Early retirement

Retiring before the normal retirement age will affect your pension. Here are the key points to consider.

Buying a temporary annuity

Your early retirement pension consists of your lifetime pension payment, the bridge benefit (for service earned before April 1, 2018) and, if you choose it, a temporary annuity.

A temporary annuity is a top-up to your pension; it increases your monthly payment until you reach age 65 or your death, whichever comes first. You can add a temporary annuity to any pension option, whether single life or joint life. A temporary annuity does, however, reduce your lifetime pension, and the younger you are when you retire, the bigger the impact on your pension.

You can use the personalized pension estimator in My Account to see how a temporary annuity affects your basic lifetime pension, including what the pension amount will be after age 65 and how it could affect your basic lifetime monthly pension payment.

If you select the temporary annuity option, you can choose either the full or the half temporary annuity, provided your lifetime pension supports the cost.

The full temporary annuity is based on the maximum old age security (OAS) benefit, and temporary annuity amounts may change periodically to reflect changes in the OAS.

If you choose a half temporary annuity, the top-up to your monthly pension payment is half the amount of the full temporary annuity. Because the top-up is smaller, your lifetime monthly pension decreases less. This option is based on half of the maximum OAS pension.

Here is an example of what these options could look like for a member looking to retire at 56 years old, with a pension effective date of November 1, 2019 where their:

  • Lifetime pension = $2,100
  • Half temporary annuity = $300
  • Full temporary annuity = $600
Lifetime pension without temporary annuity Temporary annuity amount Lifetime pension adjusted for temporary annuity Pension payable to age 65 Pension payable after age 65
$2,100 $0 $2,100 $2,100 $2,100
$2,100 $300 $1,973 $2,273 $1,973
$2,100 $600 $1,846 $2,446 $1,846

It’s important to remember that a reduced lifetime pension might have a significant impact on your spouse or dependants.