r/CanadaPublicServants • u/Trick_Fig3092 • 4d ago
Benefits / Bénéfices Medical Retirement - Operational Pension - Indexing
If I medically retire, will my pension be indexed right away? I will have 21 years of service and am 42 years of age.
I know a normal operational service pension requires you to get to the 85 factor to begin indexing (tho the percentages will accumulate from date of retirement until 85 factor)
7
u/onomatopo moderator/modérateur 4d ago
Not sure where you read about any 85 factor, thats not a thing in most public service pension plans. If you "retire" with 21 years of service at 42 you are ineligible to draw your pension.
if you medically retire at that age my understanding is that you will receive an immediate annuity https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/active-members/disability-pension.html
1
u/AntonBanton 4d ago
OP is asking about the operational services provisions, which does have options for an allowance at any age after 20 years of service, and does use an 85 factor for indexing. They’re trying to get clarity on if/how medical retirement would impact the operational annual allowance they would be eligible for.
It’s not a normal circumstance, and it’s one they really need to call the pension centre about.
1
u/Trick_Fig3092 4d ago
I have called the pension centre and they did confirm. But I find many there get confused due to the operational pension being such a small group so many are uncertain
-13
u/Admirable-Resolve870 4d ago
The Rule of 85 is a pension eligibility formula where your age + years of pensionable service = 85. This was for group 1 employees, people hired before 2012/2013 era.
If you meet this rule, you may qualify for an unreduced pension before the “normal” retirement age.
12
u/Vegetable-Bug251 4d ago
The federal public service does not have a Rule of 85, even for employees that started before 2013. I started in the FPS in 1996 and the Rule of 85 has never applied. I think you may be confused with the Public Service Pension Plan that is present or used to be present in British Columbia, Ontario, and Alberta for Provincial Public Servants.
2
u/AntonBanton 4d ago
The operational services provisions (which OP is asking about) do use an 85 factor for indexing.
1
u/HandcuffsOfGold mod 🤖🧑🇨🇦 / Probably a bot 4d ago
True, however OP keeps saying that it applies for pension eligibility - which is incorrect.
-11
u/Admirable-Resolve870 4d ago
It does apply
The 85 factor is calculated by adding together your age and years of service at retirement. If the total equals at least 85 points, you're entitled to an unreduced PSPP pension as early as your 55th birthday.
If you have 30 years of service at 55, you will be able to retire without penalty as you meet the minimum 55 age criteria
If you are 58 years old with 27 years, you can retire without penalty as you meet the 55 minimum criteria. The 85 formula applies.
Had a colleague that started at age 20. They retired at 55 with 35 years as they needed the minimum age. They could have differed probably.
Examples above are for group 1
4
u/Vegetable-Bug251 4d ago
Assuming group 1, now try your example for a person who has 35 years of service and is age 53 (ie. they started in the Federal Public Service at age 18). So under your factor rule of 85 their years of service is 35 so their age when they can retire with an unreduced pension would therefore be age 50 (85-35 years). Well I have news for you, in this example the employee cannot retire with an unreduced pension, they need to work until at least age 55 to qualify for a fully unreduced pension and at age 55 they will have 37 years of service and your factor 85 rule now calculates to 37 years of service plus age 55 equals 92.
2
u/HandcuffsOfGold mod 🤖🧑🇨🇦 / Probably a bot 4d ago edited 4d ago
A group 1 plan member with two years of service can retire without penalty and receive an immediate annuity at age 60. Sixty plus two equals sixty-two, which is well below eighty-five.
Conversely, somebody who started working young (say, age 18) would not be eligible for an unreduced pension until age 55 even though their age+service would equal eighty-five before their 52nd birthday (52+34=86).
While some other pension plans do have some form of "magic number" reflecting a combination of age and years of service, the federal public service pension does not.
2
u/frasersmirnoff 4d ago edited 4d ago
Yes. Section 64 of the PSSA provides that a recipient (of supplementary retirement benefits, a.k.a. indexing), includes a person who is in receipt of an immediate annuity or annual allowance not having reached sixty years of age and is in receipt of that immediate annuity or annual allowance by reason of being disabled.
12
u/Vegetable-Bug251 4d ago edited 4d ago
For the Federal Public Service there is no such thing as factor 85. The pension retirement rules in the FPS are either retire at age 55 with at least 30 years of pensionable service for an unreduced pension (employees who started before 2013) or retire with at age 60 with at least 30 years of pensionable service for an unreduced pension (employees who started after 2012).
To answer your specific question, if it is ultimately determined that you are eligible to medically retire right now, you would receive roughly 2% per year times 21 years of service times your average top 5 consecutive best salary. So if your average top 5 consecutive best years salary is for example $100,000 then multiply that by 42%, so your medical retirement pension would be $42,000 per year and it is indexed starting on January 1st of the year after you retire, with a pro-rated indexation for the first year depending on the month you medically retired the year before, and then full indexation on January 1st every year thereafter. There is no penalty reduction for your pension if you medically retired, much like there is if you retire non-medically, without the needed years of service to qualify for an unreduced pension.