Page 135 - A Canuck's Guide to Financial Literacy 2020

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Earliest Retirement Age with Unreduced Pension

Plan sponsors specify a "normal" retirement age, the age where a plan member can retire
with a full pension in retirement. This age is typical 65. However, for many plans, it is not 65.
The normal retirement age can be based on years of service with the company and the
member's age, also known as the qualifying factor.

Qualifying Factor + 85 Factor

o The qualifying factor is a formula which is used to determine whether a plan
member is eligible for an unreduced pension, up to 10 years or more before
the "normal retirement age".
o The qualifying factor is usually 85 but it can be 80 or 90. Each company is
different. The 85 factor is calculated by adding your age + years of
pensionable service. If your age plus years of service equal to 85, you are
entitled to unreduced pension in this example.

Age for Unreduced Pension

o To calculate the age of when a plan member is eligible to take early
retirement, the formula is

Example: Steve is 50 years old. He has been a teacher for the last 30 years and joined the
plan on his first day of work. The plan has a normal retirement age of 65, with a qualifying
factor of 85. What's the earliest age at which Steve can qualify for unreduced early
retirement benefit?

Steve can retire with an unreduced early retirement benefit at 57 years and 6 months.