Your pension and Canada Pension Plan integration

For retirees 65 and under, understanding the concept of CPP integration can be confusing. However, understanding how your PSPP pension income changes when you become eligible for the Canada Pension Plan (CPP) is important as you move through retirement.

Retirees under the age of 65 receive the PSPP early retirement bridge benefit which is designed to supplement your lifetime PSPP pension. The early retirement bridge benefit continues from your retirement date until age 65, when you become eligible to collect an unreduced CPP pension. While you were an active contributing member in the PSPP, you also contributed to CPP.

The early retirement bridge benefit is often more than what members may receive from CPP as your bridge benefit is calculated based on the credit you earned in the Plan, whereas your CPP benefit reflects the benefit you've earned in the CPP under its eligibility rules. While the combined CPP and PSPP benefit for most clients at age 65 is higher, you will notice that your total PSPP pension from age 65 is lower because you are only receiving your lifetime PSPP pension without the additional bridge benefit.

What should retirees under 65 know about how CPP integration impacts their pension?

• It’s important to understand that your PSPP early retirement bridge benefit and your CPP pension are not the same amounts because of the difference in calculation.
• It’s highly recommended that you should know how much you could receive as CPP payment, to plan proactively about your cash flow in retirement.
• You can choose to take a permanently reduced CPP retirement pension as early as age 60. When begun before 65, CPP pensions are reduced. For CPP retirement pensions starting in 2016 and later, the reduction is 0.60% for each month (or 7.2% per year) before age 65. Taking early CPP does not impact your bridge early retirement bridge benefit and pension.

What should retirees at 65 know about how CPP integration impacts their pension?

• At age 65, the early retirement bridge benefit from the PSPP ends since you are now eligible to collect an unreduced pension from CPP. From age 65 onwards, you receive your PSPP lifetime pension, along with your CPP pension (unless you delay collecting your CPP pension).
• If you commence your PSPP pension on or after your 65th birthday, your PSPP pension will not include any early retirement bridge benefit.

If you die before age 65, will your survivor benefits be adjusted to integrate with CPP?

Yes. Any survivor pension paid to your eligible spouse, or eligible children, will be equal to a percentage of the pension that would have been payable to you after age 65.

If you are receiving CPP Disability Benefits, will the adjustment for CPP integration be made before age 65?

No. The adjustment for CPP integration is made at age 65 for all PSPP members even if you received CPP Disability Benefits prior to that date.

If you retire before age 65, will your PSPP pension still be protected through a cost-of-living adjustment?

Yes. The PSPP protects your pension from inflation regardless of the age you retire. Each year after you retire, any cost-of-living adjustment (COLA) is applied to your PSPP pension. The adjustment is based on the change in Canada’s Consumer Price Index. When you reach age 65, the PSPP early retirement bridge benefit and any inflation adjustments to that benefit received are no longer included in your PSPP pension. Your PSPP lifetime pension continues to be increased by COLA.

For information on CPP integration, please contact us or visit Canada.ca(s’ouvre dans un nouvel onglet) to receive an estimate of your monthly CPP.