Working past age 65 - Pension
The following information will answer your questions as to what happens when a plan member under the public service pension plan continues to work past age 65.
You may want to know…
Do you continue to contribute to the public service pension plan after age 65?
Yes. If you continue to be employed in the federal public service you must continue contributing under the plan until your retirement date, or to the end of the calendar year in which you reach age 71. The salary and service accrued after age 71 will not be included in the calculation of your pension.
Even after you reach the maximum of 35 years of pensionable service, you continue contributing but at a lower rate. When you reach the maximum of 35 years of pensionable service, your current service contributions reduces to one percent of your salary. This lower contribution amount ensures Protection from Inflation for your future pension. Although you will not accrue additional years of pensionable service after reaching 35 years, the salary paid to you during this period may be used in the calculation of the best consecutive 5-year average salary on which your pension will be based.
How are public service pension plan benefits coordinated with the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP)?
The public service pension plan is coordinated through the Canada Pension Plan/Quebec Pension Plan Coordination so that employees do not have to set aside a greater proportion of their salary for retirement savings. Your public service pension benefits include a lifetime pension and a temporary bridge benefit which is payable until the first of the month following your 65th birthday. The bridge benefit ends immediately when you begin to draw disability benefits. If you are still working at age 65, the bridge benefit will not be paid upon retirement. Please see Reaching age 65 and Retirement Income Sources for more information about the coordination between the plans.
If you begin receiving retirement benefits from Canada Pension Plan (CPP) or Quebec Pension Plan (QPP), will your contributions under the public service pension plan change?
No. Your contributions will not change. Your contributions under the public service pension plan are not dependent upon whether you pay CPP or QPP contributions or whether you are in receipt of CPP or QPP benefits.
If you continue to work past age 65 and you retire at age 71, is your pension calculated using the same formula as for a plan member retiring at an earlier age?
Yes. Your public service pension will be calculated using the same basic formula:
When you retire, you will receive a 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)
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.
Plan members who retire at age 65 or after do not receive the bridge benefit.
0.625%Footnote 3 × Your average salary up to the AMPEFootnote 2 × Your years of pensionable service (maximum 35 years)
Is there a co-relation between the amount of retirement benefits payable under the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) and the adjustment to your public service pension at age 65?
No. Despite the coordination between the plans, the public service pension plan and the CPP or QPP are separate plans. The benefits provisions of each plan are different and the benefit amount is calculated independently of each other. The formula for the bridge benefit portion of your public service pension is the same whether or not you pay CPP or QPP contributions or receive CPP or QPP benefits. The bridge benefit calculation and the stop date are based on the fact that during your pensionable service you paid a lower rate of contributions under the public service pension plan on the salaries for which you were required to pay CPP or QPP contributions. For further information on the coordination of these plans, please consult the information on the Canada Pension Plan/Quebec Pension Plan Coordination.
Are you still covered by the Supplementary Death Benefit provisions after age 65?
Yes. You will continue to be covered by the Supplementary Death Benefit (SDB) provisions. This benefit is equal to twice your annual salary, payable to your designated beneficiary or to your estate upon your death. The coverage decreases by 10 per cent each year starting at age 66 to a minimum of $10,000 by age 75. If you are still employed in the public service past age 65, the minimum coverage is the greater of $10,000 or one third (1/3) of your annual salary. After you reach age 66, your contributions will decrease as your coverage declines.
What happens if you become employed or re-employed in the federal public service past age 71?
If you become employed or re-employed in the public service past age 71, you cannot contribute to the public service pension plan after the end of the calendar year in which you reach age 71. If you have already retired and begin working again after age 71, your monthly pension (including indexing) will temporarily cease to be paid and it will be reinstated once you stop working. Please see Re-employment After Retirement for more details.
Visit Public service group insurance benefit plans for information on benefits.
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