November 12, 2020
Please be aware of the following changes to the Public Service Pension Plan (PSPP) text.
Removal of Coordination
The Coordination pension option allows eligible members who retire before age 65 to receive a temporary pension payment increase. However, it also results in a permanently reduced pension after age 65 when this temporary increase is removed, and a lifetime coordination reduction begins.
Coordination will no longer be available to members who start their pension on or after January 1, 2021.
Learn more about Coordination.
Change to Joint Lifetime Reduced by 1/3
The pension option of Joint Lifetime Reduced by 1/3 Guaranteed at Least Five Years will change in reference to when and if the pension reduces.
- Starting January 1, 2021, the pension option of Joint Lifetime Reduced by 1/3 Guaranteed at Least Five Years is reduced by 1/3 on the death of the member only, rather than on the death of either the member or pension partner. If the member dies before the pension partner, the monthly payment to the pension partner is reduced by 1/3. Members who retire with this option on, or after January 1, 2021, will no longer see their pension amount reduce if their pension partner dies first.
Learn more about PSPP Pension Options.
Buyback Payments at Retirement
Effective January 1, 2021:
- Members commencing to receive a pension must complete any outstanding buyback payments prior to their pension commencement date. Buyback payments will not be allowed after a member’s pension commencement date. If the buyback is not paid in full before their pension commencement date, the buyback will be prorated.
- Members who have a Leave Without Salary (LWOS) will not be allowed to apply for or purchase a LWOS after their pension commencement date.
- There are no changes to payment timelines for members who are not commencing to receive a pension; the rules continue to be the same as the rules prior to January 1, 2021.
Learn more about Buybacks.
Gender Neutral Mortality Assumptions used in the Calculation of Pension
Since the Plan is now registered under the Employment Pension Plans Act (EPPA), changes are required to the Plan’s administrative assumptions to ensure that the Plan complies with the EPPA and does not discriminate based on gender.
All members, regardless of gender, contribute the same rate of contributions to the Plan and the monthly pension payable under the normal form of pension, being a single life with a 5-year guarantee, is not impacted by gender. However, prior to January 1, 2021, the expected value of a member’s future lifetime pension stream, also known as a commuted value, would be higher for a female than for a male, given the assumption that females live longer. Since all optional forms of pension are calculated to be equal in expected value to the commuted value of the member’s normal form of pension, this distinction resulted in a larger pension for a female member than for a male. Going forward, this distinction is being removed to ensure equality between all members. A blended unisex mortality table will now ensure that all members, whether male, female or non-binary, receive the same value of pension, all other factors being equal. There is no more distinction in benefits based on gender (including lump sum commuted values).
This change only impacts members that opt to take an optional form of pension, such as the Joint Life Option. Those that opt for a Single Life pension with a 5-year guarantee are not impacted by this change.
If you would like more information on the above changes, please log in to Your Pension Profile and contact us using Secure Mail.