Issue 3 – Summer 2009

• Understanding Your Pension in Uncertain Economic Times
• New Telephone Service and Name
• CPP or QPP Flexible Retirement Benefit and your Public Service Pension
• Changing your Pensioners' Dental Services Plan (PDSP) coverage upon Divorce, Separation or Termination of a Common-law Relationship
• Survivors' Pension – Keep your family informed
• Did you know that a Supplementary Death Benefit (SDB) may be payable upon your death?
• Please Note – Employment and Eligibility Disclaimer
• When Death Occurs, can your family members apply for Health and Dental Coverage?
• Disclaimer

Understanding Your Pension in Uncertain Economic Times

In light of the current economic situation, you may be wondering if fluctuations in the financial markets could impact your federal Public Service pension. Since April 2000, the Public Sector Pension Investment Board (PSPIB) has been assisting the Government of Canada in financing pension benefits by investing employer and employee contributions. The funds held and invested in the capital markets have been subject to the same recent return volatility as seen in financial markets globally.

However, your Public Service pension plan is a defined benefit plan, a type of registered plan that promises members a pension based on salary and years of service. The plan is legislated by the Public Service Superannuation Act (PSSA) and benefits are paid from the Consolidated Revenue Fund (CRF). The Government of Canada continues to hold a statutory obligation for the payment of pension benefits independent of the financial performance of the pension portfolio and is required to fund any shortfalls in the plan.

The pension plan is reviewed on an ongoing basis. The Treasury Board of Canada Secretariat (TBS) monitors and reports on the financial status of the plan. The Office of the Auditor General of Canada (OAGC) performs regular audits of the plan. The Office of the Superintendent of Financial Institutions Canada (OSFI) is responsible for determining the financial position of the plan and establishing the funding requirements.

New Telephone Service and Name

We have also changed the name of the Superannuation, Pension Transition and Client Services Sector, also known as the Superannuation Sector. Our new name, the Public Service Pension Centre, better reflects what we do and whom we serve.

CPP or QPP Flexible Retirement Benefit and your Public Service Pension

The chart illustrates the effect of taking an early CPP or QPP retirement benefit at age 60 compared to waiting until age 65. The Public Service and CPP or QPP monthly pension amounts (including indexing) used in the chart are for illustration purposes only. Your situation may be different.

The chart is divided into two scenarios: Taking an Early CPP or QPP Retirement Benefit at age 60 and Taking a CPP or QPP Retirement Benefit at age 65. Each scenario is divided into the five following columns: CPP or QPP Retirement Benefit, CPP or QPP Indexing, Public Service Pension, Public Service Pension Indexing and Total. These columns illustrate the monthly benefit amount you would receive under each plan. For each scenario, the chart is further divided into 6 rows to illustrate the monthly benefit amount you would receive under each plan at age 60, age 61, age 62, age 63, age 64 and age 65. Each scenario is detailed below.

Taking an Early CPP or QPP Retirement Benefit at age 60:

• At age 60, your CPP or QPP retirement benefit would be $525.00. Your Public Service pension would be $2,000.00. This would give you a total benefit amount from both sources of $2,525.00. From age 60 to age 64, the amount of benefits you would receive under the CPP or QPP and the Public Service pension plan remain the same, however, these amounts would be indexed each year to the cost of living.
• At age 61, the indexing amount payable on your CPP or QPP retirement benefit of $525.00 would be $8.66. The indexing payable on your Public Service pension of $2,000.00 would be $33.00. Your total benefit amount, with indexing, from both sources would be $2,566.66.
• At age 62, the indexing amount payable on your CPP or QPP retirement benefit of $525.00 would have increased to $17.73. The indexing payable on your Public Service pension of $2,000.00 would have increased to $67.56. Your total benefit amount, with indexing, from both sources would be $2,610.29.
• At age 63, the indexing amount payable on your CPP or QPP retirement benefit of $525.00 would have increased to $29.67. The indexing amount payable on your Public Service pension of $2,000.00 would have increased to $113.04. Your total benefit amount, with indexing, from both sources would be $2,667.71.
• At age 64, the indexing amount payable on your CPP or QPP retirement benefit of $525.00 would have increased to $42.42. The indexing amount payable on your Public Service pension of $2,000.00 would have increased to $161.64. Your total benefit amount, with indexing, from both sources would be $2,729.06.
• At age 65, the indexing amount payable on your CPP or QPP retirement benefit of $525.00 would have increased to $52.64. Because your Public Service pension must be reduced when you reach age 65, your Public Service pension would decrease from $2,000.00 to $1,341.37. Correspondingly, the indexing payable on that pension would decrease from $161.64 to $134.50. The total benefit amount, with indexing, from both sources would therefore be reduced from $2,729.06 to $2,053.51.

Taking a CPP or QPP Retirement Benefit at age 65:

• At age 60, you would only be receiving your Public Service pension of $2,000.00. This amount would be indexed each year to the cost of living.
• At age 61, the indexing payable on your Public Service pension of $2,000.00 would be $33.00. Your total benefit amount, with indexing, would be $2,033.00.
• At age 62, the indexing payable on your Public Service pension of $2,000.00 would have increased to $67.56. Your total benefit amount, with indexing, would be $2,067.56.
• At age 63, the indexing amount payable on your Public Service pension of $2,000.00 would have increased to $113.04. Your total benefit amount, with indexing, would be $2,113.04.
• At age 64, the indexing amount payable on your Public Service pension of $2,000.00 would have increased to $161.64. Your total benefit amount, with indexing, would be $2,161.64.
• At age 65, the amount of your CPP or QPP retirement benefit would be $750.00. Because your Public Service pension must be reduced when you reach age 65, it would decrease from $2,000.00 to $1,341.37. Correspondingly, the indexing payable on that pension would decrease from $161.64 to $134.50. Your total benefit amount from both sources would therefore be $2,225.87.

	CPP or QPP Retirement Benefit	CPP or QPP Indexing	Public Service Pension	Public Service Pension Indexing	Total
Taking an Early CPP or QPP Retirement Benefit at age 60
Age 60	$525.00	$ 0.00	$2,000.00	$ 0.00	$2,525.00
Age 61	$525.00	$ 8.66	$2,000.00	$ 33.00	$2,566.66
Age 62	$525.00	$17.73	$2,000.00	$ 67.56	$2,610.29
Age 63	$525.00	$29.67	$2,000.00	$113.04	$2,667.71
Age 64	$525.00	$42.42	$2,000.00	$161.64	$2,729.06
Age 65	$525.00	$52.64	$1,341.37	$134.50	$2,053.51
Taking a CPP or QPP Retirement Benefit at age 65
Age 60	$ 0.00	$ 0.00	$2,000.00	$ 0.00	$2,000.00
Age 61	$ 0.00	$ 0.00	$2,000.00	$ 33.00	$2,033.00
Age 62	$ 0.00	$ 0.00	$2,000.00	$ 67.56	$2,067.56
Age 63	$ 0.00	$ 0.00	$2,000.00	$113.04	$2,113.04
Age 64	$ 0.00	$ 0.00	$2,000.00	$161.64	$2,161.64
Age 65	$750.00	$ 0.00	$1,341.37	$134.50	$2,225.87

It is therefore important to plan financially for the eventual reduction to your Public Service pension and to carefully consider the financial impact on your overall pension benefits. Before making a decision to receive early CPP or QPP benefits, you may want to find out what your pension benefits will be before and after age 65.

Changing your Pensioners' Dental Services Plan (PDSP) Coverage upon Divorce, Separation or Termination of a Common-law Relationship

The Pensioners' Dental Services Plan (PDSP) is a positive enrolment plan. This means that each eligible family member must be enrolled by name to be covered under the PDSP. If there is a change to your family situation such as divorce, separation or the termination of a common-law relationship, it is important to contact your Public Service Pension Centre to obtain a PDSP form. You may be required to amend your coverage.

Survivors' Pension

As a retired member, your survivors (spouse or common-law partner and children) could be eligible for a pension or an allowance. In order for them to benefit from a pension or an allowance, we invite you to remind your survivors to contact the Public Service Pension Centre after your death.

Public Works and Government Services Canada (PWGSC) and Treasury Board of Canada Secretariat (TBS) are aware that the survivors and dependants of active and retired Public Service pension plan members are seeking benefit-related information. For this reason, information specific to survivors and dependants will be added to Your Pension and Benefits Web portal in 2009 at: www.pensionandbenefits.gc.ca.

Please Note – Employment and Eligibility Disclaimer

When Death Occurs, Can your Family Members Apply for Health and Dental Coverage?

In the event of your death, your eligible survivors may apply for membership under the Public Service Health Care Plan (PSHCP) and the Pensioners' Dental Services Plan (PDSP). To become a member, an eligible survivor (a spouse, a common-law partner or a dependant child) must be receiving an immediate ongoing pension under the federal Public Service pension plan ¹. A survivor is not required to have been previously covered under the PSHCP or the PDSP to apply.

The PSHCP is an optional health care plan. It is designed to supplement your provincial/territorial health insurance plan, reimbursing eligible expenses that are reasonable and customary. For example, the plan covers eligible prescription drug costs, hospital expenses, vision care, medical practitioner fees and out-of-province emergency medical expenses. There are certain restrictions, exclusions and maximum reimbursement amounts listed in the plan document and member booklet.

Similarly, the PDSP is an optional dental plan. The PDSP covers only reasonable and customary dental treatment necessary to prevent or correct a dental disease or defect if the treatment is consistent with generally accepted dental practices. Again, there are restrictions, exclusions and maximum reimbursement amounts.

The PSHCP and the PDSP are two separate plans. Your survivors must apply for/enrol in both if they wish to have health and dental coverage. If your survivor is an underage child, the appointed guardian must apply on that child's behalf. Forms are available from the Public Service Pension Centre. In general, if survivors apply within 60 days of their pension entitlement, coverage begins on that date. If the application/enrolment forms are received later than 60 days from the pension entitlement date, waiting periods apply.

¹ Some restrictions apply.

Disclaimer

Liaison, your pension and benefits newsletter, is provided for information purposes only and is not a legal document on your rights and obligations. Should there be any discrepancy between the information in this document and that contained in the Public Service Superannuation Act (PSSA) and related regulations or other applicable laws, the legislative provisions will apply. Similarly, should there be any discrepancy between information in this document and that contained in the group benefit plans provisions or insurance contracts, the plan provisions or insurance contracts will apply.