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Variable Pension Benefit (VPB) Frequently Asked Questions (FAQs)

The basics how, what and why
What is a Variable Pension Benefit (VPB)?

The Variable Pension Benefit (VPB) is a source of income or ‘pension’ during retirement.  It is a flexible option that lets you control your retirement income and choose how it is invested within the Plan.  You simply leave your money in PEPP and begin to withdraw it through the VPB.  The VPB is available to all current and former PEPP members.

VPB offers members:

  • Flexible payments –  you choose when and how much income to receive.  You can choose regular payments, or request lump-sum payments or do both.

  • Control of investments you hold with VPB you are able to choose and transfer between investment options within the Plan.
Can I get a VPB estimate?

Yes, we can provide you with an estimate.  Everyone has a different situation, different account balance and different monetary needs.  Please call PEPP for a personal VPB estimate if you are within one year of retirement.

How do I apply for VPB?

Complete the VPB Application and submit to PEPP.  If you have a spouse we’ll also require a Spouse’s Consent and Waiver of Post-Retirement Survivor Benefits before we can process your application.

Why does my spouse have to sign a spousal consent/waiver?

Your spouse must sign a consent because according to The Pension Benefits Act, 1992 (Saskatchewan), a surviving spouse is entitled to a minimum of 60% survivor benefit from a pension – the VPB cannot provide that guarantee to your spouse. The VPB allows the member to withdraw and spend the entire account balance which would leave the spouse with no survivor benefits; so, if you have a spouse, a completed Spouse’s Consent and Waiver of Post-Retirement Survivor Benefits form must accompany your application. 

By signing the spousal waiver your spouse confirms to PEPP his/her full awareness that the member may withdraw and spend all the money in the pension account and could leave $0.00 for spousal benefit at death. 

The waiver must be signed no more than 90 days prior to the VPB Application.

Can the spousal waiver/consent be revoked?

Yes, the spousal waiver may be revoked at any time before the VPB has commenced by providing written notice to PEBA. 

Investment Options
What rate of return does PEPP offer?

Your VPB account will continue to be valued at the current unit value, just as your PEPP account.  Unit values are posted to the website daily.  Annualized rates of return are posted monthly in the Fund Performance Bulletin on the website.

Is there a guarantee on investment returns or income levels?

The VPB does not offer any guarantee on investment returns, income levels, or how long the money will last. Those factors are determined by how you invest your money, the market gains/losses experienced, and how quickly you withdraw the money.

Payment Options
What are the VPB payment options?

You can schedule regular payments, request lump-sum payments, or do both.

  • The maximum you can withdraw is your total account balance.
  • There is no minimum withdrawal required prior to age 72.
  • All VPB payments are made electronically directly to your bank account (Electronic Fund Transfer).

Scheduled payments:

  • You can schedule regular payments to be paid to you each month or annually;
  • Scheduled payments are made on the last banking day of the month;
  • The minimum for a scheduled payment is $100.00 (before tax).

Lump-sum payments:

  • Lump-sum payments can be requested at any time;
  • Lump-sum payments are processed within five business days;
  • The minimum amount for a lump-sum payment is $100.00 (before tax);
  • You are allowed one free lump-sum payment per fiscal year (April 1 – March 31).  A fee of $45.00* is charged for each additional lump-sum payment request.

*Fees are subject to change.

What is the maximum amount I can withdraw from the VPB?

The maximum you can withdraw from your VPB account is your entire account balance.

What is the required minimum withdrawal and what happens if I don’t withdraw the minimum?

Prior to age 72, there is no required minimum withdrawal.  You can withdraw any amount you wish or nothing at all.  After age 72 you must withdraw at least the required Income Tax Act minimum each calendar year.

The minimum withdrawal is calculated each January 1st.  The calculation involves your total account balance multiplied by a prescribed factor.  The factors increase with age.  Upon enrolment you decide to use your age or your spouse’s age to determine the factor for use in this calculation.  The Minimum Withdrawal Schedule is posted to the website.  There’s an example of this calculation in the PEPP Talk on Variable Pension Benefit.

If you don’t withdraw the required minimum any remaining balance up to the required minimum will be automatically transferred electronically to your bank account at calendar year end.

How do I know what the required minimum withdrawal is in my case?

We’ll let you know.  Each November VPB members are sent a letter estimating the required minimum withdrawal for the coming year.  At the beginning of each year (usually January) you will be sent a VPB Annual statement. The statement will confirm your actual required minimum withdrawal for the current year.

How long will my VPB money last?

How long your money will last depends on:

  • how much money you have in the account;
  • what the investment returns are for the option(s) you are invested in; and
  • how quickly you withdraw the money.

Please call PEPP for a VPB estimate if you are within one year of retirement.  You may also want to go online and use Retire@Ease, our retirement planning tool, to experiment with the amount of income your PEPP account may provide.

All payments cease and the account is closed once the balance has depleted to $0.00.

Beneficiary Information (benefits at death)
What is a specified beneficiary?

The specified beneficiary is a designation strictly for the spouse of the original member of a VPB.  The specified beneficiary:

  • is the only beneficiary that can continue the VPB account in his/her own name within PEPP after the member dies; 
  • must receive 100% of the remaining VPB account balance; and 
  • does not have the right to waive any portion of the beneficiary rights

If you do not have a spouse, you will not list a specified beneficiary.

What options does the specified beneficiary have at the member’s death?

The specified beneficiary (spouse) can:

  • continue to receive payments from the VPB account;
  • transfer the balance to pRRIF;
  • purchase a life annuity;
  • transfer to a RRIF, RRSP or LIRA if they are less than 72 years of age; or
  • receive the balance in a lump-sum payment less withholding tax.
Can a specified beneficiary transfer money into the VPB account on or after the death of the member?

No, a specified beneficiary cannot transfer money into the VPB account after the member dies. The Income Tax Act (ITA) does not allow this type of transfer.  The ITA refers to “member” which excludes a beneficiary.

Do I have to name my spouse as beneficiary?

Yes, if you have a spouse, s/he must be the beneficiary of your VPB account; however, your spouse may waive the right to all or a portion of the benefit.  Waiving all or a portion of the benefit allows the member to share the benefit with people/entities other than the spouse.

How do I designate someone other than my spouse as a beneficiary?

To designate someone other than your spouse, your spouse must complete a Spousal Waiver of Designated Beneficiary Status – VPB form.  He/she can waive rights to all or a portion of the benefit.  This waiver can be revoked up until the member’s death.  If your spouse waives any portion of his/her beneficiary entitlement, the beneficiary designations must be done under the other beneficiary(ies) section of your application.

Example: spouse has waived 50% of the account balance
Other beneficiary(ies): Spouse = 50%
Child 1 = 25%
Child 2 = 25%

Example: spouse has waived 100% of the account balance
Other beneficiary(ies): Child 1 = 50%
Child 2 = 50%

What options do the ‘other’ beneficiaries have?

At death of the member other beneficiaries must remove the money from the VPB account.  Other beneficiaries (excluding a spouse) will receive the money as a lump-sum payment less withholding tax as soon as is practical after the death of the member.

If a spouse is named as an other beneficiary, s/he may make a tax-sheltered transfer to another eligible registered retirement account.

What happens in the event of a spousal relationship breakdown?

In the event of a spousal relationship breakdown the account is split according to a court order, leaving no less than 50% to the pensioner.   See the Glossary on our website for the definition of spouse and information on when the relationship is considered terminated.  Your spouse is your beneficiary until that time.

Transferring Money In and Out of the VPB
Can I transfer money into my VPB account?

Yes, sometimes at retirement members like to consolidate their accounts.  You may transfer money from your:

  • Locked-in Retirement Account (LIRA);
  • Another registered pension plan (RPP) upon approval;
  • Prescribed Registered Retirement Income Fund (pRRIF);
  • Life Income Fund (LIF) and Locked-in Retirement Income Fund (LRIF);
  • Another Variable Benefit account – restrictions may apply; or
  • RRSP or RRIF (non-spousal);

A transfer from a pension plan, LIRA, LIF and LRIF must qualify for administration under The Public Employees Pension Plan Act and The Pension Benefits Act, 1992 (Saskatchewan).  Any transfer received that cannot be governed by this legislation will be returned to the transferring institution and any loss of income incurred will be at your cost.

Your spouse (if applicable) will be required to sign a Consent to Transfer Outside Registered Monies into the VPB form to allow the transfer of money into the VPB.

Is there a limit on how much money a member can transfer to the VPB?

No, there is no maximum amount of money a member can transfer into the VPB.

Can I transfer my money out of VPB?

Yes, you may transfer money at any time.  You can transfer all or a portion of your VPB account out to a:

  • LIRA – offered by an outside financial institution up until you reach age 71;
  • pRRIF – offered by an outside financial institution;
  • Life Annuity – offered by Saskatchewan Pension Annuity Fund (SPAF), or another licensed insurance business; or
  • Any combination of the above options.

Your spouse (if applicable) will be required to sign a Spouse’s Consent to Transfer Monies Out of the VPB form to allow the transfer out of the VPB.  

Taxes, Inflation and Fees
What are the income tax implications of the VPB?

In a VPB:

  • return on investment is tax-sheltered;
  • payments are taxed as income in the year of withdrawal;
  • PEPP must withhold income tax from each payment and submit it to Canada Revenue Agency (CRA) on your behalf.

PEPP uses the payroll tax method.  The payroll tax method calculates how much tax to withhold from each payment based on the total estimated VPB payments for the calendar year after taking into consideration your personal tax credits claimed on your Canada Revenue Agency form TD1 form.

Will PEPP ensure I pay enough tax; does PEPP issue a T4A?

No, ultimately, the tax liability for VPB payments will be assessed based on your personal tax situation when you file income tax for the year.  It is possible that you may find that sufficient tax has not been withheld when the tax return for the year is filed.  Other sources of income affect your tax rate.  You may request additional tax in excess of the required rates to be withheld from your payments. A CRA TD1 form is available on our website.

Within 60 days of the end of each calendar year, an information slip (T4A) will be sent to each pensioner who has received any payments during the year.  The information slip will show the total amount of payments received as well as the amount of income tax that has been withheld.  This information is required when filing your tax return for the year.

Is VPB eligible for pension income splitting and the $2,000 pension income amount?

Yes, at age 65 VPB income qualifies for income splitting with your spouse and the $2,000 pension income amount used for determining non-refundable tax credits.

VPB income that a spouse receives as a result of the death of the member qualifies as eligible pension income (regardless of age) for income splitting and the $2,000 pension income amount.

What about inflation?

PEPP does not adjust payments automatically for inflation.  You can adjust your income to suit your needs. You have the control.

What are the fees associated with VPB?

Application fee - None

Transaction fees*
Number of free transactions allowed each fiscal year
Fee for additional transactions within
the fiscal year
Lump-sum payment
Payment schedule change
Change of investment option payments are made from
Inter-fund transfers

$40.00 (processed by you online
            via PEPP Access)
$70.00 (request processed by PEBA staff)

Fiscal year is April 1 to March 31

* Fees are subject to change. Transaction fees are deducted directly from your VPB account

Administration fees:

Administration fees such as investment manager fees, custodial fees, and administration costs of the plan are charged against each investment option. These fees are reflected in the unit value for each fund and are subject to change.  For current administration fees check the Fund Fact Sheets on our website.  There’s also a Fees and Expenses brochure with more information on our website

Working After Retirement
What if I go back to work?

If you are in the process of applying for VPB and return to work with a PEPP participating employer, your VPB application will not be processed - you are not retired.  If you return to work after your VPB application has been processed, you will begin contributing to PEPP just like you did before you ‘retired.’  You will have two accounts at PEPP - your PEPP contribution account and your PEPP VPB account.

When you terminate again, you will be sent termination options regarding your PEPP contribution account.  At that time, you can choose what to do with your PEPP contribution account.  If you decide to transfer it to your VPB account, your spouse must sign another waiver/consent allowing the transfer.  This waiver/consent is required because this is new pension money to which the spouse has entitlement.

Can I still withdraw from my VPB account if I’m working?

Yes, you can still withdraw from your VPB account while you are working.  Your contribution account, however, is locked-in until you terminate employment again.

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