Medical Retirement - Operational Pension - Indexing

[u/Trick_Fig3092]

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)

[u/onomatopo]

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

[u/AntonBanton → u/onomatopo]

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.

[u/Trick_Fig3092 → u/AntonBanton]

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 

[u/Admirable-Resolve870 → u/onomatopo]

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.

[u/Vegetable-Bug251 → u/Admirable-Resolve870]

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.

[u/AntonBanton → u/Vegetable-Bug251]

The operational services provisions (which OP is asking about) do use an 85 factor for indexing.

https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/plan-information/operational-service-provisions.html

[u/HandcuffsOfGold → u/AntonBanton]

True, however OP keeps saying that it applies for pension eligibility - which is incorrect.

[u/cestlavie514 → u/Vegetable-Bug251]

It comes from doing the math and calling it a factor. If you have 30 years at 55, you have 85 and can retire. I used to call it a factor of 85 until I read more into it and understand the various nuances of the plan.

[u/Admirable-Resolve870 → u/Vegetable-Bug251]

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

[u/Vegetable-Bug251 → u/Admirable-Resolve870]

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.

[u/HandcuffsOfGold → u/Admirable-Resolve870]

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.