CPP integration & your PSPP bridge benefit

Did you know…

The PSPP provides a bridge benefit to all members who begin collecting a pension prior to reaching age 65. The bridge benefit supplements your income until you can begin collecting your Canada Pension Plan (CPP) at an unreduced rate at age 65.

Here are some important facts about the bridge benefit:

• If you choose to retire before age 65, you will receive a PSPP bridge benefit that ends when you reach age 65.
• Your PSPP early retirement bridge benefit and your CPP pension are not the same amount. Your PSPP bridge benefit is calculated based on your credited service in the PSPP (up to a maximum of 35 years), while your CPP benefit reflects the amount earned during your entire working career.
  
  PSPP bridge benefit formula:
  (0.7% × the average YMPE* or your average annual salary, whichever is less) × your years of pension credit.
• You will notice a change in the total amount you receive from your PSPP pension when you turn 65. This is because your early retirement bridge benefit stops at age 65. However, you may also choose to start your CPP pension at that time.

*YMPE (Year’s Maximum Pensionable Earnings) is an annual limit set by the Government of Canada that determines the maximum earnings on which you contribute to CPP. The YMPE for 2026 is $74,600.

When should you take CPP? Key tips for PSPP members

Although age 65 is the standard start age for Canada Pension Plan (CPP) benefits, you may choose to begin as early as age 60 or as late as age 70. PSPP members should consider the following:

• Start Early (Age 60): You can begin CPP at age 60, but your benefit will be reduced by 36% (0.6% per month before age 65).
• Wait Longer (Age 70): Deferring CPP until age 70 increases your payments by 42% (0.7% per month after 65). At age 70, the maximum monthly CPP can reach $1,937.73 compared to $1,364.60 at age 65 (based on 2024 figures).

Why delay CPP?

• Higher Lifetime Income: CPP provides larger, inflation-protected payments for life.
• Tax Planning: Drawing down RRSPs earlier can reduce taxes and help avoid OAS clawbacks.
• Longevity Protection: Combined with your PSPP pension, CPP offers reliable lifetime income.

Potential downsides

• Cash Flow Needs: If you need income before age 65, delaying CPP may not be feasible.
• Breakeven Age: The value of deferral depends on your life expectancy.
• Tax Impact: Higher CPP income could move you into a higher tax bracket.

To learn more about CPP integration and how it works with your PSPP pension, visit OPB.ca.