Decrease in the pension reduction factor

July 30, 2009 Some CAPE members have recently received correspondence concerning the limit on allowable RRSP contributions for 2009 and, more specifically, a decrease in this limit. This decrease is a result of the amendment to the coordination formula of the Public Service Pension Plan with the Canada/Quebec Pension Plan.
Since 2001, some federal public service bargaining agents, including the former Social Science Employee Association (now CAPE) and the National Association of Federal Retirees (FSNA), were aware that the pension reduction of the public service pension that occurs when retirees reach the age of 65 and that may lead to a reduction in the total amount of the pension received (Public Service Pension and Canada/Quebec Pension) would negatively affect more and more retirees.
This issue was discussed at length by representatives of the bargaining agents, the FSNA and the employer who sat on the Public Service Pensions Advisory Committee. A recommendation from the committee, aimed at decreasing the reduction factor in order to decrease or eliminate the reduction of the total amount of the pension received from age 65, was sent to the president of the Treasury Board who implemented it. It is this decrease in the reduction factor that affects the limit on allowable RRSP contributions.
For more detailed information on the coordination formula of the PSPP / CPP (QPP), please visit the Treasury Board's website:
http://www.tbs-sct.gc.ca/hr-rh/bp-rasp/pensions/pensionfacts-infopensions/improvement-amelioration-eng.asp#faq