You might be on your last LAPP at work as you approach the finish line of retirement. There are several things you need to know about getting there. If you have two or more years of LAPP membership or service you are vested, which means you are entitled to a lifetime LAPP pension at retirement.
Every vested LAPP member is able to take their unreduced pension on or after their 65th birthday. This is considered the "normal retirement age" in the Plan.
You may have the option of starting your pension earlier than age 55 if you become disabled and stop contributing to the Plan.
The amount of the reduction is 3% per year multiplied by the lower number of:
Keep reading to see an example of how the early retirement reduction is calculated for a member deciding to retire early with the following age and pensionable service:
STEP 1: Calculate the number of years it would take her to reach age 65, AND the number of years until she reaches 85 points.
STEP 2: Use the lower number (7 Years) to calculate the total pension reduction rate:
Based on the pension reduction calculated in STEP 2, her pension will be subject to an early retirement reduction of 21%, which results in her pension being $790 per month ($9,480 annually).
It's a lot to consider, but thankfully we do have some tools to help you.
Pension estimates (also called Retirement Benefit Statement - Estimates) are documents that tell you how much pension you might expect to get if you keep working at the same pace or Full-Time Equivalent you are now until a certain date. The longer you work, the larger your pension will get.
Think about getting at least two estimates: one for the earliest you would consider retiring, and another for the longest you would wait before starting your pension. This will give you an idea of how much more you could receive by continuing to work for a period of time. Estimates can be a great help in figuring out the best date for you to retire, and you can receive one by contacting us.
You will also want to consider how other forms of income — like Old Age Security, the Canada Pension Plan and any personal investments — will affect your finances once you have retired. There are other resources throughout the Thinking of Retiring section, and you can always contact us if you have any questions about your LAPP pension.