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Calculating Your Pension

 

 
Defined benefit plan


TRAF is a defined benefit pension plan. This means your pension is determined by your years of service and your salary, not your contributions.

Generally, the longer you work and the more salary you earn, the higher your pension will be when you retire. If you decide to teach part time, your average salary will not be affected, but you will earn a lower pension benefit because your service is not full time.

Pension formula

If you meet all eligibility requirements, the earliest you can receive your pension is the month following your 55th birthday. You must commence pension benefits no later than December 31 of the year you turn age 71.

The pension formula is based upon the lesser of A or B:

  1. Years of pensionable service prior to July 1, 1980 x 2% x average contractual salary of the best seven of the final 12 years of service PLUS years of pensionable service on and after July 1, 1980 x 2% x average contractual salary of the best five of the final 12 years of service

    less

    Years of pensionable service from January 1, 1966 to July 1, 1980 x 0.6% x average contractual salary up to the year's maximum pensionable earnings (YMPE) under the Canada Pension Plan (CPP) in the same seven-year period PLUS years of pensionable service on and after July 1, 1980 x 0.6% x average contractual salary up to the YMPE in the same five-year period.

  2. 70% of your weighted average contractual salary in the five- and seven-year periods used above. (Generally more than 40 years of pensionable service is needed to attain a 70% maximum pension).

All pensions are subject to maximums as required by the Income Tax Act.

If you have no pre-July 1, 1980 service or if you have already converted your service to a five-year average, your pension formula is based on the average salary of the best five years of the last 12 years.

Adjustment due to early retirement (with less than 10 years of qualifying service)

Actuarial equivalent

If you retire and commence your pension before age 65 with less than 10 years of qualifying service, your pension will be adjusted to the actuarial equivalent of the pension payable at age 65.

Adjustment due to early retirement (with 10 or more years of qualifying service)

Early retirement penalty (ERP)


If you retire and commence your pension before age 60, and your age plus qualifying service total less than 80, legislation applies an ERP to your pension for service you have after 1991.

The penalty is the lesser of 0.25 of 1% for each month you retire before age 60 OR 0.25% for each month that the combined age plus qualifying service is less than 80.

Bridging benefit

If the ERP applies to you, then you will receive a bridging benefit. This benefit is determined on the amount of the penalty over your lifetime and paid to you in full over a shorter time frame - until you are age 65 or until you pass away, whichever happens earlier. Therefore, the amount of the monthly bridging benefit is greater than your monthly penalty but equivalent in expected value to your lifetime penalty.

If you are affected by the ERP, you need to know that your pension will decrease at age 65 by the monthly amount that has been included in your pension payments due to bridging, plus any cost of living adjustments that have been paid on this amount.

If you retire and commence your pension at age 60 or older, an ERP will not be applied to your pension.

Postponed retirement

If you retire and commence your pension after age 65, your pension may be based on the greater of the accrued pension at your retirement date or the actuarial equivalent of the pension that would have been payable at age 65.

Note: Different rules may apply if you terminated your contract with your employer before May 31, 2010.