Early retirement

Retiring before the normal retirement age will affect your pension. Here are the key points to consider.

Calculating your bridge benefit

If you retire before age 65, your pension may include a temporary monthly payment called a bridge benefit. The bridge benefit is earned on pensionable service accumulated in the plan up to and including December 31, 2015.

This benefit is designed to bridge the gap between your early retirement income and your income after you turn 65, which may also include Canada Pension Plan and old age security benefits. The bridge benefit ends when you turn 65 or die, whichever happens first.

The bridge benefit is added to your monthly pension payment and calculated as follows for service earned up to and including December 31, 2015:

0.3% x (lesser of previous year's maximum pensionable earnings [YMPE] or highest average salary) x pensionable service

For example, if you retired on December 1, 2018, at age 60 with 25 years of pensionable service up to December 31, 2015, and earnings averaging $67,000 in your five highest salary years, your bridge benefit would be calculated as:

0.3% x (YMPE for 2017 of $55,300) x 25 = $4,147.50

This means you would receive a bridge benefit of $4,147.50 annually on top of your basic pension until you turn 65 or die. (On your Member's benefit statement, the bridge benefit is calculated as a monthly payment.)

Pensionable service earned on or after January 1, 2016, does not add to your bridge benefit. Changes to the formula used to calculate pensions converted the bridge benefit to a lifetime pension benefit. This means you will receive a higher lifetime pension, since there is no bridge benefit that will stop at age 65.