Part III—Early PSPP Pension (i.e. an annual
allowance)
If you retire before you reach age 60 (unless you are at least 55 years of
age and have 30 or more years of pensionable service), you may choose an annual
allowance.
An annual allowance is a permanently reduced pension payable to
contributors who are at least 50 years of age with two (2) or more years of
pensionable service and who retire before age 60, the normal retirement age for
the PSPP.
Your early PSPP pension is reduced to take into account the fact
that you are likely to receive this pension for a longer period than if you had
waited to receive an unreduced pension at
age 60 (or from age 55 if you have 30 or more years of pensionable service).
Table 3 —Early PSPP pension before age 65
In this example, Leslie has left the Public Service at 55 years
old in 2005, with a "best-five" average salary of $60,000
and 25 years of pensionable service.
Since Leslie retires at age 55 with 25 years of pensionable service,
his pension is reduced by five percent for every year that he is younger
than age 60 OR by five percent for every year that his pensionable service
is less than 30 years. In both cases, Leslie is five years younger than
age 60 AND he is five years away from his 30 years of pensionable service.
His reduction is thus 25 per cent of his PSPP pension at age 60.
(Please remember that Leslie's PSPP pension at age 60 was previously
calculated to be $30,000.)
This means that Leslie's reduction equals $7,500 (25 percent x
$30,000).
Thus, Leslie's early PSPP pension (i.e. annual allowance) payable
from age 55 is $22,500 ($30,000 - $7,500).
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At age 65 (or earlier if a disability pension is paid by the CPP/QPP),
your early PSPP pension (i.e. annual allowance) is reduced to account for the
co-ordination with the CPP/QPP the same way the other PSPP retirement pensions
would be. Your early PSPP pension (i.e. annual allowance) at age 65 is reduced
by applying the following formula:
Early PSPP pension
(i.e. annual allowance)
|
–
|
PSPP reduction
at age 65
|
=
|
Early PSPP pension
(i.e. annual allowance)
at age 65
|
Table 4 — Early PSPP pension at age 65
Leslie's early PSPP pension
(i.e., annual allowance)
($22,500)
|
–
|
Leslie's
PSPP reduction
at age 65
($7,094)
|
=
|
Early PSPP pension
(i.e., annual allowance)
at age 65
($15,406)
|
Leslie's early PSPP pension (i.e.,
annual allowance) at age 65 will equal $15,406.
|
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Part IV—Early or Delayed CPP/QPP
Retirement Pension
Under the terms of the CPP/QPP, you may choose to either:
- claim your CPP/QPP pension as early as age 60; or
- delay drawing your CPP/QPP pension until you reach age 70.
Normally, your CPP/QPP retirement pension starts the month after your 65th
birthday. This pension is smaller if you begin receiving it before age 65 and
larger if you take it after.
(For more information on CPP/QPP retirement benefits, please visit the
CPP/QPP Web sites or contact the CPP or QPP at the toll-free telephone numbers
provided at the end of this document.)
Because the PSPP is a separate plan, your PSPP pension will not be reduced
until you have reached age 65, even if you choose to claim an early CPP/QPP
retirement pension between age 60 and 65, except in the case of disability.
Please note also that, if you choose to delay the receipt of your CPP/QPP
retirement pension after age 65, your PSPP pension will still be reduced at age
65.
Conclusion
The information provided in this document has focussed on the
impact of the co-ordination between the PSPP and the CPP/QPP. During your career
as a federal public service employee, you may have to make decisions that will
affect your eventual benefits under the PSPP. We hope that, by carefully
studying this information, you will be able to better understand this provision
in your plan and make sound decisions.
Although this information applies to the great majority of
employees, it isn't possible to cover every circumstance. If you feel that
your situation has not been covered, or if you wish to confirm whether a
particular provision does or does not apply to you, you should contact the
following officials:
a) if you are a current contributor, you may contact your departmental
compensation office or the Public Works and Government Services Canada (PWGSC)
Call Centre at the toll‑free telephone number provided in the List of
Useful Links and Telephone Numbers; or
b) if you are a retired plan member or the survivor of a
PSPP member, please contact the PWGSC Call Centre.
QUESTIONS AND ANSWERS
- What have been the contribution rates to the PSPP and to the CPP/QPP
since 2000?
Your contribution rates over the last five years are shown
in the following table:
Employee Contribution Rates for the Years 2000–06
Year
|
PSPP Contributions on Salary Above the YMPE
|
PSPP Contributions on Salary Below the YMPE
|
CPP/QPP Contributions on Earnings up to the
YMPE
|
2000
|
7.5%
|
4%
|
3.9%
|
2001
|
7.5%
|
4%
|
4.3%
|
2002
|
7.5%
|
4%
|
4.7%
|
2003
|
7.5%
|
4%
|
4.95%
|
2004
|
7.5%
|
4%
|
4.95%
|
2005
|
7.5%
|
4%
|
4.95%
|
2006
|
7.8%
|
4.3%
|
4.95%
|
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Where can I obtain more information on my PSPP benefits?
PSPP benefits
If you are a current contributor, information on your future PSPP pension is provided to you
every year through Your Pension and Benefits Statement. If you are a pensioner, please contact the PWGSC
Call Centre mentioned in the attached list. You may also
estimate your future PSPP pension by using the Pension Benefits Calculator. (Additional
information may be found by visiting the Compensation Sector Web site
provided in the List of Useful Links and Telephone Numbers).
-
Where can I obtain more information on my CPP/QPP contributions?
CPP/QPP benefits
Information on your CPP/QPP contributions and estimated benefits are
provided to you through your most recent CPP Statement of Contributions
or QPP Participation Statement. (Additional information on these
statements can be found by visiting the CPP or the QPP Web sites or by
calling the toll-free number provided in the List of Useful Links and
Telephone Numbers.)
List of Useful Links and Telephone Numbers
Acts and Regulations
The Department of Justice Canada provides legislative material, notably the Public
Service Superannuation Act and its regulations (the Public Service
Superannuation Regulations), the Supplementary Retirement Benefits
Act, the Special Retirement Arrangements Act and its regulations (the
Retirement Compensation Arrangement Regulations, No. 1 and No. 2), and
the Pension Benefits Division Act and its regulations (the Pension
Benefits Division Regulations).
http://canada.justice.gc.ca
Group Benefit Plans
This site provides information on the Public Service Health Care Plan, Public
Service Dental Care Plan, Disability Insurance Plan, and Public Service
Management Insurance Plan. (Follow the Information for Employees window to
Pensions and Benefits.)
http://publiservice.tbs-sct.gc.ca
Canada Pension Plan and Old Age Security
The links to the Canada Pension Plan and Old Age Security are found on the
main page of the Social Development Canada Web site.
http://www.sdc.gc.ca/en/home.shtml
Compensation Sector Web Site
Pension Benefits Calculator and Service Buyback Estimator
This Web site makes tools available to Public Service Plan members that
enable them to estimate the value of their future pension benefits (Pension
Benefits Calculator) and the cost of buying back prior pensionable service
(Service Buyback Estimator).
http://www.pwgsc.gc.ca/compensation/
Quebec Pension Plan
This site provides information on the Quebec Pension Plan and the benefits
available to plan contributors. (Search the Quebec Pension Plan Web site for
specific information on this plan.)
http://www.rrq.gouv.qc.ca/en/
Your Pension Plan
This is a brochure published by the Treasury Board of Canada Secretariat that
describes the major terms of your pension plan, which is governed by the Public
Service Superannuation Act (PSSA). (See under Employees/Pensions and
Benefits/Pensions/Public Service Pension Plan.)
http://publiservice.tbs-sct.gc.ca
PWGSC Call Centre (toll-free)
for active and retired PSPP members
1 800 883-1411
for current executives of the Public Service of Canada
1 888 742-1300
Canada Pension Plan (toll-free)
1 800 277-9914
for service in English
1 800 277-9915
for service in French
1 800 255-4786
if you use a TTY device
Quebec Pension Plan (toll-free)
1 800 463-5185
1 800 603-3540
if you use a TTY device
1 The AMPE is the average of the YMPE (Year's Maximum
Pensionable Earnings) for the year of your retirement and the four preceding
years. The YMPE and the AMPE are determined in accordance with the provisions of
the CPP/QPP. If you ceased to be employed in the Public Service in 2006, the
AMPE will be $40,540.
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