Pension payments to former members beginning after pensionable age

In cases where a former member begins receiving their monthly pension after pensionable age, for example age 67 where the pensionable age of the plan is age 65, the former member is entitled to retroactive pension payments for the two year period after age 65. OSFI expects retroactive pension payments owed to be credited with a reasonable rate of interest.

In the example above, in lieu of paying the former member retroactive pension benefit payments plus interest, a plan administrator may offer this former member the option of receiving a pension benefit that is actuarially increased from pensionable age. The administrator’s decision to allow the actuarially increased pension benefit must not be contrary to the statutory rights of the former member’s spouse or common-law partner at pensionable age. Where it is offered, the plan text should expressly provide for this option.