Sources of Retirement Income


When I retire where will my income come from?

As a vested member of SHEPP you can count on a monthly lifetime pension as a source of income in retirement. Your SHEPP pension is determined by a formula based on your four highest years' average contributory earnings and years of participation in the Plan, or credited service. This means as your average contributory earnings and years of credited service grow, so does your pension.

Your SHEPP pension benefit is just one potential source of income in retirement. In addition to employer sponsored pension plans, the Canadian retirement income system was designed to include government pension programs and other vehicles to save for retirement.

In addition to your SHEPP lifetime pension you may have other sources of income in retirement, such as the Canada Pension Plan (CPP), Old Age Security (OAS) and personal savings and investments.

Personal Savings and Investments

The savings and investments you accumulate during your working years can include:

  • Money in savings accounts;
  • Investments in stocks and bonds;
  • Equity accumulated in your home or other financial and business assets;
  • Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs); and
  • Tax-Free Savings Accounts (TFSAs).

Government Pension Programs

The Government of Canada provides these pension benefits:

  • Canada Pension Plan (CPP) retirement pension;
  • Old Age Security (OAS) pension;
  • Guaranteed Income Supplement (GIS); and
  • Allowance and the Allowance for the Survivor.

To learn more about these Government pension benefits, including eligibility and how to apply visit www.servicecanada.gc.ca.

What is a Pension Adjustment?

You may have noticed that your T4 includes a line titled "Pension Adjustment." A pension adjustment (PA) is the deemed value of the pension benefit you have earned for that tax year in a registered pension plan such as SHEPP. The PA impacts the amount of room that you have to contribute to your Registered Retirement Savings Plan (RRSP). Your employer calculates your PA using a formula prescribed by the Income Tax Act, and reports it to the Canada Revenue Agency on your T4 slip.

Will my SHEPP pension be affected if I return to work after I have retired?

No. Once you begin receiving your SHEPP pension you will continue to receive it for the rest of your life, even if you return to work. If you receive a bridge benefit, you will receive it until age 65. That isn't to say other retirement benefits you receive won't be affected (e.g. Canada Pension Plan and Old Age Security). It is important to consider how all of your retirement income sources may be affected before returning to work.

If I return to work for a SHEPP participating employer, can I start earning another SHEPP pension?

No. Once you begin receiving your SHEPP pension you cannot make contributions toward another SHEPP pension. If you start a job with an employer who participates in a pension plan other than SHEPP, you may enquire with them about participation in their pension plan. Your SHEPP pension will not be affected should you begin contributing to another pension plan.