How we calculate your pension
We calculate your pension based on your years of service and the average of your five highest years of salary.
How we calculate your pension if you are in group 5
Group 5 is all police officers and firefighters who are not in group 2.
For service earned before January 1, 2022, your pension includes your lifetime pension and bridge benefit as follows:
- Your lifetime pension will be calculated using your highest average salary, the year’s maximum pensionable earnings and your years of pensionable service
- The bridge benefit will be added to your lifetime pension and will be payable from your date of retirement until age 65 or death, whichever comes first
For service earned on or after January 1, 2022, the pension formula uses one accrual rate. The bridge benefit is reduced to meet Income Tax Act limits.
|When you earned your service||Type of benefit||Formula|
|Before January 1, 2022||Lifetime pension||(1.63% × HAS up to YMPE + 2.33% × HAS over YMPE) × years|
|Bridge||0.7% × HAS up to YMPE × years|
|On or after January 1, 2022||Lifetime pension||2.12% × HAS × years|
|Bridge||0.21% × YMPE × years|
HAS: Highest average salary (your best five years of earnings, or if you are employed in group 2 or group 5 on or after January 1, 2022, your best four years)
Factors that affect your monthly pension payment
These lifetime pension formulas are based on a single life pension option with no guarantee. If you are employed in groups 2 or 5 on or after January 1, 2022, the pension formula is based on a single life pension option with a 10-year guarantee. Otherwise it is based on a single life pension option without a guarantee. The monthly pension payment you receive will depend on several other factors, including:
- Your age when you retire, which may result in a reduced pension
- The pension option you choose to protect a beneficiary
- The premiums you pay for health care coverage through the group benefit plan
- Any legally required deductions such as income tax
After you retire, your monthly pension payment may increase if there is an annual cost-of-living adjustment (COLA). This adjustment is added to the lifetime portion of your pension. The COLA is also applied to the bridge benefit and the temporary annuity portion of your pension while you are receiving them.
COLA is based on the Canadian consumer price index and is applied to your pension in January each year if the Municipal Pension Board of Trustees determines that sufficient funds are available in the plan’s inflation adjustment account.
Although future COLAs are not guaranteed, once you have received an adjustment it becomes part of your lifetime pension for all subsequent years.