Annual allowance

Will your pension be reduced if you receive it before age 60?

To answer this question and many others watch the video below. Here you can learn more about your pension, the reduction formula and the pension calculator. It is important to note that annual allowance is paid monthly, not yearly. Click on the links below for additional and more detailed information on this topic.

Transcript of the Annual allowance

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If you have at least two years of pensionable service to your credit when you retire and are not entitled to an immediate annuity, you can opt to receive an annual allowance payable as early as:

  • age 50 if you became a plan member of the public service pension plan on or before December 31, 2012, or
  • age 55 if you became a plan member on or after January 1, 2013.

The annual allowance is a type of monthly pension that is reduced because you are receiving it before the normal retirement age.

The annual allowance is payable from the later of age 50 or 55 (depending on when you became a plan member), your date of termination or the date you request payment of the allowance.

The reduction is calculated based on age or, in some cases, pensionable service. The amount of the reduction depends on your situation at retirement or at the time the annual allowance becomes payable. Generally,

  • for an employee who became a plan member on or before December 31, 2012 , the reduction is 5% for every year that the employee is under age 60;
  • for an employee who becomes a plan member on or after January 1, 2013 the reduction is 5% for every year that the employee is under age 65.

If you are retiring with at least 25 years of pensionable service, the reduction may be smaller.

The reduction is permanent, except if you become disabled before you reach the normal retirement age. In that case, you would receive an immediate annuity, which may be adjusted to take into account any amount you already received as an annual allowance.

Like other pension benefits, the annual allowance is fully indexed to the cost-of-living.

If you choose to receive your annual allowance payable within 30 days of the date of your retirement, your participation in the Supplementary Death Benefit Plan is automatically extended and coverage continues at the same premium rate as when you were employed. If you decide to receive your annual allowance at a later date, you can choose to continue your Supplementary Death Benefit at commercial rates but time limits, conditions and additional costs apply.

As well, when your pension becomes payable, if eligible, you may apply to join the Pensioners' Dental Services Plan and the Public Service Health Care Plan.

You can obtain an estimate of your pension benefits from the Pension calculator on Your public service pension and benefits web portal or by contacting the Government of Canada Pension Centre. For more information on the pension benefits payable, we encourage you to consult the Pension entitlement information package, also on the web portal.

Public Services and Procurement Canada

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