Retirement Life

You contributed to the PSPP and the CPP throughout your career and you will draw a pension from both plans during retirement. Like many defined benefit plans, the PSPP is designed to work with the CPP.

In addition to your lifetime benefit, the PSPP provides you with a supplemental bridge benefit from the time you retire until the month after you turn 65. This coincides with the age at which you are eligible to begin drawing an unreduced CPP pension. You may choose to begin drawing a reduced CPP pension as early as age 60, and it is important to note that this decision has no effect on the amount of your bridge benefit. However, members who choose to wait until age 65 to draw an unreduced CPP pension will notice less of a difference in their bottom line once the bridge benefit is removed from their PSPP pension the month after they turn 65.

Under the terms of the Public Sector Pension Plan Act, when the Plan has a funded status greater than 110%, it is required to provide an annual increase to your pension to help offset the impact of inflation. This increase is known as indexation.

An actuarial valuation is conducted annually to determine the Plan's funded status. This is an annual exercise  that measures the financial health of a pension plan. It evaluates the funded status of the Plan by calculating the value of pension promises made to members and comparing it to the assets set aside to pay for those promises.

Indexation of your pension will be awarded if the funded status is greater than 110%. Indexation will not be awarded if the funded status is lower than 110%. In the case of a missed indexation, a catch-up may be awarded during a later year if the fund has enough surplus funds available.

Inflation is calculated using Statistics Canada's Canada All-Items using March 31st as the measure date. Indexation will be applied to your pension the following January 1st, if warranted.

For a history of awarded indexation percentages, see the Pension Indexation Award Archive.

Per the Income Tax Act, your pension income from the PSPP is subject to income taxes. You will receive your annual T4A in the mail by the end of February.

The amount of tax deducted from your PSPP pension can be found on the pension pay advice slip that is mailed to your home periodically.

Many retirees choose to have additional tax deducted from their PSPP pension in order to reduce or eliminate the amount owing at filing time. If you would like to have additional tax withheld from your benefit or make changes to the additional tax you've already requested, complete the 2021 TD1 - Federal Personal Tax Credits Return Form and submit it to the Pensions & Benefits office.

You may decide to return to work with a PSPP participating employer in some capacity after retirement and, if so, it is important to understand how this decision could impact your pension.

• If you accept a casual or temporary position with a PSPP participating employer, you can continue to draw pension.
• If you accept a permanent position with a PSPP participating employer, your pension will be paused until you terminate.

It is mandatory for permanent employees to contribute to the Plan, and a member cannot simultaneously contribute to and draw from the Plan.

Your employer will report your re-employed status to the Pensions and Benefits office. However, you may wish to contact the office to ensure that your new employment status does not result in an overpayment that will have to be repaid.

There may come a time when you are unable to manage your finances, including your pension. Many seniors choose to be proactive by designating a representative to act as their power of attorney to manage their financial affairs should they become unable to do so themselves. While it is not mandatory, having a designated power of attorney on file with the Pensions & Benefits office simplifies the process of having someone manage your pension if you are incapable.

Your power of attorney does not have to be a lawyer. It is often a spouse, adult child or another trusted family member who lives nearby. Whoever you choose, be sure to discuss your wishes with them so they can act on your behalf as you would see fit.

To designate a power of attorney, the Pensions & Benefits office requires the following:

1. A complete copy of the Power of Attorney (POA), signed and dated.
2. Contact information for your POA, including phone number, email and home address.

For more information on powers of attorney, you may wish to read "What every older Canadian should know about powers of attorney (for financial matters and property) and joint bank accounts" on the Government of Canada website.