Annual Allowance
An annual allowance is a reduced pension payable to contributors who are between 50 and 60 years of age with at least two years of pensionable service. The
reduction applied to the pension is calculated according to age and/or service.
Formula 1
(applies to contributors between 50 and 60 years of age with less than 25 years of service)
Reduction of 5% for every year you are under age 60 (rounded to the nearest one tenth of a year).
Formula 2
(applies to contributors between 50 and 60 years of age with at least 25 years of service)
| If the contributor is between 50 and 54 years of age: the highest of the following two percentages will be
used: |
If the contributor is between 55 and 60 years of age, the lesser of the following two percentages will be used: |
|
A reduction of 5% for every year you are younger than age 55 (rounded to the nearest tenth of a year)
or
A reduction of 5% for every year that your pensionable service is less than 30 years (rounded to the nearest tenth of a year)
|
A reduction of 5% for every year you are younger than age 60 (rounded to the nearest tenth of a year)
or
A reduction of 5% for every year that your pensionable service is less than 30 years (rounded to the nearest tenth of a year)
|
Example
| Age at departure or age when option was made |
55 years old (in 2003) |
| Average salary (best 5 consecutive years) |
$60,000 |
| Years of pensionable service |
25 years |
| Pension that would have been payable starting at age 60 |
$30,000
(2% x 25 x $60,000) |
| Reduction (according to Annual Allowance Formula 2) |
$7,500
(25% x $30,000) |
| Annual allowance payable from age 55 |
$22,500
($30,000 - $7,500) |
| Annual allowance payable from age 65 (or earlier if a disability pension is paid by the CPP/QPP) |
$15,769.50
($22,500 - $6,730.50) |
CPP/QPP Integration Reduction
($38,460 = AMPE 2003, see note in "CPP/QPP integration formula") |
$6,730.50
(0.7% x 25 x $38,460) |
|
