Glossary

Clicking the term below will show the definition.

Active Member

A member who is making contributions to LAPP or would be making contributions if not for being:

  • on leave;
  • in receipt of benefits under the employer's disability plan; or
  • at the maximum pensionable service limit (35 years).
Actuarial Reserve

The estimated cost to LAPP of providing the increased benefits gained by a member who buys or transfers prior service. An actuarial reserve calculation takes into account a number of factors including salary scaling and mortality tables.

Actuarial Valuation

A mathematical analysis of the financial condition of a pension plan. An actuary prepares a plan valuation at least once every three years. The valuation shows if the contribution rates are higher or lower than what is needed to ensure the long-term funding of the Plan.

Actuary

A person authorized by their designation as a Fellow of the Canadian Institute of Actuaries to prepare and sign actuarial valuations.

Alberta Consumer Price Index (ACPI)

A weighted average of the cost of a basket of goods and services that are normally purchased by Alberta households. It includes such things as clothing, food, housing, gasoline, health, personal care services, recreation and education.

Allocation

The designation of your pension benefits to one or more beneficiaries.

Approved Long-Term Disability Income (LTDI) Plan
An income replacement plan sponsored by an employer for its employees that will pay you a portion of your pre-disability salary while you are off work. Where the LTDI plan is approved by APS, the period of LTDI coverage is considered mandatory service for pension purposes.

The criteria used by APS to approve LTDI plans are:
  • all members employed by the employer in the group to whom the LTDI plan applies, except for those ineligible for coverage by reason of not meeting the medical requirements, must be covered by the LTDI plan;
  • a member must not be required to apply for a pension as long as the member qualifies for benefits under the LTDI plan; and
  • the LTDI plan must be filed with APS.
APS

Alberta Pensions Services Corporation (APS) is LAPP's pension administrator. APS is responsible for providing services to the LAPP Board of Trustees, members, pensioners and employers.

Beneficiary
Your pension partner is automatically your sole beneficiary if you die before retirement.
If you have no pension partner, you should let LAPP know who would receive the benefit.
A Beneficiary is the person(s) you designate to receive a benefit if:
  • you die before retirement; or
  • you die before the end of the guaranteed period. This is only applicable if:
  • you chose one of the Single Lifetime Guaranteed Term options; or
  • you chose one of the Joint Lifetime options and both you and your pension partner die within the guaranteed period.

You can designate one or more beneficiaries or a charitable organization.
Even if you have a pension partner you should designate a beneficiary. That way LAPP knows to whom the benefit is to be paid if your pension partner predeceases you, or if your pension partner has waived the right to a benefit. If you have not designated a beneficiary and your Will does not specifically mention LAPP, payment will be made to your estate.

Canada Pension Plan

The federal pension plan administered by Human Resources and Social Development Canada on behalf of employees in all provinces and territories of Canada except Quebec, which operates the equivalent Quebec Pension Plan.

Commuted Value

The actuarial present value of accrued benefits, determined using actuarial assumptions and methods recommended by the Canadian Institute of Actuaries. This represents the amount of money that must be set aside today, based on current interest rates, to provide pension payments at a future date.

Contributions

Money paid into a pension plan by you and your employer. Your contributions are tax deductible and are made through payroll deduction. All contributions go directly to the LAPP fund. Contributions may also include payments towards prior service such as a period of probationary service or qualifying leave without salary.

Coordination

Coordination is a feature offered to eligible members who retire before age 65 that allows for flexible retirement income planning. Coordination lets you increase your monthly payment temporarily from the time you retire until you turn 65. At age 65, the increase to your monthly payment stops and a permanent reduction to your monthly pension payment begins. The reduction will continue as long as you live and may add up to more than the increase you received before 65.

Cost-of-Living Adjustment (COLA)

An increase in a pension benefit to compensate for inflation. Your pension will increase each January by 60% of the Alberta Consumer Price Index (CPI). The CPI is a weighted average of the cost of a basket of goods and services that are normally purchased by Alberta households. This includes things such as clothing, food, housing, gasoline, health and personal care, recreation, and education. COLA increases are calculated by taking the average of the CPI during the 12-month period ending each October and comparing it to the previous year's 12-month average.

Current Employment Status

Your current status of employment with your employer. This can be full time, part time or terminated (no longer contributing to the Plan).

Deferred Member

A member who is no longer an active member of LAPP but has left pension benefits in the Plan. A deferred member may leave their benefit entitlement in LAPP until retirement.

Deferred Pension

A pension that does not commence immediately following termination from LAPP. A deferred pension may not commence earlier than the member's 55th birthday, unless the member qualifies for a disability pension, but must commence before December 31 of the member's 71st birthday.

Note: If the member was 69 or older prior to December 31, 2006, the pension must commence effective December 31 of the member's 69th birthday.

Defined Benefit Plan

Defined Benefit Plans pay a monthly pension based on your salary and your length of service. The pension plan's obligation is to pay a stated benefit to each employee that depends on the employee's salary and length of service. The main benefits of a defined benefit plan are:

  • Your benefit is guaranteed and you are provided a specified lifetime income regardless of market conditions or how long you live.
  • You can plan for your retirement because you can estimate your future pension income. The pension estimator allows you to estimate your future monthly payments.
Diversified Portfolio

The pension plan fund is invested in common stocks (both Canadian and international), bonds, mortgages, and real estate and is managed by the Alberta Investment Management Corporation (AIMCo).

Early Retirement

Retirement before being eligible to receive an unreduced pension. See "Normal Retirement" and "Postponed Retirement".

Excess Contributions

The amount of contributions with interest returned to the member to ensure that the member's contributions with interest in the account do not exceed 50% of the commuted value. Contributions paid and service credited for prior service are not included when calculating excess contributions.

Guaranteed Term
A Single Lifetime Guaranteed Term pension (5, 10 or 15 years) is paid for your lifetime. If you die before the end of the guaranteed period, payments will continue to your designated beneficiary(ies) until the end of the guaranteed period. For example, if you choose the Single Lifetime Guaranteed At Least 10 years option and die 4 years later, the pension will be paid to your beneficiary(ies) for the remaining 6 years.
Highest Average Salary
The average of your five highest consecutive years of salary used to calculate your pension benefits. For the purposes of calculating your highest average salary, the salary for a given year may not exceed the corresponding salary cap.
Joint Lifetime

A Joint Lifetime pension is payable for the lives of the member and pension partner. Members who have a pension partner at the time of their retirement must select one of the Joint Lifetime pension options unless the pension partner signs a Pension Partner Waiver, waiving his or her rights to the survivor benefit.

If you choose the Joint Lifetime Guaranteed At Least 5 Years option, on the death of either you or your pension partner, the same pension is paid to the survivor for his or her life. If you choose the Joint Lifetime Reduced by 1/3 Guaranteed At Least 5 Years option, at the first death of either you or your pension partner, the monthly payment is reduced by 1/3. This means that if the pension partner dies before the member, the member's pension will be reduced to 2/3 of the pension amount.

In both options, the pension is guaranteed for five years. If both you and your pension partner die before the end of the five year term, the pension will be paid to your beneficiary(ies) for the remainder of the term.

 

LAPP Membership
The period of time, in calendar days, between the commencement of contributions with an employer under LAPP, and termination of participation in LAPP.
Leave With Partial Salary
A period of service during which a member is, with the approval of his/her employer, on leave from all or a portion of his/her regular duties of employment and is receiving pensionable salary that is less than his/her regular pensionable salary from the employer. During periods of leave with partial salary, the member remains an active member and contributions are remitted through the employer as if the member were at work.

Note: If the member does not have 36 months of prior employment, the employer will not remit any contributions because the member will have to pay an actuarial reserve cost to establish the leave period as pensionable service.
Liability
The LAPP liability is the total value of all benefits earned by LAPP members and other costs for which the LAPP Fund is responsible.
Locked-In Retirement Account (LIRA)
A special type of RRSP designed specifically to hold locked-in pension funds. Alberta public sector pension plans, like LAPP, are not subject to the Employment Pension Plans Act (EPPA) however, once locked money is transferred out of LAPP it must be locked-in under the rules of the EPPA. If you have a LIRA and are at least 50 years old, you can start receiving pension income. Most financial Institutions offer LIRAs however APS will only send the locked-in funds to a financial institution that appears on the Alberta Superintendent of Pensions list of approved LIRA contracts.
Marital Status
Marital status can be single, married, common-law, separated, widowed or divorced. See "Pension Partner" for further information.
Matrimonial Property Order
If you are currently undergoing a marital breakdown, your pension benefits may be subject to division and distribution between you and your soon to be ex-spouse. For pension benefits to be divided and distributed, a court-certified copy of a Matrimonial Property Order (MPO) must be obtained and filed with Alberta Pensions Services Corporation.  You should consult your legal counsel about obtaining and filing an MPO and the division and distribution of your pension benefits.

Under the Matrimonial Property Act, an MPO can only be obtained in respect of a legal marriage.  In certain circumstances, the regulations governing LAPP allow for the division and distribution of your pension benefits by making a one-time payment to the non-member ex-spouse without having to wait for the member to become eligible for a benefit.  If you are a LAPP member going through a marital breakdown, your legal counsel should take these regulations into account when working on your matrimonial property settlement.
Member ID
The unique number assigned to you by APS' previous pension administration system. The Member ID is printed on publications sent between January 2004 and May 2016, including your annual statement, enrolment package or benefit estimate package.
Member Identifier
The unique number assigned to you by APS' current pension administration system. The identifier is printed on publications sent after May 2016, including your pension highlights (annual statement) or Termination Statement Estimate.
Member Plan Status

Your status under the Plan. See "Active Member" and "Deferred Member".

 

 

Morgan Stanley World Index
An index maintained by Morgan Stanley, the index is compiled and reported monthly in local and common currencies. It measures the total return attributable to the largest capitalized companies on the world's major stock exchanges.
mypensionplan

mypensionplan is a secure website that provides active members and deferred members of the Local Authorities Pension Plan with access to personalized pension information.

Nominee
The person you name to receive your Joint Lifetime pension if you die first. If you have a pension partner on the effective date of your pension, the nominee must be your pension partner unless they sign a waiver sent with the Retirement Benefit Statement. The nominee must be a valid nominee under the Income Tax Act (e.g. an ex-spouse or ex-common-law partner).

Normal Form
The normal form is the base from which all other pension options are calculated. At present, the normal form of pension is the Single Lifetime Guaranteed At Least 5 Years. All other optional forms of pension are the actuarial equivalent of the current normal form.

Normal Retirement

Retirement at exactly age 65. See "Early Retirement" and "Postponed Retirement".

 

Old Age Security (OAS)
The basic federal income security program for seniors who are age 65 and older who meet the Canadian legal status and residence requirements.
Optional Service (Prior or Past Service)

This is previous employment with a public service organization within Canada during which you did or didn't belong to a pension plan. You may be able to buy back this period of service if you're not receiving a current or future pension from your former employer. (Only some types of public service organizations are eligible.)

Buying back optional service increases your length of pensionable service, thereby increasing your future benefits.

 

Payment Due Date
The last date payment can be accepted towards the purchase of service. The date is shown in the Buyback Proposal mailed to you if you are buying prior service or a leave of absence. You must be an active LAPP participant in order to make payments towards your prior service. If you stop participating in LAPP, you will have 90 days from your termination date in LAPP to complete payments. If you do not pay the outstanding balance, the credited pensionable service will be prorated accordingly.
Pension Partner

A "pension partner" means:

(i) a person who, at the relevant time, was married to a participant or former participant and had not been living separate and apart from him or her for 3 or more consecutive years,

or

(ii) if there is no person to whom subclause (i) applies, a person who, as at and up to the relevant time, had lived with the participant or former participant in a conjugal relationship

(A) for a continuous period of at least 3 years, or

(B) of some permanence, if there is a child of the relationship by birth or adoption;

Persons are living separate and apart

  • if they are living apart and either of them has the intention to live separate and apart from the other, or
  • if, before the relevant time,
    • they had been living separate and apart for any period, and
    • that period was interrupted or terminated by reason only that either of them become incapable of continuing to live separate and apart or of forming or having the intention to continue to live separate and apart of that person's own volition,

and the separation would probably have continued if that person had not become so incapable.

Pension Plan Assumptions

Plan assumptions are used in preparing actuarial valuation reports and are set by the pension plan Boards. They are long-term estimates of the economic and demographic assumptions for the Plan. These assumptions include factors such as interest rates, inflation rates, mortality rates and retirement ages for:

  • members who are retiring, these assumptions are used to determine the optional forms of pension a member may select.
  • members who are transferring into or out of the Plan, these assumptions are used to determine the value of the member's pension.
  • members who are purchasing optional service, these assumptions impact the cost of optional service.

 

 

Pensionable Salary
Basic pay for the performance of regular duties. Salary also includes pay for shift work, weekends, acting pay, and the provision of an automobile for personal use if the employer treats it as pensionable salary under the employer's salary policy and if it is paid on a uniform and consistent basis. Variable pay is also pensionable to certain limits. Salary does not include earnings such as expense allowances or overtime payments. The salary used in the calculation of your LAPP benefit entitlement will be subject to any limits set out under the tax rules.
Pensionable Service
Your years of service during which you contribute to the pension plan, plus service recognized from a transfer or purchase of prior service. The maximum pensionable service limit in LAPP is 35 years.
Period on Loan to a Bargaining Unit
A period of service during which a member is, with the approval of the employer, on leave from his or her regular duties in order to be employed by a certified bargaining agent that is serving persons employed by a plan employer.


Plan Valuation
A mathematical analysis of the financial condition of a pension plan. An actuary prepares a plan valuation at least once every three years. Following a valuation, the Board may adjust contribution rates so the rates meet the funding requirements of the Plan.
Portable Document Format (PDF)

Portable Document Format (PDF) is a format used to deliver documents over the Internet. Adobe® Reader® (TM) is the standard software used to access PDF documents and can be downloaded, for free, from the Adobe® Website.

 

Postponed Retirement
Retirement after age 65 or after the age of entitlement to an unreduced pension. See "Early Retirement" and "Normal Retirement".
Pre-retirement Death Waiver
The pension partner may waive his/her right to a lifetime pension by completing the Pension Partner Waiver of Pre-Pension Commencement of Death Benefit form. This allows the pension to be paid to the beneficiary(ies) on file with APS instead of the pension partner. This waiver can be completed by the pension partner any time before pension commencement but it may only be rescinded by the pension partner prior to the member's death.
Prior Service (Buyback or Past Service)

This is previous employment with a public service organization within Canada during which you did or didn't belong to a pension plan. You may be able to buy back this period of service if you're not receiving a current or future pension from your former employer. (Only some types of public service organizations are eligible.) Buying back prior service increases your length of pensionable service, thereby increasing your future benefits.

Reciprocal Transfer Agreement

An agreement negotiated with another pension plan that allows members to transfer their pension when they move between plans.

 

Reduced Pension

If you retire between ages 55 and 65 and your age plus service totals less than 85 (we call this points), your pension is subject to a reduction. This is because, based on average life expectancy statistics, we will be paying out money over a longer period of time than if you retired at age 65. Currently, this reduction is 3 percent for each year you retire early. This reduction is based on your years short of age 65, or your years short of 85 points, whichever you would reach first.

 

Registered Retirement Savings Plan (RRSP)

A type of tax-deferred investment that is set up to hold and invest your savings until you retire. Most can be withdrawn at any time, but you will be taxed on the amount withdrawn.

 

Russell Canadian Property Index

An index maintained by Frank Russell. Measures the total return attributable to Canadian commercial real estate.

 

Salary

See "Pensionable Salary".

 

Salary Cap
The salary cap is the maximum salary upon which a defined benefit can be based. This cap is derived from the Defined Benefit Limit set under the federal Income Tax Act. The 2016 salary cap for LAPP is $160,970.
SCM 91-Day T-Bill Index

An index maintained by Scotia Capital Markets. The index measures the return attributable to 91-day Treasury Bills.

 

SCM Bond Universe Index

An index maintained by Scotia Capital Markets. Measures the total return attributable to bonds and includes representative bond issues by issuer (Federal, Provincial, Municipal and Corporate), quality (AAA, AA, AA, A, and BBB) and term (short-, mid-, and long-).

 

Service

See "Pensionable Service".

 

 

 

Service Year
The year specified by the employer as the employer's annual payroll pay period cycle. This is the year for which member's pensionable service is reported by the employer and which will have specific "From" and "To" dates. The service year may not coincide exactly with the calendar year.
Social Insurance Number (SIN)

A nine-digit number used in the administration of various Canadian government programs. You require a SIN to work in Canada or to receive government benefits.

 

Spouse

See "Pension Partner".

 

Surplus
A surplus exists when the actuarial valuation determines the Fund's accrued benefit payments are less than the net assets available for the payment of those benefits.
T-Bill

Short-term government security.

 

Termination

The point at which a member ceases to participate in the Plan, e.g. retires or moves into a non-participating position.

 

Transfer Agreement

An agreement negotiated with another pension plan that allows members to transfer their pension when they move between plans.

Unreduced Pension

A pension that will not be reduced for early retirement. See "Reduced Pension" and "Early Retirement".

 

Variable Pay

Variable pay:

  • is lump sum pay, whether variable or constant in amount from year to year, that is paid on or after December 3, 2003;
  • must form part of a variable pay program, where the terms of the program are contained in a written policy or agreement;
  • must form an ongoing part of the employee's compensation package and is payable to all employees in the program; and
  • cannot exceed 20 per cent of the employee's gross basic pay.

Variable pay is not considered pensionable salary for a member who commences in the variable pay program within the last 12 months of employment before termination.

 

 

Vested
A term used by pension plans that means you are eligible to receive a monthly pension. Members of LAPP are vested after two years of LAPP membership, or immediately if you are age 65.
Weighted Average

Weighted average means that some items are given more importance because a larger proportion of household income is typically spent on those items.

 

Withholding Date

The date on which the employer issues a member's pay for a particular pay period. Pension contributions for a particular pay period must be remitted to APS within 15 days of the withholding date.

 

Withholding Year

The year in which the employer withheld contributions that were remitted to the pension plan.

 

Year's Maximum Pensionable Earnings (YMPE)
The maximum amount of earnings on which contributions to CPP are based.