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Retirement Fact Sheet

You’ve started to think about retirement, a significant life transition. This fact sheet is intended to provide you with an overview of things you may want to think about and consider as you approach retirement. Every individual case is unique, and as you get closer to your planned retirement date, working closely with experts (including the Executive services team at the Government of Canada Pension Centre) will support you in making informed decisions that are right for you.

This Fact Sheet is structured in three sections:

  1. Transition to retirement
  2. Ready to Retire — options/considerations
  3. After Retirement

Note: This document was developed by APEX in September 2017 and revised in January 2020. 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.

Transition to retirement

  • What is Pre-Retirement Transition Leave?
  • What is a pre-retirement “special deployment” (applicable to Executives only)?
  • What is Leave with Income Averaging (LWIA) and how does it work? Can I use it to transition to retirement?
  • Can Leave without pay (LWOP) be used as a lead up to retirement?
  • I am considering a pre-retirement Interchange Canada Assignment. What do I need to know about this?
  • Is there anything specific I should do to prepare for retirement?
  • I will work past my 35 years of pensionable service. Is there anything I should know about this?

What is Pre-Retirement Transition Leave?

Once approved, pre-retirement transition leave enables employees – who are eligible for an unreduced pension or are within two years of becoming eligible for an unreduced pension — to reduce the length of their workweek by up to 40 percent. Your pay is adjusted to reflect the shorter work week, but your pension and group insurance benefit coverage continues at pre-arranged levels. The Canada Pension Plan, Québec Pension Plan, and Employment Insurance premiums are based on the reduced rate of pay.

To be considered for this leave, you must agree to resign at the end of the pre-retirement transition leave period. Details regarding eligibility criteria and how to request this type of leave can be found at Appendix C of the Directive on Leave and Special Working Arrangements. An application form can be found here.

The Retirement Planning Institute has penned an article on one public service employee’s experience with this leave.

What is a pre-retirement “special deployment” (applicable to Executives only)?

Pre-retirement special deployments permit executives approaching retirement to apply their knowledge of the department’s objectives, programs and procedures in a managerial or advisory role and to share their knowledge and experience to assist new executives or their replacement.

If you accept a pre-retirement special deployment, you must submit, with the signed letter of offer, a signed letter of resignation that will take effect immediately after the special deployment.

Please note that while on special deployment, your continued eligibility for performance pay is at your Deputy Head’s discretion. You may wish to work this out prior to signing the letter of offer.

For more details, consult Appendix C of the Directive on Terms and Conditions of Employment for Executives.

What is Leave with Income Averaging (LWIA) and how does it work? Can I use it to transition to retirement?

Leave with income averaging is an arrangement whereby eligible persons reduce the number of weeks worked in a specific 12-month period by taking leave without pay for a period of between a minimum of 5 weeks and a maximum of 3 months (note: separate agencies may have different parameters, so please consult your Human Resources Advisor).

If participating in this arrangement, your pay would be reduced and averaged out over the 12-month period to reflect the reduced time at work; however, your pension and benefits coverage, as well as premiums and contributions, would continue at the pre-arrangement levels. You receive income throughout the 12-month period, but are deemed to be on leave without pay during the non-work period of the arrangement.

Importantly, the non-work days (leave without pay) portion of the leave with income averaging working arrangement count as pensionable service under the public service pension plan. Your contributions to the public service pension plan are deducted based on the unreduced rate of pay. Contributions and pensionable earnings to the Canada or Québec Pension Plan are based on your reduced rate of pay.

Details regarding Leave with Income Averaging can be found under Appendix D of the Directive on Leave and Special Working Arrangements.

Can Leave without pay (LWOP) be used as a lead up to retirement?

With Deputy Head approval, an executive is eligible for leave without pay for any purpose not otherwise specified in the Directive on Leave and Special Working Arrangements. This authority cannot be sub-delegated. Examples where such leave might be granted include assignments with an international organization, or to accept an appointment in a Minister’s office.

With regard to counting special leave without pay towards service for the purpose of calculating vacation leave entitlement and severance pay:

  • If the leave is primarily in the interest of the employee, only the first three months of special leave without pay is counted as service.
  • If the leave is primarily in the interest of the department, the whole duration of the special leave without pay is counted as service.

Additional sources of information regarding these leaves:

  • Directive on Terms and Conditions of Employment for Executives
  • Directive on Leave and Special Working Arrangements
  • Other considerations when taking leave without pay as it might relate to your pension.

I am considering a pre-retirement Interchange Canada assignment. What do I need to know about this?

Interchange Canada is an exchange mechanism between the core public administration and other organizations in private, public and not-for-profit sectors in Canada and internationally. Assignments can last up to three consecutive years, whether the assignment takes place with one or more organizations during that time period.
Participants continue to receive their salary and remain subject to the terms and conditions of employment of their home organization, including its performance pay program, if applicable.

An Interchange Canada assignment can be arranged prior to retirement. For more information, you can access the APEX Fact Sheet or the Interchange Canada site.

Is there anything specific I should do to prepare for retirement?

If you have not yet had the opportunity, you may want to consider taking a pre-retirement course. These sessions can take two or three days of your time and can be included in your learning plan. Typically, they will include information and resources on financial planning, estate planning, your employer pension plan and the psychological and sociological aspects of retirement. Many of the people who attend these courses are surprised by the value they receive from dedicating the time to them.

The Retirement Planning Institute offers a two-day program focused on Executives that has received many positive reviews.

In addition, you may wish to consult the following links on Canada.ca:

  • Preparing for retirement – Public service group insurance benefit plans
  • Preparing for retirement – Pension

I will work past my 35 years of pensionable service. Is there anything I should know about this?

Once you reach your 35 years of service, your contributions to the public service pension plan will drop to 1%. The Pension Centre will advise the Pay Centre of the change to your contributions and you will receive a letter advising you that this has been done.

If this does not occur, you may wish to contact the Pension Centre to confirm the contributions will change. The Pay Centre maintains a toll-free, dedicated telephone line for executives: 1-888-742-1300.

Ready to Retire — options/considerations

  • I have decided to retire. What should I do?
  • How do I start the process?
  • Picking a retirement date – any considerations?
  • I have heard that my final pay is adjusted to account for the Government’s conversion to pay in arrears back in 2014. What is this about and does it apply to me?
  • Is there anything else particular to Executives that I should know about?

Additional Retirement Resources that may be of interest

  • Will I continue to be covered for Health and Dental Insurance?
  • Will my life insurance carry over into my retirement?
  • How much will this life insurance coverage cost me?
  • I am currently single/divorced or common law. What happens if I get married after I retire? Would my new significant other be entitled to survivor benefits?
  • Am I eligible to receive a retirement pension under the CPP or the QPP?
  • My government e-mail address … letting people know I am gone.

I have decided to retire. What should I do?

When you have chosen a retirement date, contact the Government of Canada Pension Centre (Pension Centre) and you will be provided with a package outlining your pension benefits, any group insurance benefit coverage and related benefits that will be available to you upon cessation of your employment. It is suggested you start this process three to six months prior to your proposed retirement date. You can reach the Pension Centre:

Do not disclose your Personal Record Identifier (PRI) or other personal information when corresponding by email.

Your “Pension and Insurance Benefits Statement” outlines your pension entitlements and benefits coverage and is accessible online for most Government of Canada payroll clients via the Compensation Web Applications (CWA). You can estimate your pre- and post-tax pension income by using the secure Pension Calculator available through CWA. If you do not have access to the CWA, contact the Public Service Pay Centre or your departmental compensation services, where available, to get your Pension and Insurance Benefits Statement.

The Pension and Benefits section on Canada.ca provides general information to help you better understand your pension entitlements and group insurance benefits.

In addition, you may find the Pension Entitlement Information Packages helpful in making your retirement decision. Also available are the You and Your Pension Plan video series.

How do I start the process?

To start the retirement process, you must submit your retirement resignation letter to your manager for approval.

The accepted resignation letter should then be copied to the Public Service Pay Centre or your departmental compensation services, as well as the Pension Centre (see contact information above). Follow your approved departmental process, which may also include providing a copy of your letter to the identified “Trusted Source”. This should be done at least three months before your proposed retirement date; if possible, notifying six months before this date can be helpful.

A compensation advisor at the Public Service Pay Centre or your departmental compensation services will finalize your pay account, including payment of any severance pay to which you may be entitled. Once this finalization occurs, they will send a letter to the Pension Centre which will trigger the Pension Centre to start processing your pension.

For pension-related matters, you should contact the Pension Centre. When contacting the Pension Centre by phone, you should have your Personal Record Identifier (PRI) and your pension number on hand. If you do not have this information, it can be found on the front of your Statement of Earnings (pay stub) or in your Pension and Insurance Benefits Statement.

Picking a retirement date – any considerations?

You should begin by taking stock of any unused leave (annual leave, personal day, etc.). Unless you want to cash out unused leave, be sure to leave enough time when picking your final day so that you can use it all while leaving sufficient time to wrap-up any loose ends in your work.

Do not forget that your annual leave entitlement is advanced to you in full at the start of the fiscal year, so if you leave mid-way through a year, you will have to return the portion of leave to which you are no longer entitled.

As an Executive, your performance pay will be prorated based on the time you worked in the fiscal year. In order to be eligible for performance pay, you need to have a valid Performance Agreement, so be sure that you complete this before you leave. You also have to meet the minimum eligibility period and obtain a performance rating of “Succeeded Minus” (Level 2) or higher.

There are a number of strategies for picking a retirement date that may be financially more advantageous to you (i.e. December 30th versus January, Monday versus Friday, after the first 10 working days of the month, etc.). For example, a number of days that would have an impact of less than a 0.5% reduction in your pension entitlement (which translates into 18 days), would not affect your pension. In other words, with the required number of years of service, you could retire 18 calendar days before your 55th birthday, as an example, with an unreduced pension. Everyone’s situation is different, so it is therefore important to get advice that relates to your particular circumstances from a professional advisor (or the Pension Centre) who understands your pension plan entitlements.

There may also be considerations regarding your family life – if you have a partner, are they ready to retire? Will you be retiring together or at different times? Are there other family members who will be adjusting to the transition along with you? How will the timing decision impact your transition?

You may have a financial advisor who can provide advice or service providers such as the Retirement Planning Institute offer sessions that might be useful to you as you finalize details related to your retirement.

I have heard that my final pay is adjusted to account for the Government’s conversion to pay in arrears back in 2014. What is this about and does it apply to me?

If you were hired by the Government of Canada before May 8, 2014, you received your pay on a Wednesday for work completed up to and including that Wednesday end of day (i.e. the pay day). In other words, you were paid on a “current” basis. As of May 8, 2014, employees are paid “in arrears” — the pay that you receive today is based on work that was completed 2 weeks prior.

To convert employees hired prior to May 8, 2014 from payment on a current basis to payment in arrears, your regular bi-weekly pay at that point in time, became a one-time “transition payment” which will be recovered when you leave the government. This transition payment was likely the same as your regular bi-weekly pay, so was seamless to you. However, you may have noticed that for your bi-weekly pay after this, the date for which the pay is disbursed now reflects the pay period two weeks prior to the pay day.

In essence, the transition payment ensures that all employees are managed in the same way. Upon leaving the government, all employees will receive their last pay at the end of the pay period two weeks after their last day of work (even if you were paid on a current basis when you started working for the government). For employees hired prior to May 8, 2014, that last pay will be used to recover the transition payment. Depending on how your pay has changed since your transition payment was made (e.g., you may have moved up in the salary range or been promoted), your final payment upon resignation or retirement may be nil.

Example: You were earning $2,000 per bi-weekly pay in May 2014; therefore, your transition payment was $2,000. When you retire, you are earning $2,700. On your last pay period, two weeks after your last day of work, your transition payment will be recovered from your last pay, leaving $700, subject to other adjustments.

It is important to know that because the transition payment amounts to 2 weeks’ salary in most cases, if you select a retirement date that is not the end of a pay period (for example, you select a Friday before a Wednesday pay day), there may not be a sufficient amount in that final pay to cover the recovery of the transition payment. In that case, the remaining amount owing will be transferred to the Pension Centre for them to recover from your pension. If this happens, the Pension Centre will either recover it in one pension payment or through a series of smaller amounts over several pension payments. If you are aware that this is going to happen, contact the Pension Centre to inform them of your preference for recovery.

It is important to note that payment in arrears does not impact the calculation of your five consecutive years of highest paid service for pension purposes.

You can consult the Pay in Arrears information available from Public Services and Procurement Canada to learn more about how it might impact you.

Is there anything else particular to Executives that I should know about?

You can access Your Pension and Insurance Benefits – Statement for Executives (2015), which provides explanations of the information in your Statement. If you do not have access to the Compensation Web Application, you also have access to this information through a dedicated Pension Centre contact for executives that can be reached:

By email:

Or

by phone:

  • 1-888-742-1300 (dedicated line for Executives)

Additional Retirement Resources that may be of interest

Canadian Retirement Income Calculator: The Canadian Retirement Income Calculator will provide you with retirement income information, including the Old Age Security (OAS) pension and Canada Pension Plan (CPP) retirement benefits. You will need to work through a series of modules in order to estimate your retirement incomes from various sources and compare them to your goal income. It also allows you to see the impact of changes in savings behaviour.

Will I continue to be covered for Health and Dental Insurance?

The Public Service Health Care Plan (PSHCP) covers both employees and retired members of the public service. Coverage can continue after you retire if you are entitled to receive an immediate public service pension based on a minimum of six years of cumulative pensionable service. To continue your coverage, you must indicate that you authorize that contributions be deducted from your pension payments on the form that will be provided by the Pension Centre.

Your PSHCP certificate number will not change when you retire.

You will share the cost of the Extended Health Provision and Hospital Level I coverage with the Government of Canada. You are responsible for 100% of additional expenses for Hospital Level II or III coverage.

The Pensioner’s Dental Services Plan (PDSP) is offered to retired public service employees (their spouses and dependent children). It is completely separate from the dental care plan for public service employees.

If you are eligible and apply within 60 days of the date you become entitled to your pension, coverage will begin on the effective date of your pension entitlement. If you apply more than 60 days after the date you become entitled to your pension, your coverage will begin on the first day of the second month following the date your pension office receives your completed PDSP form.

You will share the cost of this coverage with the Government of Canada. Contact the Government of Canada Pension Centre for more information.

Note: If your dentist uses electronic billing, once you are a member of the Pensioner’s Dental Services Plan, remember to advise your dentist that you have changed insurance providers. The information to claim your expenses will need to be updated.

The form to apply for the Pensioner’s Dental Services Plan will be included in the package you receive from the Pension Centre when you advise them that you will be retiring.

Will my life insurance carry over into my retirement?

When you leave the public service, your basic life, supplementary life and dependents’ insurance coverage will end after a 31-day extension period. Accidental Death and Dismemberment insurance cannot be converted to a private policy.

There are three ways you can establish post-retirement life insurance.

1. During the extension period, you will be able to exercise your Conversion Privilege to obtain an individual private life insurance policy with Industrial Alliance, without medical examination, regardless of your state of health. The policy will be available at Industrial Alliance’s standard rates for your age and other factors. You would make these arrangements directly with Industrial Alliance. Information will be contained in the package you receive from the Pension Centre.

2. The Public Service Pension Plan includes the Supplementary Death Benefit (SDB). Upon retirement, the SDB may provide a form of decreasing term life insurance, if you continue to pay for it – the basic benefit is equal to twice your annual salary when you retire and it decreases by 10% annually starting at age 66 to a minimum of $10,000 by age 75. The benefit is paid to your designated beneficiary and is calculated as follows:

  • Annual Salary × 2 (Rounded up to the nearest $1,000)
    You may, at any time, change your designated beneficiary by completing a new Naming or Substitution of a Beneficiary form and submitting it to the Pension Centre at the address on the form.

3. In addition, Post-retirement Life Insurance was introduced as part of the Public Service Management Insurance Plan (PSMIP) on January 1, 1989. It is available to members of the Executive Plan who were entitled to employer-paid coverage on their last day of employment and who are entitled to receive an immediate continuing pension under the Public Service Superannuation Act (PSSA).

Some federal agencies and Crown Corporations, which are covered by the PSMIP, have chosen not to participate in the post-retirement life insurance portion of the Plan. Your departmental Compensation Services or the Public Service Pay Centre can confirm if you are eligible for this benefit.

This benefit is paid by your employer. You might wish to consider your personal financial situation to determine if this is right for you because it is considered a taxable benefit, and therefore would increase your taxable income.

The amount of your post-retirement life insurance is based on the annual salary you are receiving immediately before you retire from the public service. For insurance purposes,your final salary is adjusted to the next highest multiple of $250, if it is not already such a multiple. For example, a salary of $125,110 would be adjusted to $125,250.

During your first year of retirement, your life insurance will be equal to your adjusted final salary. During your second year of retirement, your insurance will be equal to 75 per cent of your adjusted final salary. It will be equal to 50 per cent of your adjusted final salary during your third year of retirement; and 25 per cent thereafter for life (unless your coverage is suspended, terminated or cancelled under the circumstances described below).

If you die, the amount of post-retirement life insurance in force at that time will be paid to your beneficiary. You may name your own beneficiary; should you wish to change beneficiaries at any time, you may do so, subject to any applicable provincial law, by completing the card available for this purpose from the Pension Centre. If you do not name a beneficiary, the benefit will be paid to your estate. Your beneficiary or estate should contact the Pension Centre, who will provide the claim form and details of the claims procedure.

How much will this life insurance coverage cost me?

You are responsible for the costs of your private policy (if you choose to exercise the conversion option) and the Supplementary Death Benefit.

The Government of Canada pays the full premium required to support your Post retirement Life Insurance. The premiums paid on your behalf for this insurance in any one year will be considered part of your income for income tax purposes.

I am currently single / divorced or common-law. What happens if I get married after I retire? Would my new significant other be entitled to survivor benefits?

For your spouse to be able to claim the survivor benefits under the public service pension plan, they must have been married to you prior to your retirement and still be married to you at the time of your death. If you are in a common-law relationship, your survivor must prove that he or she lived with you in a conjugal relationship for at least one year prior to your retirement and that the relationship continued up to the time of your death.

If you marry after retirement, your survivor would not normally be entitled to benefits. However, you may elect, within one year of marrying or within one year of becoming entitled to payment of a deferred annuity or annual allowance, to provide your survivor with a benefit by taking a reduction in your own pension. This election must be made at least one year before your death. Under the public service pension plan, there is a minimum guaranteed benefit should there be no eligible survivors or children. For more information, refer to minimum benefit.

There is also the Supplementary Death Benefit that is paid to your designated beneficiary or to your estate.

Additional information about getting married or reaching common-law status is available for your consideration.

Am I eligible to receive a retirement pension under the CPP or the QPP?

The Canada Pension Plan (CPP) operates throughout Canada, except in Quebec, where the Québec Pension Plan (QPP) provides similar benefits. The CPP and QPP work together to ensure that all contributors receive their benefits no matter where they live. Please visit Retraite Québec for information on pensions and benefits under the QPP if you live in Quebec.

My government phone number and e-mail address … letting people know I am gone.

Every department will have different rules for how long they will maintain your government e-mail address after you have retired, as well as how long an out-of-office message will inform of your departure. You may wish to send out an e-mail to your work contacts advising of your departure, and who they should contact after your retirement.

Also, keep in mind that if your work e-mail was ever used as a contact for a professional association, your doctor/dentist, as a recovery password or for on-line membership / login, for example, it will no longer be available to you after you leave. It will be helpful to start making these changes before you leave.

 

After Retirement

  • Adjusting to one pay per month
  • Indexing. How does it work?
  • Is there an association for retired public service employees? Tell me more about the National Association of Federal Retirees (Federal Retirees).
  • How will I occupy my new found free time?

Adjusting to one pay per month

In addition to adapting to your reduced earnings (pension vs. regular pay), it is important to realize that your pension payments will be on a monthly basis (third last business day of the month). You may want to consider how this might impact any payments you have that are automatically withdrawn on a bi-weekly basis, for example.
After you retire, you can expect to receive a paper copy of your pension stub in the mail indicating how much you have received and how it was allocated (taxes, dental plan, health plan, etc.). It will come once a month for the first few months. Once your payment amount stabilizes, the Pension Centre will stop issuing the paper version monthly. After that, you will receive a paper version twice a year: in January and in September.

Indexing. How does it work?

At the end of each year, the Treasury Board of Canada Secretariat provides online information on the pension indexing increase that is effective on January 1st. Information on the calculation of this index can be found on the Public Services and Procurement Canada website while the Indexing rate for retired members can be found on the website of the Treasury Board of Canada Secretariat.

Is there an association for retired public service employees? Tell me more about the National Association of Federal Retirees (Federal Retirees).

Federal Retirees is one of the largest registered not-for-profit organizations in Canada, whose mission is to promote the interests and protect the benefits of federal employees and retirees. With a network of 79 branches nationwide and a growing membership of roughly 176,000, they are open to all federal retirees (and their partners) receiving a pension from the federal public service, Canadian Armed Forces and RCMP, as well as federally appointed judges. They are also open to those receiving survivors’ pensions, and to all current federal employees paying into a pension.  You do not have to be retired to join!

With a 56-year tradition of non-partisan advocacy for the rights of retirees and seeking to protect against changes to our members’ hard-earned pensions and benefits, Federal Retirees works towards good policies that improve the lives of all Canadians in retirement. Some of our most notable achievements can be found here https://www.federalretirees.ca/en/advocacy/our-priorities/our-history-our-victories.  Federal Retirees also sits on several official committees and advisory boards where critical discussions that affect their members are held.

A membership with Federal Retirees can also help you save money through their National Preferred Partner Program. Their members have access to exclusive savings through their health, travel, technology, home & auto, and financial partners.

To learn more, please visit www.federalretirees.ca.

How will I occupy my new found free time?

You might want to give consideration to what you want to do with your life in retirement once the honeymoon period is over. Playing golf, traveling and sleeping longer hours isn’t enough for most people who have had a challenging and very busy work life.

Identifying the things you’ve always wanted to do and how you will get started — whether having deeper community involvement, launching a new business, or developing new interests and skills — will add fulfillment and excitement to your retirement planning process.

Suzanne Nault, Licensed Psychologist and certified professional coach finds many government executives have difficulty making the adjustment to this new found freedom, especially if they have not had other outside activities while working. It is important to start thinking about this before you retire.

Ms. Nault also suggests using on-line tools such as https://www.meetup.com/ (which contrary to the title is not a dating site, but rather a geographically specific network of activities and endeavours that are going on in your neighbourhood and for which you might wish to join in). If you are planning on relocating after retirement, this might be a good way to find out what is happening in your new location. As an established leader, you might want to create and post a new group activity on this site for others to join.

Or, you might give consideration to Canadian Executive Service Organization, a registered charity that offers senior-level professionals from the public and private sector a chance to volunteer their skills and expertise to empower others in Canada and internationally. These are unpaid volunteer assignments where your knowledge and experience can be put to good use.

Sources:

 

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