Types of retirement

What's on this page:

    Overview

    This subsection provides information on each of the five different types of retirement under the PSPP:

    Normal retirement

    This subsection describes normal retirement at age 65. A member retiring at 65 is eligible for Basic Pension less the CPP Integration amount.

    It includes these topics:

    Example calculation

    This describes a sample calculation for a member aged 65 who retires with 25 years of pension credit after joining the plan in 1996.

    Member information

    Average Annual Salary: $100,000.00
    Average YMPE: $66,666.67
    Pension credit: 25 years

    Calculation

    OPB follows these steps to calculate the pension amount for normal retirement.

    Step Action Example
    1 Calculate the Basic Pension using the Basic Pension Formula:
      2% of Average
    Annual Salary    		 × Pension Credit

    Max. 35 years 
    before 1992
    No max. after 1991    		 (2% × $100,000) × 25 years = $50,000
    2 Calculate the CPP Integration at age 65 using this formula:
      0.7% of Average
    Annual Salary

    Up to Average YMPE    		 × Pension Credit

    Max. 35 years from 1966    		 (0.7% × $66,666.67) × 25 years = $11,666.67
    3 Calculate the pension at age 65 using this formula:
      Basic Pension Less CPP integration 
    reduction at 
    age 65    		 $50,000 − $11,666.67 = $38,333.83 per annum

    For more information

    For members who retire with service before January 1, 1966

    Normal retirement age for these members is age 60 and there is a difference

    • in the pension formula, and
    • in the eligibility for reduced early retirement.

    See section  Pre-1966 Rules (PDF).

    Unreduced early retirement

    This section describes the PSPP provisions for members to

    • retire earlier than age 65, and
    • still receive an unreduced pension.

    A member may become eligible for an unreduced early retirement under the following conditions, which are detailed below on this page:

    Important: If the member has divested out of the PSPP, then the member is not eligible to retire under these provisions until such time as the member terminates from the successor employer.

    60/20 Provision

    The 60/20 provision allows a member to retire early with an unreduced pension when the member meets the following conditions:

    • is at least 60 years of age, and
    • has a minimum of 20 years of Pension Credit.

    Example

    This is an example of a member who is eligible for the 60/20 provision:

    Member's date of birth: March 15, 1964
    Pension Credit Date: June 5, 2004
    Eligible for unreduced retirement on: July 1, 2024

    This table describes how this member was eligible for unreduced early retirement on July 1, 2024, when the member is both age 60 and has at least 20 years of Pension Credit.

    When the member... The member... So the member...
    reached age 60 on March 15, 2024 did not have 20 years' pension credit was not eligible for unreduced early retirement.
    Was over age 60 on July 1, 2024 had at least 20 years' pension credit was eligible for unreduced early retirement on July 1, 2024.

    OPP 50/30 Provision

    Members who are OPP officers may retire with an early unreduced pension if they have attained a minimum age of 50 years and have 30 or more years of Pension Credit.

    This is similar to the administration of 60/20 provision except that it is restricted to OPP officers only.

    Factor 90

    The Factor 90 provision of the PSPP allows a member to retire early with an unreduced pension if the member's age plus pension credit equals a minimum of 90 years.

    Example

    This is an example of a member who is eligible for the Factor 90 provision:

    Member's age: 59 years, 4 months
    Pension Credit: 30 years, 8 months
    Total of age + pension credit: 90 years
    Average Annual Salary: $85,000
    Pension Credit: 30.667 years

    This is how the member's pension is calculated based on the Factor 90 provision and the member's information:

    2% of Average 
    Annual Salary    		 × Pension Credit 
    Max. 35 Years before 1992    		    
    (2% × $85,000)
    from age 59 years
    4 months to age 65    		 × 30.667 years = $52,133.90 per annum

    Factor 85

    The Factor 85 provision of the PSPP allows an OPP civilian to retire early with an unreduced pension if the member's age plus pension credit equals a minimum of 85 years. This is similar to the administration of Factor 90 provision except that it is restricted to OPP civilians only.

    What happens at age 65

    Once a pensioner on early unreduced pension reaches age 65, then the CPP Integration takes effect. OPB

    • informs the pensioner by letter when the integration will take place, and
    • adjusts the pension using the following calculations.
    Step Action Example
    1 OPB calculates the CPP Integration at age 65 using this formula
      0.7% of Average 
    Annual Salary 

    Up to Average YMPE    		 × Pension Credit 

    Max. 35 years from 1966    		 (0.7% × $66,666.67) × 30.667 years = $14,311.28
    2 OPB calculates the pension at age 65 using this formula:
      Basic pension Less CPP integration 
    reduction at 
    age 65    		 $52,133.90 − $14,311.28 = 
    $37,822.62 per annum

    Reduced early retirement

    This section describes the option for reduced Early Retirement and includes these topics:

    Important: If the member has divested out of the PSPP, then the member is not eligible to retire under the reduced early retirement provision until such time as the member terminates from the successor employer.

    What is a reduced early retirement?

    Reduced early retirement is a retirement option for members who are under age 65 but over age 55 who do not qualify for unreduced early retirement. Therefore, an age reduction factor is applied to their pension.

    Eligibility

    A member who terminates employment and membership in the PSPP may retire at any time if they are

    • age 55 or over and,
    • their entitlement is not considered a small pension.

    Reduction amount

    The reduced early retirement pension is the full pension amount reduced by 5/12 of 1% for each month (i.e., 5% annually) that the member is less than age 65.

    Example calculation

    This is an example of a pension calculation for a member eligible for reduced early retirement.

    Member details

    A member who is 60 years of age and has 15 years of pension credit wishes to retire. Although the member does not meet any of the unreduced early retirement qualifications, the member is still able to take a reduced early retirement because the member is over age 55.

    Member age at retirement: 60 years
    Pension Credit: 15 years
    Average Annual Salary: $85,000
    Early retirement reduction factor: 5/12 of 1% per month less than age 65 (5% annually)
    Step Action Example
    In this example, the member is age 60 and OPB calculates the pension for reduced early retirement using the following steps.
    1 Calculation of the basic pension using the basic pension Formula: (2% × $85,000) × 15 years = 
    $25,500
    2% of Average
    Annual Salary    		 × Pension Credit

    Max. 35 years 
    before 1992
    2 Reduction of the basic pension amount for early retirement using the early retirement reduction factor: 65 years − 60 years = 5 years (60 months) 

    60 months × (5/12 × 1%) = 25%
    5/12 of 1% × Each month the member is 
    less than age 65
    3 Calculation of the pension amount at the early retirement date using this formula: $25,500 − ($25,500 × 25% = $6,375)

    $25,500 − $6,375 = $19,125 per annum to age 65
    Basic pension Less Early retirement
    reduction
    When the pensioner reaches age 65, OPB recalculates the pension for CPP Integration and reduction for early retirement
    4 Calculation of the CPP Integration amount at age 65 using this formula: (0.7% × $66,666.67) × 15 years = $7,000.00
    0.7% of Average
    Annual Salary up
    to the YMPE    		 × Pension Credit

    Max. 35 years from 1966
    5 Calculation of the integrated pension amount using this formula: $25,500 − $7,700.00 = 
    $18,500.00
    Basic pension Less CPP Integration
    amount
    6 Calculation of the reduced pension at age 65 using this formula: $18,500.00 − ($18,500.00 × 25% = $4,625.00)

    $18,500.00 − $4,625.00 = $13,875.00 per annum
    Integrated pension Less Early retirement
    reduction

    Retirement from deferred status

    This section describes the retirement options for deferred vested members and includes these topics

    What is a deferred pension?

    A deferred pension is a pension a member can collect at a later date, provided they leave pension credit in the PSPP when they end their membership. Members can start collecting a deferred pension as early as age 55. If they start collecting their pension before age 65, however, it will be reduced to reflect the fact that they are starting it early and, therefore, are likely to collect it longer.

    A deferred member has the option to transfer the commuted value of the deferred pension on a locked-in basis before age 55. The deferred member must contact OPB directly for details.

    Members who terminate PSPP membership will be eligible to a deferred pension, subject to small pension rules.

    Deferred pensions and COLA

    This describes how COLA works for those on deferred pension.

    Upon termination

    Terminated members who elect to receive a deferred (future) pension accumulate COLA

    • from the month following termination
    • to the time their pension starts.

    The first increase is pro-rated for the number of complete months remaining in the calendar year after termination. If the member terminates employment in December, COLA begins 13 months later.

    Upon starting the deferred pension

    When the deferred vested pension becomes payable,

    • the pension is adjusted to include COLA, and
    • the member is advised of the updated amount.

    Thereafter, the pensioner continues to receive COLA on a yearly basis.

    Retirement from deferred status before age 65

    Members may start receiving monthly payments as early as age 55, subject to an annual 5% reduction for each year the member is under 65. The factor is reduced proportionately for partial years.

    The pension is reduced when the member reaches age 65 for the CPP Integration amount.

    Retirement from deferred status at age 65

    OPB will contact the member directly if the member has not requested payment of the deferred pension by age 65 to initiate the retirement process.

    Application process to commence a deferred pension

    The retirement process for a deferred vested member is the same as that for a member retiring from active service except that

    • OPB deals directly with the deferred vested member, and
    • the employer (or former employer) is usually not involved in the process.

    What Employers Do

    Employers must simply refer the deferred vested member to OPB when they contact the former employer.

    Members' Responsibility

    Deferred vested members must initiate the process to start their pension payments by

    • contacting OPB directly for the required forms, and
    • submitting the necessary documentation.

    Disability retirement

    This section describes the retirement process for a member who elects a disability retirement and includes these topics

    What is total and permanent disability?

    "Total and permanent disability" means, in relation to an individual, suffering from a physical or mental impairment that

    • prevents the individual from engaging in any employment for which the individual is reasonably suited by virtue of education, training or experience, and
    • can reasonably be expected to last for the remainder of the individual's lifetime.

    Forms required for disability retirement

    Employers should direct members who wish to apply for disability retirement to contact the OPB directly, as follows:

    Secretary, Appeals
    Ontario Pension Board 
    200 King Street West, Suite 2200
    Toronto, ON M5H 3X6

    Tel.: 416-364-8558
    Toll Free: 1-800-668-6203

    The Secretary, Appeals will inform the member regarding the required forms and documentation.

    Procedure to apply for disability retirement

    Members must apply directly to OPB by writing a letter to the Secretary, Appeals at the above address.