Long-term disability benefits and your pension
Learn how a long-term disability leave might affect your pension.
If you are off work for an extended period because of illness or injury, you may qualify for long-term disability benefits provided by your employer.
How long-term disability benefits affect your pension
When you receive long-term disability benefits for time away from work, your pension may be affected. It depends on whether your long-term disability plan has been approved by BC Pension Corporation. Contact your employer to find out if you are covered by an approved long-term disability plan.
Receiving disability benefits from an approved long-term disability plan
If you receive long-term disability benefits from an approved plan, you will accumulate pensionable and contributory service in the pension plan as if you were working.
If you are on long-term disability leave when you apply to retire, your pension will be calculated using your highest average salary before your long-term disability leave. This will be increased by any inflation adjustments provided by the pension plan.
If you receive other sources of income, such as Canada Pension Plan disability benefits and WorkSafeBC benefit payments, your long-term disability plan payments may be reduced by the benefit payment amounts.
Because you accumulate service while receiving long-term disability benefits, we will send you a pension adjustment statement each year. You will need to submit this statement with your income tax return.
Receiving disability benefits from a long-term disability plan that is not approved
If you receive long-term disability benefits from a plan that is not approved by Pension Corporation, you will not accumulate pensionable and contributory service in the pension plan while on leave. The value of your pension will not increase while you are away from your job.
If this applies to you, you may be able to increase your future pension by buying service as a general leave for the time you were off work and receiving long-term disability benefits.
Accepting a lump-sum payment to end your long-term disability claim
You may decide to accept a lump-sum payment to settle your long-term disability claim and end your benefits. If you choose this option:
- You will not continue to accumulate pensionable and contributory service
- You will not be eligible for a disability pension from the Municipal Pension Plan
If you accept a lump-sum payment from the long-term disability benefits plan, you may be eligible for a retirement pension or termination benefits. Contact the pension plan for more information.