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Rule of 80 Question

I have been working for 20 years and, on December 31, 2019, I am 2 years short of an early retirement with an unreduced pension under the current plan since I would have reached 80 points on December 31, 2021. As a result of the new rules, will I then not have an unreduced pension if I retire on December 31, 2021?

When looking at how the early retirement provisions would be applied, there are two key elements to keep in mind:

  1. The pension in respect of your service prior to January 1, 2020 is based on the current formula and current early retirement provisions (i.e. unreduced at 80 points). Only the pension in respect of service after January 1, 2020 is based on the proposed provisions (i.e. unreduced at 90 points).

2. Your whole service (i.e. before and after January 1, 2020) is used when determining eligibility for an unreduced pension. For example, if you reach 80 points on December 31, 2021, those 80 points are applied to both the service before and after January 1, 2020.

In this situation, the pension based on your service prior to January 1, 2020 (i.e. the pension earned on the 20 years of service based on the current formula) would be unreduced since you would have 80 points on December 31, 2021.

However, the pension based on your service after January 1, 2020 (i.e. the 2 years of service) would be actuarially reduced, since you would not have attained the required 90 points for an unreduced pension under the proposed amendments.

Overall, since most of your pension is based on service prior to January 1, 2020 and is unreduced as a result of you attaining 80 points, the impact on your pension of the change in early retirement provisions is minimal.  In fact, the improved accrual will, in many cases, result in an improved retirement benefit even with the reduction.