Amendment to the reduction factor used in the coordination formula of the Public Service Pension Plan with the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP)
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August 22, 2007
To: Heads of Human Resources, Heads of Agencies, Heads of Crown Corporations, Heads of other Employers subject to the Public Service Superannuation Act
Subject: Amendment to the reduction factor used in the coordination formula of the Public Service Pension Plan with the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) – Impact on the calculation of an amount related to a Transfer Value, a Pension Transfer Agreement or a Pension Benefits Division
An amendment to the reduction factor used in the coordination of the Public Service (PS) pension plan with the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP) will be effective January 1, 2008. The purpose of this notice is to ask you to advise the compensation community of your organization in order to inform them of the impact of this change on the calculation of an amount related to a Transfer Value (TV), a Pension Transfer Agreement (PTA) or a Pension Benefits Division (PBD).
Change to the reduction factor used to calculate a pension at age 65
Starting January 1, 2008, the reduction factor used to calculate the pension at age 65 will be lowered from the current 0.7% to 0.625% by 2012.
Because the pension reduction at age 65 (or earlier in case of CPP/QPP disability) will be smaller commencing in 2008, this change will increase the benefits under the PS pension plan and will therefore result in a higher benefit accrual rate for members reaching age 65 in 2008 or later.
Impact on the calculation of an amount related to a Transfer Value, a Pension Transfer Agreement or a Pension Benefits Division
This improvement of benefits will affect the amount calculated in the estimation of a lump-sum value of the future pension benefit of a plan member. We must inform plan members of the factors that can affect the amount of a TV, a PTA or a PBD if the payment is made on or after January 1, 2008.
Please see the three enclosed documents mentioning the factors that can affect the amount related to a TV, a PTA or a PBD:
- Change to the reduction factor used to calculate a pension at age 65 – Impact on the calculation of a Transfer Value (TV) amount
- Change to the reduction factor used to calculate a pension at age 65– Impact on the calculation of a Pension Transfer Agreement (PTA) amount
- Change to the reduction factor used to calculate a pension at age 65 – Impact on the calculation of a Pension Benefits Division (PBD) amount
Phil Charko
Assistant Secretary
Pensions and Benefits Sector
- Date modified: