Early retirement

Retiring before the normal retirement age will affect your pension. Here are the key points to consider.

Calculating your bridge benefit

If you retire before age 65, your pension will include a temporary monthly payment called a bridge benefit.

This benefit is designed to bridge the gap between your early retirement income and your income after you turn 65, which may also include Canada Pension Plan and old age security benefits. The bridge benefit ends when you turn 65 or die, whichever comes first.

The bridge benefit is calculated as follows:

0.7% x (lesser of previous year’s maximum pensionable earnings [YMPE] or highest average salary) x pensionable service

For example, if you retired in 2016 at age 60, with 25 years of pensionable service and earnings averaging $67,000 in your five highest salary years, your bridge benefit is calculated as:

0.7% x (YMPE for 2015 of $53,600) x 25 = $9,380

This means that you will receive a bridge benefit of $9,380 annually on top of your basic pension until you turn 65 or die.

The bridge benefit may increase because of an annual cost-of-living adjustment.