Tax information for retired members

Your pension is taxable income. We will deduct federal and provincial income tax from your monthly pension payment.


Deductions from your monthly pension payment

Your pension is taxable income. This means we deduct income tax from your gross monthly pension payment. The amount we deduct is based on the income you receive from the plan. Your other sources of income may have tax deducted at a different rate.

The net monthly pension payment is calculated as follows:

  • Your gross pension amount
  • Minus income tax
  • Minus (if applicable) monthly premiums for retirement extended health care and dental coverage, as well as Medical Services Plan

The amount of income tax we deduct from your monthly pension payment depends on where you live. Each province and country has its own tax rate. We use the tax rate for your province of residence, and if you live outside Canada, we use the tax rate for the country where you are living (as specified by the Canada Revenue Agency).

Important note: the amount we deduct from your monthly pension payment assumes your pension is your only source of income. If you have other sources of income, such as benefits from the Canada Pension Plan or old age security, this could put you into a higher tax bracket and result in more taxes owed.

How to request that we deduct additional tax

You can ask us to deduct more income tax from your monthly pension payment. If you would like to do this, please send us a written request. Your request must include your full name, signature and three personal identifiers such as your:

  • Person ID (you can find this on your pension statement)
  • Date of birth
  • Telephone number
  • Address

If you send your request electronically, we don't need your signature.

As part of your request, you need to tell us how you want the additional income tax deducted, as a:

  • Total dollar amount
  • Additional dollar amount
  • Total per cent

Income splitting and your pension

You may be able to reduce the total tax you pay by transferring part of your pension income to your spouse   or common-law partner.
 

This process, known as income splitting, allows individuals to allocate a portion of their income to a spouse who has lower earnings. This potentially creates tax savings for couples.

Please contact the Canada Revenue Agency for more details. You may also want to talk to a financial adviser or accountant to find out if transferring your pension income is to your advantage.


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External link to learn more about income splitting

Learn more about pension income splitting on the Canada Revenue Agency website

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My Account for retired members

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