GUIDE TO RETIREMENT / Guide to Retirement

Guide to Retirement

Fedral Public Service

Guide to Retirement from the Federal Public Service

Updated on: February 2021

This document was developed by APEX in summer 2018. In situations where there is a difference between the information contained in it and the official information you receive from the Government of Canada Pension Centre, the latter will take precedence. Even though APEX updates the document regularly, it is important to always verify with the Government of Canada Pension Centre before making any decisions.

The information contained in this guide is provided for orientation purposes only and does not constitute a legal document on your rights and obligations. Should there be any conflict between the information in this document and that contained in the Public Service Superannuation Act (PSSA) and the Public Service Superannuation Regulations (PSSR), or other applicable laws, the Act and Regulations apply.

Introduction

On behalf of the Government of Canada, the President of the Treasury Board is responsible for the Public Service Pension Plan, and is supported by the Secretariat as the administrative arm of the Treasury Board and Public Works and Government Services Canada as the day-to-day administrator.

The President of the Treasury Board is also responsible for ensuring that the Public Service Pension Plan is adequately funded to fully meet plan member benefits. To determine the plan’s funding requirements, the President enlists the help of the Office of the Chief Actuary, to provide advice and a range of actuarial services, and the Public Sector Pension Investment Board to manage the pension assets for the public sector pension plans. The Public Service Pension Advisory Committee advises the President on the administration, design and funding of the benefits and on other pension-related matters referred to it by the President.

The roles and responsibilities of each organization are as follows:

  • Treasury Board of Canada Secretariat
    The President of the Treasury Board is responsible for the overall management of the Public Service Pension Plan on behalf of the Government of Canada, the plan sponsor. In support of the Treasury Board’s role as employer for the public service, the Secretariat is responsible for policy development in respect of the funding, design and governance of the Public Service Pension Plan and other retirement programs and arrangements. In addition, the Secretariat is responsible for providing strategic direction, program advice and interpretation; developing legislation; communicating to plan members; and liaising with stakeholders.
  • Public Services and Procurement Canada
    Public Services and Procurement Canada is responsible for the day-to-day administration of the Public Service Pension Plan. This includes developing and maintaining the public service pension systems, books of accounts, records, and internal controls, as well as preparing the Account Transaction Statements for reporting in the Public Accounts.In addition, Public Services and Procurement Canada processes payments and carries out all accounting and financial administrative functions. Through its pay and pension services, Public Services and Procurement Canada’s Pay and Pension Services for Government Employees ensures that federal government employees and retired pension plan members receive their pay and pension benefit payments accurately and on time. In total, this involves payments of approximately $29 billion annually.
  • Public Sector Pension Investment Board
    The Public Sector Pension Investment Board is a Canadian Crown corporation established by the Public Sector Pension Investment Board Act and is governed by an 11-member board of directors, accountable to Parliament through the President of the Treasury Board. Its legislative mandate is to maximize returns without undue risk of loss, having regard to the funding, policies and requirements of the Public Service Pension Plan, the Royal Canadian Mounted Police pension plan, and the Canadian Forces Regular Force and Reserve Force pension plans. The Public Sector Pension Investment Board has been investing on behalf of the pension plans the amounts transferred by the Government of Canada since April 1, 2000.
  • Office of the Chief Actuary
    The Office of the Chief Actuary, an independent unit within the Office of the Superintendent of Financial Institutions Canada, provides a range of actuarial services and advice to the Government of Canada that includes the Public Service Pension Plan. The Office of the Chief Actuary is responsible for conducting an annual actuarial valuation of the pension plan for accounting purposes as well as a triennial (i.e., once every three years) funding valuation.
  • Public Service Pension Advisory Committee
    The Public Service Pension Advisory Committee, established under the Public Service Superannuation Act, provides advice to the President of the Treasury Board on matters relating to the Public Service Pension Plan’s administration, benefit design, and funding.The committee is composed of 13 members: 1 pensioner, appointed from pensioners nominated by the public servant pensioner association; 6 members representing employees, appointed from the employees nominated by the National Joint Council of the Public Service of Canada; and 6 members nominated by the President of the Treasury Board, who are traditionally chosen from the executive ranks of the public service. All members are appointed by the Governor in Council to hold office for a term not exceeding three years and are eligible for reappointment for one or more additional terms.

Important Terminology and Definitions

Annual Allowance

If you became a member of the Public Service Pension Plan on or before December 31, 2012:

  • An annual allowance is a benefit available to plan members who have more than two years of pensionable service, who retire before age 60 and are not entitled to an immediate annuity. This benefit is a reduced pension that takes into account the early payment of a retirement pension. It becomes payable at age 50 at the earliest.

If you became a member of the Public Service Pension Plan on or after January 1, 2013:

  • An annual allowance is a benefit available to plan members who have accumulated more than two years of pensionable service, who retire before age 65 and are not entitled to an immediate annuity. This benefit is a reduced pension that takes into account the early payment of a retirement pension. It becomes payable at age 55 at the earliest.
Annuity

A contract purchased from an insurance company to provide periodic (usually monthly) payments to a person for his or her lifetime.
Average Salary (For Pension Purposes)
Salary of the five consecutive years of highest paid pensionable service in the public service. The average salary of those five years is used to calculate pension benefits under the public service pension plan. Salary includes performance pay and bonuses paid.

Bridge Benefit

When you retire, you will receive both a lifetime pension and a bridge benefit. A bridge benefit is a temporary benefit, payable until age 65 (the bridge benefit stops if you become entitled to CPP/QPP disability benefits). Regardless of when you start receiving your CPP/QPP pension, your bridge benefit payments will stop at age 65.

Common-Law Partner

For the purpose of federal pension legislation, a person who has been cohabiting with a member in a conjugal relationship for at least one year.

Compensation Web Applications

Compensation Web Applications (CWA) is a suite of self-service pay, pension and insurance applications enabling employees to monitor and manage their personal compensation information, as well as calculate pay, pension and insurance “what if” scenarios to assist with financial planning. CWA allows employees to view their Pension and Insurance Benefits Statement, their Statement of Earnings (Pay Stub), and request changes to their Voluntary Deductions. Employees can also use the Pension Benefits Calculator, the Service Buyback Estimator, the Retirement Package, the Pension Portability Package, the Service Buyback Package and the Public Service Health Care Plan (PSHCP) Web Application to help make important pension and insurance related decisions.

Continuous Employment

The period during which an employee is continuously employed by the same employer. Continuous employment may be defined in the pension plan (or by law) to include certain periods of absence and/or of employment with an associated or former employer.

Deferred Annuity

If you became a member of the Public Service Pension Plan on or before December 31, 2012:

  • A benefit that is available to most plan members who leave the public service and have accumulated at least two years of pensionable service. This benefit is calculated using the same formula as an immediate annuity, but payment is deferred.

If you became a member to the Public Service Pension Plan on or after January 1, 2013:

  • deferred annuity is available to most plan members who leave the public service before age 65 and have accumulated at least two years of pensionable service. This benefit is calculated using the same formula as an immediate annuity, but payment is deferred.
Defined Benefit Plan

A type of registered pension plan that promises a certain level of pension, usually based on the plan member’s salary and years of service. The Public Service Pension Plan is a defined benefit pension plan. This is contrasted with defined contribution pension plans where the benefit at retirement is determined by the amount of annuity that the accumulated contributions plus interest can purchase at retirement.

Immediate Annuity

If you became a member of the Public Service Pension Plan on or before December 31, 2012:

  • You can receive an immediate annuity if you leave the public service at age 60 or over with at least 2 years of pensionable service or have attained age 55 or over with at least 30 years of pensionable service.

If you became a member to the Public Service Pension Plan on or after January 1, 2013:

  • You can receive an immediate annuity if you leave the public service at age 65 or over with at least 2 years of pensionable service or at age 60 or over with at least 30 years of pensionable service.
Indexation

It is the automatic adjustment of pensions in pay, or accrued pension benefits (deferred annuities), in accordance with changes in the Consumer Price Index. Public service pensions are indexed in January of each year.

Operational Service – Correctional Services Canada

Service with Correctional Services Canada (CSC) is broken down into two types:

  • Actual operational service

You accumulate actual operational service when your CSC principal place of work is not one of the following:

  • The national headquarters or a regional headquarters of CSC;
  • The office of the CSC Commissioner; or
  • A regional Correctional Staff College or any other institution that provides similar training to CSC employees.
  • Deemed operational service

If you have accumulated at least 10 years of CSC operational service and have ceased to be employed in actual operational service but continue to be employed by CSC, you may accumulate operational service while employed by CSC, subject to certain conditions. You are encouraged to contact the Pension Centre to fully understand the conditions.

  • For Contribution Rates, visit Operational Service Provisions Contribution Rates.
Pension Adjustment (PA)

The estimated value of a member’s pension benefits accruing in a particular year as determined under the Income Tax Act. For defined benefit plans, the PA is determined by a formula. A person’s RRSP contribution room is reduced by the value of the previous year’s PA.

Pension Benefit

The periodic amount that a member or former member is or may become entitled to under the terms of the pension plan.

Pension Benefit Credit

The aggregate value, at any given time, of a person’s pension benefit and other benefits provided to them under a pension plan.

Pensionable Age

The age specified in the plan text as the age at which members are entitled to a pension that is not reduced because of early retirement. It can be a specific age or be the age at which a certain number of years of service are attained, or require the attainment of both a certain age as well as a minimum number of years of service.

Pensionable service

Pensionable service means the complete or partial years of service credited to you at retirement. Your total pensionable service is the sum of your periods of current service, service that has been bought back and service transferred through a Pension Transfer Agreement. Your pensionable service is used to determine your eligibility for pension benefits and to calculate your pension benefits.

Plan Administrator

The person or group that is responsible for managing your pension plan and the pension fund. The plan administrator may hire a third party service provider to manage the day-to-day work, but the plan administrator is ultimately responsible.

Portability / Transfer Options

The options available on cessation of membership, death, marriage breakdown, or plan termination. Members, or survivors in the case of a member’s death, can transfer the commuted value of accrued pension benefits to a Locked-in RRSP, a LIF, an RLIF, another pension plan (if there is a reciprocal transfer agreement in effect and the transfer is accepted by the new plan), or the commuted value can be used to purchase an immediate or deferred annuity. A member can forego these options and elect to receive a deferred pension from the plan at retirement.

Retirement Compensation Arrangement (RCA)

A plan which provides benefits that exceed the allowable limits for a registered pension plan under the Income Tax Act. For 2019, employees whose annual salary rate was in excess of $169,300 were required to contribute to the RCA in respect of the portion above this amount (https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/bapr-samb/2019/bapr-samb-2019-001-eng.html). For executives, this includes base salary and any performance award or bonus received.

Return of Contributions

A benefit that is available to plan members who leave the public service with less than two years of pensionable service under the public service pension plan. It includes employee contributions only plus interest, if applicable.

Service Buyback

Purchase of prior eligible service that an active plan member may count as pensionable, at his/her option, subject to certain conditions. You are encouraged to contact the Pension Centre to fully understand the conditions.

Spouse

For the purposes of pension legislation, a person married to the member or former member (includes a void or null marriage).

Supplementary Death Benefit

Decreasing term life insurance benefit equal to twice the annual salary of the plan member; coverage decreases by 10 percent per year starting at age 66. A minimum amount of coverage ($10,000) is provided at no cost to the plan member at age 65 for plan members entitled to an immediate annuity or an annual allowance payable within 30 days after termination of employment in the Public Service. This minimum coverage is maintained for the plan member’s life.

Survivor

The survivor of a plan member is the person who, at the time of the plan member’s death:

  • was married to the plan member before retirement; or
  • was cohabitating in a relationship of a conjugal nature with the plan member prior to retirement and for at least one year prior to the date of death.
Survivor Benefit

A pension benefit that is paid to the eligible survivor of a plan member who dies. The common-law survivor of a plan member may be entitled to a survivor benefit if this person has lived with the plan member in a relationship of a conjugal nature prior to retirement and for at least one year prior to the date of death.

Transfer Agreement

An agreement negotiated between the Government of Canada and an eligible employer to provide portability of accrued pension credits from one pension plan to the other.

Transfer Value

A benefit option available to plan members who leave the public service before age 50 with at least two years of pensionable service. This benefit is the actuarial value of the plan member’s future pension benefits. It must be transferred to another registered pension plan, to a retirement savings vehicle or to a financial institution for the purpose of purchasing an annuity.

Vested Benefits

Pension benefits to which an employee is entitled upon cessation of membership under a pension plan, provided that they have accumulated at least two years of pensionable service. Under federal legislation, an employee’s pension benefits are vested immediately when they join a pension plan.

Waiver

The removal of the normal reduction to an annual allowance that is applied because the individual, at termination, did not meet the age and service thresholds to receive an immediate annuity. This reduction would normally be 5% for every year that the individual’s pensionable service credit is less than 30 years or the age is less than 60 years for plan members employed on or before December 31, 2012 and less than 65 years of age for plan members employed on or after January 1, 2013.

Year’s Maximum Pensionable Earnings (YMPE)

The maximum earnings for which contributions can be made to the Canada Pension Plan/Quebec Pension Plan (earnings ceiling) during the year. The YMPE changes each year according to a formula using average wage levels. The YMPE is set annually by the Canada Revenue Agency (CRA) and is available on their website.
Source: Public Services and Procurement Canada (PSPC)

Making Sense of Retirement*

The Changing Value of My Pension*

Marriage or a Common-law Relationship*

Separation or Divorce*

How to Retire*

Group Benefits Coverage*

Survivor Benefits*

Other Sources of Retirement Income*

General Information*

Post-Retirement Obligations*

Additional Retirement Resources that May Be of Interest*

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