By: Louanne Haugan, Director of Communication and Development
The Canadian Baptist Pension Plan is a Defined Contribution Pension Plan registered in the province of Ontario. Employers and Plan members must each contribute 6% of the member’s monthly earnings to the Plan for a total of 12%. It is mandatory for an employer to offer Plan participation to eligible employees, however membership is voluntary, and employees may join at any time after becoming eligible.
Ministry leaders such as pastors, executive and management staff and professors who meet the provincial minimum salary/hours are eligible to join from their date of employment. Support Staff such as church administrators, secretarial and clerical staff, and custodial staff may join after one year of continuous employment. An employee must either work a minimum of 20 hours/week or earn 35% of the 2018 Years’ Maximum Pensionable Earnings, which is $19,565. This holds true in all western provinces with the exception of Manitoba, where the amount is 25% of YMPE or $13,975.
It is of utmost importance that pension contributions are remitted on time, as per Plan text. Pension Plan contributions for the previous month are due at Sun Life Financial by the 10th of the following month, with the exception of December’s contribution which must be received prior to December 31st. Failure to submit on time will result in the employee’s account falling into delinquency. If the missing contributions are not made, our Plan may be found in non-compliance of regulatory timelines. This is a serious offence, which may ultimately result in the government collapsing the entire National Pension Plan.
If a member is in financial difficulty and they wish to suspend their contributions, they should sign a Pension Waiver Form. Signing this form does not prevent them restarting their contributions in the future. Their account would be listed as “inactive” until such time as they re-start their contributions to the Plan.
If a church is in financial difficulty, the CBWC needs to be notified as soon as possible. Catch-up contributions can be made to the Plan if the catch-up contributions are made in the same calendar year in which they were missed, and they do not exceed the maximum contribution limit as stated in the Plan. However, if the catch-up contributions must be made in subsequent years to the year in which the contributions were missed, certain requirements must be met before the missed contributions can be made:
- The missed contributions are allocated to the member’s account in the current (or future) years – there are no retroactive contributions permitted
- The missed contributions are subject to the particular year’s pension adjustment limits, the lesser of 18% of the member’s compensation for the current year or $26,500 for 2018.
- The plan text permits these “catch-up” contributions
This is not a scenario Financial Services Commission of Ontario (FSCO) takes lightly. An employer must also be aware that with regard to the interest due on missed employer contributions (“principal amount”), the Superintendent of FSCO would expect the employer to also remit, as a lump sum, an amount for interest on the principal amount. This would be calculated at the “fund rate of return”. If the overall fund rate of return to be applied is negative, the total value of the principal plus interest must still be no less that the value of the principal amount alone.
The Canadian Baptists of Western Canada are pleased to be able to provide the benefit of a retirement plan to our churches for their pastors and staff. Joining with our sister conventions across Canada, we are privileged to be the guardians of such a great Plan – one that consistently sees above average rates-of-return on investment to our members. We are mindful that strong governance, wise investment choices, and a constituency that abides by the regulations as written in our Plan text, all contribute to the success of Canadian Baptist Pension Plan.
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This article was published in the April 2018 issue of Treasurer’s Corner. Click here to subscribe to this monthly newsletter for church treasurers and operators.