Coordination

Coordination is an option in PSPP that can allow eligible members who retire before age 65 to receive a temporary pension payment increase. However, it also results in a permanently reduced pension after age 65 when this temporary increase is removed and a lifetime coordination reduction begins.

This permanent reduction to your pension will continue regardless of changes to your federal benefits or to your other retirement income sources. If you select the coordination option, it is critical to ensure you will have enough income at age 65 to compensate for the permanent reduction to your PSPP pension. We suggest that you seek independent financial advice to make the choice best suited to your financial circumstances.

Am I Eligible for Coordination?

You're eligible for coordination if at age 65, when the permanent coordination reduction would begin, your monthly pension payment would be above a minimum threshold allowed by the Plan rules. For pensions that will commence in 2018, this threshold is $186.33/month.

If you're eligible for coordination, your Retirement Benefit Statement will show your coordination options. Prior to deciding whether to coordinate your pension, you should carefully review the different pension options that are available to you and select the option that best suits your individual circumstances.

How is My Coordination Amount Determined?

The amount of coordination shown on your Retirement Benefit Statement will be based on the maximum amount of Canadian Pension Plan (CPP) and Old Age Security (OAS) you may receive, and not based on how much CPP and OAS you will receive. You can also choose to coordinate a smaller amount if you prefer. 

Your choice cannot be changed once your first pension payment has been made.

Use the Government of Canada's CPP/OAS calculators or talk to a representative at the Government of Canada at 1-800-277-9914 to get their estimation of how much CPP and OAS you will receive.

The following is an example of how coordination impacts your pension, before and after the temporary increase.

This graph shows your PSPP pension without coordination.

You will notice that the amount of your PSPP pension (in purple) remains the same, from the time you start collecting your pension before age 65 and for the rest of your life. In the second column, your retirement income grows after age 65 because you decide to also start collecting your federal government pension benefits from CPP and OAS (in green).

This graph shows what happens to your PSPP pension with coordination.

The first column shows your pension with the coordination increase that you can receive before age 65.

The second column shows that, like in the first graph, when you turn 65 you can start collecting other benefits like CPP and OAS (in green). But it also shows the permanent coordination reduction on your PSPP pension (in grey) that starts at age 65. This permanent coordination reduction starts at age 65 even if you do not actually start your CPP or OAS benefits at 65.

It's important to understand that if you choose the coordination option, your PSPP pension will be smaller after 65, for the rest of your life, no matter how long you live.

With coordination, the amount of total retirement income paid over your life may not be the same as if you took a pension option without coordination. It will depend on how much coordination you take and how long you live.

Choosing coordination may impact the pension left for your pension partner or beneficiary after you pass away.

More on Death After Retirement

Is Coordination the Right Choice for Me?

To make a sound decision about coordination, you should have a good idea of how much money you can expect from all of your retirement income sources. You may want to seek advice from an independent financial advisor before choosing this option.

Points to carefully consider when thinking about the coordination option include:

• You cannot change your mind once your pension payments start.
• How much money will you need before and after age 65? You could live with a reduced pension another 20 years or more after age 65 but only collect an increased pension for a few years before turning 65.
• Will you be able to adjust to a reduced retirement income after age 65?
• What other sources of money will you receive before and after 65? How will this affect your income tax filing? Read more about this on Retirement Planning.
• How much CPP and OAS will you receive when you decide to start collecting this income? You can visit the CPP/OAS calculators or talk to a representative at the Government of Canada at 1-800-277-9914 for more information.

You Might Consider Coordination If:

• You have a shortened-life expectancy and need more income before turning 65 than after;
• You plan to wait until you are 65 to begin receiving CPP benefits;
• You will have additional sources of retirement income once you are 65, such as other employment pensions or personal savings.

You Might Not Consider Coordination If:

• You do not know the amount of pension you will receive from CPP or OAS at 65;
• You plan to start receiving CPP or any of your additional retirement income sources before turning 65.