When the Canada/Quebec Pension Plan (C/QPP) was integrated with other workplace pension plans in 1966, it was thought that federal employees would be best served by a pension scheme that coordinated or integrated federal pension plan contributions with C/QPP contributions. This helped to keep pension plan contributions affordable for employees. The retirement income system – workplace pension plans, C/QPP and Old Age Security, as well as individual savings – was projected to replace approximately 75 to 85 per cent of pre-retirement income.
Federal pensions are comprised of two parts: the lifetime pension amount, which is paid over the lifetime of the pensioner, and the bridge benefit. The bridge benefit ends on the first of the month following your 65th birthday (or as soon as you start receiving C/QPP disability benefits). The bridge benefit is intended to supplement your retirement income until you start receiving C/QPP benefits, which is normally at age 65, although some may opt to start their C/QPP retirement benefit as early as age 60 or defer it past the age of 65. In effect, federal pension contributions have funded a lifetime pension amount and a temporary bridge benefit amount.
This temporary bridge benefit is not unique to the federal pension plans; it is also a feature of comparable provincial and municipal public sector pension plans, including British Columbia public sector pensions, Ontario Municipal Employees Retirement System (OMERS), Ontario Teachers’ Pension Plan, the Healthcare of Ontario Pension Plan, the Saskatchewan Teachers’ Federation Pension and others. And because the federal pension plans and the Canada/Quebec Pension Plan were intentionally structured to be coordinated, the ending of the bridge benefit is legitimate and is not a clawback.
The amount of the bridge benefit varies by individual and is based on average salary and years of service. The amount is not dependent on the C/QPP retirement pension you receive. Because it is based on the contributory period and earnings, some individuals may receive a C/QPP retirement pension that is equal to, smaller, or larger than their bridge benefit.
Ensuring your C/QPP retirement pension is maximized can be helpful in offsetting the impact of the bridge benefit termination at age 65. The Canada/Quebec Pension Plan includes provisions that allow eligible individuals to drop certain low-earning periods from their C/QPP benefit calculation that may, in turn, raise the amount of C/QPP retirement benefit.
More information is available by contacting Service Canada at 1-800-622-6232 or La Régie des rentes du Québec at 1-800-463-5185.