In this case the spouse would receive at least 60 of

This preview shows page 35 - 37 out of 168 pages.

payable on a joint and last survivor basis. In this case, the spouse would receive at least 60% of the reduced early retirement pension earned by the deceased member. These benefits would be in addition to a refund of the employee's contribution plus interest with respect to plan membership prior to 1987. 36 Moe belongs to a defined-benefit pension plan that offers a pension valued at 2% of best earnings for each year of service, commencing at age 60. His plan does allow early retirement, with a standard reduction of 3% for each year of early retirement. As a result of a disability, Moe is forced to retire at age 38, with only 10 years of service, and best average earnings of $40,000. If Moe works in a province with progressive disability provisions, what will Moe's pension entitlement be at this time? Incorrect The correct answer: $8,000 Your answer: $5,120 Solution: Most jurisdictions now stipulate that full credit must be given for pensions earned up to the date of retirement due to disability, without an actuarial reduction. Therefore, Moe's pension entitlement at the time of his disability at age 38 would be $8,000, calculated as (2% × 10 × $40,000). 37 Carol has worked for the same employer for 30 years. Through these years, she has been a member of a defined-benefit pension plan, based on 2% per year of service times final earnings at the NRA of 65 with no option of unreduced early retirement. Her salary averaged $60,000 for the last 5 years. When she turned 61 this year, Carol decided to take her pension, in spite of a 3.5% penalty for each year less than the NRA. What would be the amount of Carol's pension? Incorrect The correct answer: $30,960 Your answer: $27,360 Solution: If Carol was retiring now at normal retirement age, her pension would be $36,000, calculated as ($60,000 × (30 × 2%)). Her actual pension will be reduced by 14%, calculated as (3.5% × 4). Her early retirement pension would be $30,960, calculated as ($36,000 × (1 - 14%)). 38 Audrey has been a member of her defined-benefit pension plan since she was 27 years old. The pension plan is governed by the Federal Pension Benefits Standards Act. If the plan specifies a normal retirement age of 65 and a qualifying factor of 90, what is the latest age that pension payments can commence? Correct The correct answer: 71 years
12/6/2020 VirtualUniversity.CIFP.ca 10/24 Your answer: 71 years Solution: Under the federal regulations, pension payments must commence no later than the end of the year in which the member turns 71 years of age. 39 Jordan, who is currently 35 years old, has been contributing to his employer's defined-benefit pension plan for the past 8 years, such that his total contributions to date, including interest, amount to $40,000. His employer has contributed $50,000 over that same time frame, including interest. Jordan's employer is located in a province that has a "45 and 10" provision. Jordon is terminating his current employment. He is entitled to receive the following lump-sum cash payment: Correct The correct answer: $40,000 Your answer: $40,000 Solution:

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture