see which investment fund(s) might best suit you and your risk tolerance.

  4. Plan your retirement savings goal: In order to reach your retirement savings goal, first you will need to find out how much you will need to save for retirement. 

    We recommend building your own retirement plan using the new myCSSPEN Compass Retirement Planner. This tool help you navigate your retirement journey so you can understand if you are on track toward achieving your retirement savings goals.

Article from the Spring/Summer 2023 issue of TimeWise.


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