The Enhanced Early Retirement Benefit (EERB) program allows LAPP members who receive a retiring allowance to purchase a pension enhancement with those funds if they retire within 6 months of ending employment.
The EERB is a way that members can minimize their early retirement reduction. To do this, a member would need to receive a retiring allowance from their employer, which exists under the tax rules and relate to a payment following retirement in recognition of long service or as severance pay.
Can I Apply For an Enhanced Early Retirement Benefit?
You can apply for an EERB ("benefit enhancement") if:
- You are 55 years of age or older when you leave your employer,
- You have two years or more of LAPP membership or service, and
- You will receive a retiring allowance from your employer on any pre-1996 employment.
The benefit enhancement can be purchased only with retiring allowance money that is eligible for rollover to a registered pension plan (RPP) or registered retirement savings plan (RRSP) under the Income Tax Act.
What Does the Enhancement Do?
Normally, if you retire before age 65 without reaching your 85 factor
, your pension is reduced. This reduction is 3% for every year early that you retire. If you purchase the enhancement, you can lower the reduction, to a minimum of 1.5%. More detail can be provided in a cost estimate.
The Cost Estimate
You can ask your employer to have LAPP estimate:
- The approximate cost of the benefit enhancement,
- What portion of the benefit enhancement can be purchased if you know the amount of your retiring allowance,
- Your regular pension options without the benefit enhancement, and
- The approximate additional LAPP pension increase that can be expected from purchasing the benefit enhancement.
If you ask your employer to request an estimate from LAPP, you will need to provide your employer with:
- The date your employment will end,
- The date your pension will start, and
- Your pension partner’s birth date, if you have a pension partner.
Estimates will be calculated as of the month in which we receive your request, based on your age when the pension will start and using estimated pensionable service and salary up to the date your employment will end.