Weighing Your Options

Deferred Annuity

When must you make your option: You must make a pension option within one year of leaving the Public Service. If you do not make a choice within that time limit, then you are deemed to have opted for a deferred annuity.

What about inflation: A deferred annuity is fully indexed as of the most recent date you leave the Public Service in order to maintain your purchasing power throughout your retirement. Your total pension amount is indexed according to the consumer price index (CPI). Read additional information about indexing.

Protection in case of disability: If you opt for a deferred annuity and become disabled as per the definition described under the Public Service Superannuation Act (PSSA) after your departure from the Public Service but before age 60, then it is important that you inform the Superannuation Directorate. You could, therefore, be eligible for an immediate annuity on grounds of disability. This benefit is indexed annually and reduced as soon as you begin collecting Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) disability benefits or at age 65.

Possibility of Conversion before age 60: A deferred annuity can be converted to an annual allowance at any time between ages 50 and 60. An annual allowance is a permanently reduced pension (see the calculation formula of the annual allowance in "Formulas and Methods " and the points to consider for an annual allowance in "Step 1 ").

Reduction at age 65: Your pension will be reduced at age 65 as a result of the integration with the CPP/QPP (or as soon as you receive a disability pension from the CPP/QPP). See CPP/QPP integration formula in Formulas and Methods and read additional information about the co-ordination of the Public Service Pension Plan with the Canada Pension Plan or Quebec Pension Plan

What happens to your insurance plans: If you opt for a deferred annuity, then you are still considered a PSPP member. As such, you or your eligible survivors may apply to join the Pensioners’ Dental Services Plan (PDSP) and the Public Service Health Care Plan (PSHCP) when you begin receiving a PSPP benefit. Certain conditions apply. Learn more on My Benefits.

Protection in the event of death: Your PSPP offers you a form of decreasing term life insurance and several types of benefits in the event of your death. You can find out more about this topic on Protecting Your Survivors.

Protecting your survivor: If you are entitled to a deferred annuity, then your eligible survivor may receive a benefit in the event of your death. A survivors’ benefit normally comes to half (50%) of a pension (before any reductions). See the survivor's benefit formula in "Formulas and Methods ". This survivor's benefit is fully indexed on an annual basis for the rest of your survivor’s life.

Protecting your children: If you are entitled to a deferred annuity, then your eligible children may receive a child’s allowance in the event of your death. A child’s allowance is 20% of the survivor’s benefit for each of your children, up to a maximum of four children. If there is no survivor or if the survivor does not receive any survivor’s benefits, then the child’s allowance is 40% of the survivor’s benefit for each child, up to a maximum of four children (see the child allowance calculation in Formulas and Methods). This allowance is fully indexed on an annual basis until your child, according to the definition of child under the Public Service Superannuation Act (PSSA), reaches 18 years of age, or later if he or she is a full time student and is deemed to be a dependant child under the PSSA and its regulations.

Supplementary Death Benefits: The Supplementary Death Benefit (SDB) Plan offers a form of decreasing term life insurance. The death benefit under this plan is paid to your designated beneficiary. The benefit amount is twice your annual salary, rounded up to the nearest $1,000. This original benefit amount decreases by 10% annually, starting at age 66. You may also be entitled to a paid-up benefit of $10,000, beginning at age 65 and for the remainder of your life.

If you opt for a deferred annuity when you leave the Public Service, you may ask to participate in the Supplementary Death Benefit (SDB) plan, but time limits, conditions and additional costs apply. To learn more, visit Protecting Your Survivors and Death and Bereavement .

What happens if you are re-employed: If you again become employed in the Public Service and a PSPP contributor, then your pension will most likely be recalculated based on the pension credits accrued during your period of re-employment and indexed as of your new departure date. For more information, consult re-employment in the Public Service.

Pensions