Preparing for retirement - Pension

Congratulations! Planning for retirement is an exciting event in your life; however, it is also a time to make some important decisions. The following information is intended to provide you with a variety of tools and products to help you choose the pension option that is right for you.

You may want to know…

  • Can you increase your pensionable service prior to retirement?

    You may have periods of prior service that you can buy back as a way of increasing your pension. Any service buyback has to be made before you retire.

    If you have not finished paying for an existing service buyback, you will have to continue making payments after you leave. For more information, refer to the service buyback package.

  • Is there a special working arrangement where you can reduce your workweek to transition into retirement, but continue to have the non-work days be counted as pensionable service?

    Yes. If you are eligible to retire within two years, you can apply for pre-retirement transition leave. This is a special working arrangement where eligible employees apply for leave without pay to have their workweek reduced by up to 40 percent. The non-work days of the working arrangement count as pensionable service under the public service pension plan. The contributions to the pension plan are deducted based on the unreduced pay rate. Certain conditions apply and you have to submit an application to your Manager for approval.

    To learn more about the pre-retirement transition leave and the conditions that apply, please visit the Directive on Leave and Special Working Arrangements.

    More information can also be found in the Leave Without Pay Information Package.

  • What steps should you follow when preparing to retire?
    • Step 1: Take the time to familiarize yourself with your pension options.

      Your options vary depending on your age and your years of pensionable service when you leave the federal public service.

      If you have at least 2 years of pensionable service, you may be entitled to:

      If you have less than 2 years of pensionable service, generally you are entitled to:

      You may also be eligible to transfer all or part of your accrued pension credits to another pension plan through a pension transfer agreement regardless of the number of years of pensionable service that you have to your credit.

      Note: If you leave the public service and have chosen one of the following pension benefit options: a return of contributions, a transfer value payment or transferred your accrued pension credits to another pension plan, you will be covered under the post-2013 pension plan rules if you are re-employed as a plan member on or after . For more information, refer to the Re-employment section.

      If you have accumulated operational service with Correctional Service Canada, you may be entitled to different pension options and should contact the Government of Canada Pension Centre.

      More detailed information on the retirement process and required forms can be found in the Pension Entitlement Information Packages.

    • Step 2: Find out the value of each of your pension options.

      Examine your most recent personal Pension and Insurance Benefits Statement, as it provides you with a summary of your entitlements and their approximate value. The Compensation Web Applications - Pension Calculator can also help you estimate your yearly and monthly pension based on the information you enter.

      Also available, the You and Your Pension Plan video series, based on the half-day retirement courses. They offer you the opportunity to learn more about specific pension and group benefit topics that are important to you with unlimited access to the videos anytime, anywhere.

    • Step 3: Find out which of your Public service group insurance benefit plans continue after retirement.
    • Step 4: Estimate what your financial requirements will be when you leave the public service.

      Consult Understanding Your Financial Needs for additional information.

  • Once you have chosen your retirement date, who should you notify?

    Once you have chosen your retirement date, you must first submit your resignation letter to your manager for approval.  The accepted resignation letter should then be sent to the Public Service Pay Centre or your departmental compensation services, as well as the Government of Canada Pension Centre. This should be done at least 3 months in advance of your retirement date.

  • How do you choose a pension benefit option?

    As a first step, refer to your most recent Pension and Insurance Benefits Statement to review your current pension entitlements, or if you have access to the Compensation Web Applications, use the pension tools to estimate a future pension benefit.

    When you have chosen a termination date, contact the Government of Canada Pension Centre and you will be provided with a personalized Pension Benefit Options Statement outlining your pension choices. To make your option, you must complete the Pension Benefit Options Statement and return it to the Pension Centre.

    More detailed information on the termination of employment process and required forms can be found in the Pension Entitlement Information Packages.

  • What is the formula for calculating your pension benefit?

    The public service pension plan provides a lifetime pension payable until your death and a temporary bridge benefit payable until age 65.

    Generally, the formula for calculating your pension is as follows:

    Lifetime pension

    Your annual lifetime pension is based on your average salary of your five consecutive years of highest paid service and your years of pensionable service, as follows:

    1.375%Footnote 1 × Your average salary up to the AMPEFootnote 2 × Your years of pensionable service (maximum 35 years)

    plus

    2% × Your average salary in excess of the AMPEFootnote 2 × Your years of pensionable service (maximum 35 years)

    Note: If your pension includes part-time service, the benefits are adjusted to reflect the part-time assigned hours of work compared to the full-time hours of the position.

    Bridge benefit

    If you retire before age 65, you may also receive a bridge benefit payable until age 65 or until you become entitled to a Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) disability benefits, whichever occurs first. The bridge benefit is calculated as follows:

    0.625%Footnote 3 × Your average salary up to the AMPEFootnote 2 × Your years of pensionable service (maximum 35 years)

    Total Pension

    Your total pension (lifetime pension and bridge benefit) will be equal to 2 per cent of your average salary of your five consecutive years of highest paid service multiplied by the number of years of your pensionable service (maximum 35 years).

  • Why does your bridge benefit under the public service pension plan stop at age 65?

    The bridge benefit is a temporary benefit that helps to “bridge” your pension until age 65, when the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) is expected to begin. However, the bridge benefit will stop immediately if you become entitled to a CPP/QPP disability pension. More information can be found in Canada Pension Plan/Quebec Pension Plan Coordination.

  • Is your pension benefit protected from inflation?

    Yes. Indexation ensures that your pension will be protected from losing its value as a result of inflation or increases in the cost of living. However, if you become re-employed in the public service and begin contributing to the public service pension plan, your monthly pension (including indexing) will cease. This is because you cannot receive a pension and accumulate pensionable service under the public service pension plan simultaneously. For more information on the effects of re-employment, refer to Re-employment After Retirement.

  • Does your retirement date affect the pension increases (indexing) you receive?

    The Public Service Superannuation Act provides for annual increases, based on increases in the Consumer Price Index, on all retirement and survivor benefits. The increases usually begin January 1 following the year of retirement and are effective each year after that.

    The first indexing amount will be prorated to reflect the number of full months remaining in the year following the month in which you retired. In subsequent years, you will be entitled to the full increase.

    Example: If an employee retires on August 20, in January of the following he would be entitled to a pension indexing increase of 4/12 (for September to December).

  • What happens if you have not finished paying your pension contributions for your existing service buyback or your period of leave without pay when you retire?

    If you have an existing service buyback that is not fully paid, you will have to continue making payments after you leave. For more information, refer to the Service Buyback Package.

    Any pension and Supplementary Death Benefit contributions still owing for a period of leave without pay have to be paid when you retire. Information on payment options for these contributions can be found in the Pension Entitlement Information Packages - Two or More Years of Pensionable Service.

  • If you have granted someone a general Power of Attorney, can that person manage your pension affairs?

    If you wish for another person to manage some of your pension affairs, an original, notarized, or a certified true copy of the general Power Of Attorney (POA) document bearing the original signature of the lawyer, notary, commissioner of oaths or justice of the peace must be sent to the Government of Canada Pension Centre. The person you name can then request address changes, direct deposit and choose a benefit on your behalf. However, a POA does not provide that person with the authority to change the recipient of a pension benefit or to change a beneficiary under the Supplementary Death Benefit Plan.

    In order to protect our plan members, the Pension Centre cannot accept photocopies, faxes or scans of legal documents. Original POA documents will be returned to you by mail.

    If you simply wish to allow someone to make enquiries and receive information about your pension matters, but not make decisions on your behalf, you can provide the Pension Centre with a written consent to that effect.

  • Once you retire, how long will it take before you can expect to receive your first pension payment?

    The Government of Canada Pension Centre has service level standards in place for all services, including for receipt of a first payment. Once your documentation has been accurately completed and received by the Pension Centre, you can expect to receive a payment within 45 calendar days.

Visit Public service group insurance benefit plans for information on benefits.

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