This section provides a general introduction to PSPP retirement administration and includes these topics:
This is when pension payments are made and how members access their payment schedule:
|First pension payment||Paid at the end of the month following the month of retirement.|
|For subsequent payment dates||View list of current Pension Paydates.|
Please use the following links to access other retirement information.
|For information on...||Click on these links:|
|Medical or Dental benefits or Life Insurance after retirement||Insured Benefits After Retirement|
|The impact of Income Tax Act limitations on pensions||Income Tax Rules (PDF)|
|Supplementary pension plans||Supplementary Plans (PDF) (for pensions that exceed the Income Tax Act limit)|
Retirement administration forms
This section summarizes the forms used for retirement administration and includes these topics:
- Required forms
- Common-law relationship requirements, and
- Income Tax exemption requirements for Status Indians in receipt of a pension.
Employers must notify OPB of a member's retirement by completing and submitting the forms below. All completed forms must be submitted three months before retirement.
Important: OPB cannot process a member's pension entitlement(s) without full documentation.
|Completed By||Forms and Documents|
|Employer||If a Status Indian is retiring:|
The member and spouse must have been living together as of the termination date in either
- a conjugal relationship continuously for three years, or
- a relationship of some permanence as parents of a child.
Proof of Common-law relationship
The terminating member must submit a signed and completed OPB3010 - Affidavit of Spousal Relationship (PDF).
All Status Indians (within the meaning of the Indian Act) are subject to the same tax rules as other Canadian residents, unless their income is eligible for exemption under Section 87 of the Indian Act. This exemption applies to the income of a Status Indian earned on a reserve.
Registered Pension Plan benefits (including pension payments from the PSPP) are treated in the same way as employment income. Therefore, if any part of the Member's employment income is exempt from income tax under Section 87 of the Indian Act, then the pension income related to that employment income is also exempt from income tax.
When a Status Indian retires, the Member and Employer must forward to OPB the following forms and documents (in addition to the normal retirement forms and documentation):
- Certificate of Indian Status (provided by Member but issued by Department of Indian Affairs and Northern Development)
- Canada Revenue Agency TD1-IN Form (Determination of Exemption of a Status Indian's Employment Income), and
- Letter from Employer confirming that the tax-exempt employment reported on the TD1-IN Form corresponds to membership in the PSPP. See Sample Letter (PDF).
- If the Member has worked for more than one Employer while a Member of the PSPP, then OPB needs a TD1-IN and a letter from EACH EMPLOYER for whom the Member has worked.
- OPB will tax the Pensioner based on the percentage confirmed on the TD1-IN Form and the letter(s) from the Employer(s).
- If OPB DOES NOT RECEIVE the required form and documents, OPB is required to deduct income tax at source. The Pensioner will have to claim exemption when he/she files income taxes.
PSPP pension formula
This section describes the PSPP pension formula and includes these topics.
The following terms are used in calculating the PSPP Pension Formula.
|Average Annual Salary||The average of the member's Annual Salary rates over the 60 consecutive months of membership that produces the highest amount.
If the member has fewer than 60 consecutive months of PSPP membership, then the Annual Salary rates throughout the actual period of membership are used.
Exception: The Annual Salary in respect of prior eligible service periods may be used in the calculation when the member has
|CPP Integration||The reduction to the member's pension that
|Pension Credit||The length of time in years and months, during which a member, or the employer on behalf of the member, contributes to the PSPP.
This includes credit purchased through a buyback or transferred in from another pension plan.
|YMPE (Year's Maximum Pensionable Earnings)||The annual amount of earnings that determines the maximum contributions and benefits under the CPP.
The Average YMPE is calculated using
|Total 3-Year YMPE||$177,700|
|3-Year Average ($177,700 ÷ 3)||$59,233.33|
OPB calculates the member's pension from the PSPP using the following formula.
|2% × average annual salary||×||Pension credit (max 35 years before 1992; no max after 1991)||−||0.7% of average annual salary up to average YMPE||×||Pension credit from 1966 (max 35 years)|
This page describes CPP Integration and includes these topics:
CPP Integration refers to how the PSPP and CPP plans work together during a member's working years, early retirement, and after age 65. A member's pension consists of:
- the lifetime pension, available from the date the member retires for the member's lifetime; and
- if the member retires early, an early retirement bridge benefit, available from the early retirement date up to age 65.
At age 65, the early retirement bridge benefit portion of the member's PSPP ends. The additional bridge benefit is intended to supplement the member's retirement income until age 65 when the member is eligible for an unreduced CPP pension.
If the member collects both the PSPP and CPP pensions before age 65, the member will notice a reduction to the total pension income at age 65 when the early retirement bridge benefit ends.
|Member's PSPP pension (before age 65 includes early retirement bridge benefit)||−||CPP Integration (bridge benefit ends at age 65)||=||Your annual PSPP lifetime pension|
For a more detailed explanation of how the PSPP pension benefit is integrated with the CPP benefit, please refer the member to OPB publication, CPP Integration and your PSPP pension (PDF).
This section describes the PSPP's provision to protect pensions against inflation and includes these topics:
- What is inflation protection?
- Cost-of-living adjustment (COLA)
- What OPB does, and
- Deferred pensions and COLA.
Inflation protection is an important benefit in the PSPP that provides pensioners and survivors with a yearly cost-of-living adjustment.
The Cost-of-Living Adjustment (COLA) is the dollar amount of the increase to an individual pension payment.
COLA is calculated by means of an escalation factor, which is:
- the percentage by which OPB increases pensions each year
- based on the Consumers' Price Index (CPI), a standard measure of the Canadian cost of living that the Federal government sets each month, and
- set by the PSPP which specifies
- how the escalation factor is determined, and
- the maximum annual percentage increase of 8%.
Formula for the Cost-of-Living Adjustment (COLA)
The Cost-of-Living Adjustment is based on the average of the CPI for the two 12-month periods ending in the preceding September.
Example: The Cost-of-Living Adjustment reported in January 2021 was calculated as follows:
|Average CPI from
Oct. 2019 to Sep. 2020
|÷||Average CPI from
Oct. 2018 to Sep. 2019
Factor for 2021
The COLA applies to the pension payments made in a calendar year.
Note: The COLA reported in January 2021 applies to pension payments from January to December 2021.
The maximum escalation factor in any year is 8%. In other words, the maximum a pension may increase is 8% in any one year. If the escalation factor is over 8%, the difference is carried forward to a year in which the escalation factor is less than 8%.
Details concerning the current year's pension increase.
For new pensioners
When pension payments start part way through the year, the COLA at the next January is pro-rated for the number of pension payments in that year.
- calculates the escalation factor and the COLA, and
- notifies all pensioners of the following in January:
- the escalation factor
- their individual COLA amount, and
- the breakdown of their monthly pension (including any deductions).
Unless the member’s pension is considered a small pension, the member will be eligible for a deferred pension. This describes how COLA works for those with a deferred pension.
Terminated members who elect to receive a deferred (future) pension accumulate COLA
- from the month following termination
- to the time their pension starts.
The first increase is pro-rated for the number of complete months remaining in the calendar year after termination. If the member terminates employment in December, COLA begins 13 months later.
Upon starting the deferred pension
When the deferred vested pension becomes payable,
- the pension is adjusted to include COLA, and
- the member is advised of the updated amount.
Thereafter, the pensioner continues to receive COLA on a yearly basis.