Termination Options

If you find yourself in circumstances where your employment with your MEPP employer has terminated, you will need to make some decisions regarding your MEPP pension benefit.

Once MEPP receives notification and the final contributions from your employer, we will send you a Termination Options package.

Your pension benefit options are dependent on whether you are vested or entitled to a pension at termination. Your vesting status and all your options will be clearly explained in your Termination Options package. If you have been employed less than two years, you are not vested in the Plan. If you have been employed for two years or more, you are vested.

Not vested at termination

When you are not vested, you are not eligible to receive a pension. You must withdraw your benefit from the Plan. Your termination benefit is your contributions and interest.

You may choose to:

• receive your refund as a single taxable payment. We will issue you a cheque less withholding tax.
• transfer your refund to purchase service in a new employer’s pension plan. If your new employer has a pension plan, you may be able to transfer your refund amount and service to your new pension plan. If you wish to transfer, contact your new employer to ask if a transfer would be accepted. This type of transfer would be made through a portability agreement between the MEPP and the new plan.
• transfer your refund to a Registered Retirement Savings Plan (RRSP). A T2151 form must be completed to initiate the transfer. Tax is not withheld on transfers to RRSPs.

Or

• leave your refund in MEPP for up to two years. You may leave your refund in MEPP for up to two years after your termination date in case you become re-employed by a MEPP employer. If you do not make a choice and do not become re-employed with a MEPP employer within two years of your termination date, your taxable refund will be sent to your last known address.

Vested and not qualified to retire at termination

If you are vested when your employment terminates, your termination benefit is the commuted value (CV) of the pension you have earned.

You may choose to:

• leave your benefits in the Plan as a deferred pension. A deferred pension is a pension that you delay taking until later in life;
• transfer your CV and service to your new employer’s pension plan under a portability agreement between MEPP and the new plan. Contact your new employer first to ask if they will accept the transfer; or
• transfer your CV to a Locked-in Retirement Account (LIRA). You’ll need a T2151 to initiate this transfer.

If you are eligible to retire when you terminate, see Apply for Your Pension.

If you are vested and do not select an option within two years of termination date, MEPP establishes a deferred pension for you.

Other considerations

Whether you are vested or not:

• if you leave your benefit in MEPP and become employed with another MEPP employer within two years, your new service is combined with your previous service; or
• if a MEPP employer offers you employment that will begin after the two-year period ends, you may apply for an extension of the two-year limit. You must apply in writing before the period ends.

Small benefit

If you are vested and your commuted value is below a certain dollar amount, you must remove your benefit from the Plan within two years of termination. If you fall into this category, your Termination Options package will provide you with the proper options.

Withholding tax

The Canada Revenue Agency requires MEPP to withhold tax on any taxable payments. Here are the tax rates based on certain dollar levels:

• up to and including $5,000: 10%
• over $5,001 and up to $15,000: 20%
• over $15,000: 30%

The amount withheld is based on the amount of the payment and not on your total income. You could still have more tax to pay when you file your annual income tax return.

Learn more in the MEPP In-Depth on Termination Options.