For service before 2013
If you have a spouse when you retire, the normal form of pension plan is a 60% joint and survivor lifetime annuity guaranteed for 10 years.
In other words:
- The pension is payable for life.
- When you die, the person you identified as your spouse when you retired – if he or she is still living at the time and for the rest of his or her life – is entitled to a lifetime annuity equal to 60% of the pension you were receiving. The pension is therefore also a lifetime annuity for the retiree’s spouse.
- Should you and your spouse die before the end of the 10-year guarantee period, your beneficiary will receive the current value of the pension your spouse would have received until the end of the guarantee period. This means that the guarantee applies to the beneficiary and an amount is payable only if the DGPP paid an annuity (to the retiree and his or her spouse) for a period of less than ten years.
If you do not have a spouse when you retire, the normal form of pension plan is a lifetime annuity guaranteed for 15 years.
In other words:
- The pension is payable for life.
- Should you die before the end of the 15-year guarantee period, your beneficiary will receive the present value of the pension, in full and as a single lump sum payment, you would have been entitled to until the end of the 15-year guarantee period.
For service after 2012
The normal form of pension will be the same from now on, regardless of marital status. Whether or not you have a spouse when you retire, the normal form of pension is: lifetime annuity, garanteed for 10 years.
In other words:
- For you: the normal form of pension is paid to you for your entire life.
- For your beneficiaries: should you die before the end of the 10-year guaranteed period, your beneficiary will receive the present value of the pension to which you would have been entitled until the end of the 10-year guarantee period, in a single lump sum payment based on 100% of the pension.
One specific DGPP measure provides that if you still have dependent children upon your death and after retirement, the difference between the lifetime annuity that was paid to you and the annuity that will be paid to your spouse is to be paid to your child (or shared among your children) for as long as there are dependent children.
Are any other choices available besides the "normal pension form"?
The most important thing for retiring employees is to be able to choose the pension form that best meets their short- and long-term retirement income needs, as well as those of their spouse, if applicable. Thus, if the normal pension form does nos meet your needs when you retire, you can opt for another pension form.
If you have a spouse when you retire, you can choose a 60% joint and survivor lifetime annuity for years of service after 2012. In such cases, the normal pension is then subject to an actuarial adjustment.
Whether or not you have spouse at retirement, you can opt for the following pension form.
Lifetime annuity + temporary annuity to age 60 + temporary annuity from age 60 to 65:
This option enables you to increase your retirement income before age 65. To do so, you can reduce your lifetime annuity and apply for a temporary annuity payable up to age 60 + a temporary annuity payable from age 60 to age 65. Of course, starting at age 60, you can also apply to receive your pension from the Régime de rentes du Québec (RRQ) or the Canada Pension Plan (CPP).
At the moment of your retirement, your spouse will have to be officially designated.
Payment and indexation (regardless of choice of annuity above) Regardless of the pension form you choose, your retirement annuity will be paid monthly, retroactively, starting on your retirement date, with each payment amounting to 1/12th of the annual amount. For example, if you retire on September 7, your first payment will be paid to you retroactively on September 7 for the period from September 7 to October 6. Payments will be made by direct deposit.
In December of each year, you will receive a letter informing you of the rate of indexation of your annuity on January 1st of the following year.
For service before 2013: The vested benefit will be indexed at the beginning of each year. The indexation is based on that of the RRQ retirement pension, with a maximum of 3% per year.
For service after 2012: The vested benefit will be indexed at the beginning of each year after you reach age 65, or at the beginning of the year following retirement, if you retired after age 65, to take into account the increase in the Consumer Price Index (maximum indexing of 1%) for a defined period of 10 years. A prorata applies to the first and last year of indexing.
Note that your first RRQ or CPP payment will be made at the end of the month following the one in which you turn 60, if you apply for the pension before age 60 or, if you apply anytime thereafter, at the end of the month following your request.