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

Provided 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 service prior to July 1, 1980 x 2% x average salary of best 7 of the final 12 years of service PLUS years of service after July 1, 1980 x 2% x average salary of best 5 of the final 12 years of service;

    less

    Years of service from January 1, 1966 to July 1, 1980 x .6% x average annual salary up to the yearly maximum pensionable earnings (YMPE) under the Canada Pension Plan in the same 7-year period PLUS years of service after July 1, 1980 x .6% x average annual salary up to the maximum pensionable earnings under the Canada Pension Plan in the same 5-year period.

  2. 70% of your weighted average annual salary in the 5 and 7-year periods used above.

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

If you have no pre-July 1, 1980 service, or if you have already converted your service, your pension formula is based on the average salary of the best 5 years of the last 12 years.

Prior to 1966, TRAF contributions were 6% of salary. When the Canada Pension plan (CPP) was introduced, the rate was reduced to account for contributions made to CPP. The reduction in TRAF contributions is reflected in the pension formula and offset by the CPP benefits you can expect to receive.

Adjustment due to Early Retirement (with at least 10 years of service)

Early Retirement Penalty (ERP)


If you retire before you are 60 years of age, and your age and qualifying years of service add up to less than 80, legislation applies an ERP to your pension for any service you have after 1991.

The penalty is the lesser of 1/4 of 1% for each month you retire before age 60 or 1/4 of 1% for each month the combined age plus service is less than 80 at retirement.

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 to the cost of your lifetime penalty. Because the bridging benefit is the actuarial equivalent of the ERP, you are effectively receiving the full-formula pension.

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 on your pension payments due to bridging, plus any cost of living adjustments that have been paid on this amount.


Adjustment due to Early Retirement (with less than 10 years of service)

Actuarial Equivalent

If you terminate your contract on or after May 31, 2010, your pension will be adjusted to the actuarial equivalent of the pension that would have been payable at age 65.