To determine the amount of your basic pension, CARRA will use the following formula:
|
Years of service credited for calculation purposes (maximum 36 as at December 31, 2011) |
|
|
× |
Accrual rate (2%) |
|
× |
Average pensionable salary for your 3 best-paid years of service |
|
= |
Basic pension |
Yes. In that case, however, CARRA will consider the pensionable salary you would have received if you had worked full time.
When you retire, CARRA will use that amount, or only part of it, to calculate your pension provided both these conditions are met:
Note: If you have received a retroactive pay adjustment after 2006, it will be spread over the years concerned if your participation has ceased after December 31, 2009.
You will be entitled to your annual basic pension when you cease to be a member of the plan, provided your qualification period for the PPMP is over and you meet one of the following three eligibility requirements:
As a rule, and subject to the tax rules, you will then be eligible for an "immediate pension with no reduction."
Example:
Jean retires at 60 years of age, once her qualification period for the PPMP is over. She has 25 years of service credited for both eligibility and calculation purposes. The average pensionable salary for her three best-paid years is $70 000.
Since she meets the eligibility requirement "age 60 or over," she is eligible for an "immediate pension with no reduction," determined as follows:
|
Years of service credited for calculation purposes |
|
25 |
|
Accrual rate |
× |
2% |
|
Average pensionable salary of Jean's three best paid years of service |
× |
$70 000 |
|
Basic pension |
= |
$35 000 |
Jean will receive an annual pension of $35 000, which represents $2 917 a month ($35 000 ¸ 12).
To determine if you have reached the "88 factor," you must first add your age and the number of years of service currently credited to you. Then, you subtract the result from 88, and divide the result by 2. Then add this number to your age and your years of service.
Example:
Peter is 51 years old and has 27 years of service credited for eligibility purposes. His qualification period for the PPMP is over.
In order to determine when he will reach the "88 factor," we must first add his age and the number of his years of credited service (51 + 27), which totals 78. Now we subtract that number from 88 (88 - 78), which gives 10. Then we divide the result by 2 (10 ÷ 2), which gives 5. Finally, we add this number (5) to his age and to his years of service:
|
Age |
+ |
Years of service |
= |
"Factor" |
|
51 |
+ |
27 |
= |
78 |
|
5 |
+ |
5 |
= |
10 |
|
56 |
+ |
32 |
= |
88 |
Peter will reach the "88 factor" 5 years from now, when he turns 56 and has 32 years of service.
When he reaches the "88 factor," Peter will be eligible for an immediate pension with no reduction because he will meet the requirement "age 55 or over" and to have reached the "88 factor."
Note that if a member is under 55 years of age when he reaches the "88 factor," he is not eligible for an immediate pension and must wait until he turns 55 to retire, except if he has 35 years of service credited for eligibility purposes.
Yes, you can, provided you are at least 55, even if you have not reached the "88 factor" (age + years of service credited for eligibility purposes).
In this case, however, you are eligible for an "immediate pension with reduction." This means that your basic pension must be reduced permanently by 0.25% for each month (3% for each year) your retirement precedes the date on which you would have become eligible for an immediate pension with no reduction.
Your pension is reduced because you will be receiving it for a longer period than if you retire only after you meet one of the eligibility requirements for an immediate pension with no reduction.
First, you must determine the percentage of reduction applicable to your basic pension. This percentage is obtained by multiplying by 0.25% the number of months between the date of your retirement and the date on which you would have met one of the following three eligibility requirements:
You then multiply the amount of your annual basic pension by the percentage of reduction in order to determine the applicable reduction.
Finally, you subtract the result from your annual basic pension. This is how you can determine the amount of the immediate pension with reduction to which you are entitled.
Example:
John retires on his 58th birthday, once his qualification period for the PPMP is over. He has 25 years of service credited for both eligibility and calculation purposes. The average salary for his three best-paid years is $60 000.
First, we must determine the number of months between his retirement and the first date on which he would have been eligible for an immediate pension with no reduction. Of the three eligibility requirements for a pension with no reduction, the first he would have met is "age 60 or over," and that would have been 24 months later had he kept on working. Therefore, we must consider 24 months between his retirement and his earliest eligibility date for a pension with no reduction.
We can determine the percentage of reduction applicable to his basic pension as follows:
|
Months between retirement and earliest eligibility date for a pension with no reduction |
24 |
|
|
Monthly rate of reduction of the pension |
× |
0.25% |
|
Percentage of reduction applicable to the basic pension |
= |
6% |
Now, we will determine the amount of his basic pension:
|
Years of service credited for calculation purposes |
25 |
|
|
Accrual rate |
× |
2% |
|
Average pensionable salary of John's three best-paid years of service |
× |
$60 000 |
|
Basic pension |
= |
$30 000 |
Then we must calculate the amount of the reduction to apply to his annual basic pension:
|
Basic pension |
$30 000 |
|
|
Percentage of reduction |
× |
6% |
|
Reduction applicable to the basic pension |
= |
$1 800 |
To determine the amount of the immediate pension with reduction to which John is entitled, we simply make the following calculation:
|
Basic pension |
$30 000 |
|
|
Reduction applicable to the basic pension |
– |
$1 800 |
|
Immediate pension with reduction |
= |
$28 200 |
John's annual pension will be $28 200, which represents $2 350 a month ($28 200 ÷ 12).
Yes. This is what we call the "compensation" of the reduction applicable to a pension. It consists in transferring to the PPMP the amount necessary for the annual payment of an amount equal to the reduction you wish to cancel or reduce.
The funds must be transferred from your registered retirement savings plan (RRSP) or from a registered pension plan (RPP) within 60 days following the end of your participation. Your employer may also cancel or minimize the reduction of your pension before you cease to be covered by the plan.
If you resign before your qualification period for the PPMP is over, you will not be entitled to a pension under the PPMP. However, if you meet one of the eligibility requirements provided under RREGOP, you will be entitled to a pension under RREGOP.
Next subject: Integration of the PPMP and the
Québec Pension Plan (QPP)
