The Pension Formula

HEPP is a defined benefit pension plan, which means your pension is calculated using a formula. The two key components in the formula are your highest average earnings and your total years of credited service.

To determine your highest average earnings we use the highest five years of annualized HEPP pensionable earnings from your last 11 years in the Plan. If you have not completed five years of participation, your actual annualized HEPP pensionable earnings will be used to determine the average. 

The amount of the monthly pension benefit you will receive is based on the following formula:

• 1.5% of your highest average earnings up to the Canada Pension Plan’s YMPE (Year’s Maximum Pensionable Earnings)
• Plus 2.0% of your highest average earnings over the YMPE
• Multiplied by your years of credited service 
• Divided by 12.

If your annual pension is less than 4% of the Year’s Maximum Pensionable Earnings (YMPE*) or if your pension has a commuted value of less than 20% of the YMPE, your pension is considered a small benefit. You will receive a taxable lump sum payment of your pension benefit rather than a monthly pension.

*The YMPE is determined by the Canada Revenue Agency (CRA) and is used to determine the maximum amount you are required to pay into the Canada Pension Plan each year. It is also used to determine the amount you contribute to HEPP.

Supplementary Benefit

A temporary supplementary benefit is added to the monthly pension of members who: 

• Meet Rule of 80, or
• Have reached age 55.

This benefit is payable only to you as the member, until age 65 or your death, whichever occurs first. Please refer to your Pension Estimate for the estimated amounts of your supplementary benefit.

Effective January 1, 2020

Members who retire with an actuarially reduced pension are not eligible for a bridge benefit.

Bridge Benefit

The bridge benefit is paid until age 65 and is designed to offset a portion of the early retirement reduction. If you are entitled to a bridge benefit, it will be quoted on your Pension Estimate, which you will receive with your retirement package. 

Effective January 1, 2020

Members who retire before age 55 with actuarially reduced pensions are not eligible for a bridge benefit.

New members who begin employment after December 31, 2019 are not eligible for the bridge benefit.