LAPP is a defined benefit pension plan. Your pension is based on a formula that looks at your salary and your years of service, and not how much you have paid into the Plan. The longer you are contributing to the Plan and the higher your salary gets, the larger your pension will be.
A quick way to calculate your pension is to use one of the estimator tools provided by LAPP:
If you are interested in seeing the formula and reading about about how all the parts of the formula work together, you can do so below.
The salary we use in the formula is called your highest average salary, which uses the five years in a row where your average salary was the highest. Those are often, but not always, the last five years of a LAPP member's career.
The maximum annual salary that can be used in your pension calculation for 2020 is $172,221. This is called the salary cap.
The service we use in the formula is your pensionable service in LAPP, to a maximum of 35 years.
In the pension formula, salary above the Year's Maximum Pensionable Earnings (YMPE) is separated from the salary below the YMPE. In 2020, the YMPE is $58,700.
What is the Year's Maximum Pensionable Earnings?
LAPP is an integrated pension plan because it is designed to work with the Canada Pension Plan (CPP). This is why the LAPP formula uses the CPP’s Year’s Maximum Pensionable Earnings.
You only pay into the CPP up to the YMPE, which is an amount set by the Government of Canada every year. The 2020 YMPE is $58,700.
Salary up to the YMPE x 1.4% x Service = $_______
Salary over the YMPE x 2% x Service = $_______
(Remember, we are using an average of five years for your salary, and the average of the YMPEs for the matching years.)
The two totals are added together to give you an estimated annual unreduced pension.