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How is my pension calculated?
Ensuring you have adequate income when you retire
requires careful attention. In non-working years
your income will come from different sources,
including your Local Authorities Pension Plan
(LAPP), the Canada Pension Plan (CPP), and
savings. To plan for your future, it is useful to know
what your approximate monthly pension payments
from LAPP will be.
estimated unreduced pension amount is shown
where the two points intersect.
The quick estimate
Years of pensionable service:
The easiest way to get an estimate of your future
LAPP pension is to use the pension estimator at
mypensionplan.ca, a secure website for members.
From there you can access your personal pension
information when you need it and calculate future
benefits. You can update beneficiary and address
information, and review your member annual
statements.
Highest five consecutive years’ salary:
This information sheet will show you how a pension
is calculated. If you are looking for a pension
estimate and don’t want to do the calculations
yourself, check out the estimator at
mypensionplan.ca. There is also an online
calculator at www.lapp.ca that does not use your
personal information.
The basic pension formula is determined by
Regulation and, depending on your circumstances,
may be affected by other factors when your pension
is actually calculated.
Calculating your own estimate
If you are looking for a quick estimate of your pension, go
to mypensionplan.ca. It is not necessary for you to do
the calculation in this worksheet.
The following pages provide sample calculations
and spaces for you to do your own calculations. You
can also use the attached chart to get a rough
estimate of your pension.
To use the chart, look across the top of it for your
salary and down the left edge for your service. The
Your length of service figure is shown on your
Member Annual Statement. A copy of your
statement is available on mypensionplan.ca. You
may have to estimate your future earnings.
Basic information
+
+
+
+
+
=
$

5 =
Now refer to the chart to see what the estimated
annual unreduced pension is for your length of
pensionable service and the average of your highest
consecutive five years’ salary.
If you are going to be 65 or older when you
retire, you can skip the next section and go right
to the section in this information sheet called
What else affects my pension amount?
Does my retirement age affect my
pension?
Yes. There are a number of factors that determine
your eligibility for pension and affect your pension
amount.
 The normal retirement age is 65
 You can retire after age 55 if you have two*
years of service in LAPP.
 You must start receiving your pension by
December 31 in the year in which you turn 71.

You can retire at 65 with an unreduced pension
if you have at least two* years of LAPP service.
LA806/1
January 2015
* If you left LAPP before February 1, 2000 you will
need five years of service to qualify for a pension.
If they don’t add up to 85, you need to do the next
calculation:
If you will be under 65 when you retire, you can
receive an unreduced pension as young as age 55 if
you have 85 points (years of service plus age).
Points needed ................................
=
age
+
service
a)
=
If this adds up to 85, you can skip the rest of this
section and go right to the section called What
else affects my pension amount?
If your age plus service totals less than 85 points
your pension will be reduced for early retirement.
Currently, the reduction is three per cent for each
year you retire early. This reduction is based on
your years short of age 65, or your years short of 85
points, whichever you would reach first.
65
Age needed ....................................
Your age ...............................
—
=
b)
Which is lower? The lower of (a) or (b) is the
number of years you are retiring early.
Calculate your reduced pension:
What estimated pension amount did you get from
the attached chart? $__________
3%
Here is an example
x
=
% (c)
number of years retired early
a) or b) from above
Retirem ent age ......................
60
Years of service ....................
21
Years from age 65
65 – 60 = ..............................
5 (a)
Years from 85
85 – (6 0 +21 ) = ....................
(age + s ervic e)
4 (b)
Number of yea rs re tired ea rl y
4
100%
-
$
x
estimated pension
(t ak e t he l o w er of ( a) or ( b ) )
Let’s say the estimated annual pension is $13,220.
Now you need to calculate the pension after the
reduction for early retirement. We arrive at this
figure by doing the following calculation:
3%
then
x
4 years
=
12%
100%
-
12 %
=
0.8800
$13,220
x
0.8800
=
$11,630
( 12 gives a monthly pension of $969).
Had this employee had worked for another two
years, she or he would have been 62 and had 23
years of service. Age plus length of service would
equal 85 points and the pension would not need to
be reduced.
If you are thinking about retiring early, use this
formula to calculate your reduced pension.
Retirement age
85
LESS points you accumulated
(age + service) ..............................
+
Years of service
=
Do these two numbers add up to 85? If so, the
pension will not be reduced for early retirement.
% (c)
=
% (d)
reduction factor
% (d)
=
$
reduction factor
reduced pension
The reduced pension of $_________, divided by 12
gives a monthly pension of $________.
What else affects my pension?
There are two other choices that can affect the
amount of your monthly LAPP pension income:
pension choice options and the coordination option.
Pension options
All the LAPP pension options will pay your pension
for as long as you live. If you have a pension partner
when you retire, you will be required to select a
pension that ensures your pension partner is paid a
lifetime benefit if you die.
At the time you retire, your pension partner can waive
his or her right to the benefit by signing a waiver
form. The waiver form will be included in the
package of information LAPP will send you when
you retire.
When it is time to make your pension choice, you will
be given a personalized information package and you
can request a meeting with your human resources
branch or LAPP’s Member Services Centre.
The pension estimator at mypensionplan.ca will also
provide information on the various options.
LA806/2
January 2015
Pension coordination
Coordination allows for flexible retirement
planning. It lets you increase your monthly
payment temporarily from the time you retire until
you turn 65. At age 65, the increase to your
monthly payment stops and a reduction to your
monthly payment begins. The reduction will
continue as long as you live.
If you are interested in learning more about
coordination, please see the enclosed information
sheet.
Cost-of-Living Adjustments
(COLA)
A COLA is applied to pensions every year. The
COLA is at least 60 per cent of the increase in
Alberta’s Consumer Price Index.
Retirement income
Your Local Authorities pension makes up only a
portion of your retirement income. You must also
consider other sources of income to best plan for
your retirement years.
Now that you have an idea of your estimated
Local Authorities pension, you can begin to assess
your future financial position. Contact the federal
government for information on Old Age Security,
Canada Pension and the Guaranteed Income
Supplement (GIS).
Your future financial position
Monthly LAPP pension
If you need more information about your pension
estimate, contact APS through the Member Services
Centre at:
Address:
Telephone:
E-mail:
Website:
LAPP c/o Alberta Pensions
Services Corporation
5103 Windermere Blvd. SW
Edmonton, AB T6W 0S9
1-877-649-LAPP (5277)
memberservicecentre.ca
www.lapp.ca
Protect your privacy. Send personal information
only by fax or regular mail. Do not send personal
information by email. To help you protect your
privacy, APS will not send personal information to
you by email.
The complete pension formula
In 1966, the Canada Pension Plan (CPP) was created and
LAPP adjusted both its contribution level and pension
formula. On January 1 each year, the federal government
sets the level on which you pay towards CPP. This is called
the Yearly Maximum Pensionable Earnings (YMPE). In
2015, the YMPE is $53,600.
LAPP is designed so you pay a lower LAPP contribution
rate on salary on which you also make CPP contributions.
You pay a higher contribution rate on the part of your
salary that is higher than the YMPE.
At retirement, the average YMPE matching the years that
make up your average highest five years of salary are used to
calculate your pension.
This is the calculation formula:
Old Age Security
Salary up to YMPE x 1.4%
Canada Pension
PLUS
other pension
Salary over YMPE
RRSP income
other income
x 2%
x service =
$
x service =
$
The two totals are added together to give you an
estimated annual unreduced pension.
GIS (federal supplement)
other
There are many financial planning books. There
are also people in the retirement planning industry
who can assist you.
Need information?
Alberta Pensions Services Corporation (APS)
proudly serves LAPP and provides responsive and
focused member service on behalf of the Plan.
This information package provides general information
only. Should anything in the package conflict with
governing legislation, the legislation shall apply.
You should not rely solely on information from this
information sheet in making any decisions or taking any
action with respect to your LAPP pension. Seek advice
from a qualified financial advisor before relying on any
speculative pension calculation, or exercising any
coordination option.
LA806/3
January 2015
Estimate of an Unreduced Normal Form of a Pension Payable monthly
Based on an Average Salary and Years of Service (YOS) after 1965, Pension to begin in 2015
Average Salary in thousands
YOS
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
$
35 $
40 $
45 $
50 $
55 $
60 $
65 $
70 $
75 $
80 $
85 $
90 $
95 $ 100 $ 105 $ 110 $ 115 $ 120 $ 125 $ 130 $ 135 $ 140 $ 145 $ 150 $ 155 $ 157
$82
$93
$105
$117
$132
$149
$166
$182
$199
$216
$232
$249
$266
$282
$299
$316
$332
$349
$366
$382
$399
$416
$432
$449
$466
$472
$123
$140
$158
$175
$198
$223
$248
$273
$298
$323
$348
$373
$398
$423
$448
$473
$498
$523
$548
$573
$598
$623
$648
$673
$698
$708
$163
$187
$210
$233
$264
$298
$331
$364
$398
$431
$464
$498
$531
$564
$598
$631
$664
$698
$731
$764
$798
$831
$864
$898
$931
$944
$204
$233
$263
$292
$331
$372
$414
$456
$497
$539
$581
$622
$664
$706
$747
$789
$831
$872
$914
$956
$997
$1,039
$1,081
$1,122
$1,164
$1,181
$245
$280
$315
$350
$397
$447
$497
$547
$597
$647
$697
$747
$797
$847
$897
$947
$997
$1,047
$1,097
$1,147
$1,197
$1,247
$1,297
$1,347
$1,397
$1,417
$286
$327
$368
$408
$463
$521
$579
$638
$696
$754
$813
$871
$929
$988
$1,046
$1,104
$1,163
$1,221
$1,279
$1,338
$1,396
$1,454
$1,513
$1,571
$1,629
$1,653
$327
$373
$420
$467
$529
$596
$662
$729
$796
$862
$929
$996
$1,062
$1,129
$1,196
$1,262
$1,329
$1,396
$1,462
$1,529
$1,596
$1,662
$1,729
$1,796
$1,862
$1,889
$368
$420
$473
$525
$595
$670
$745
$820
$895
$970
$1,045
$1,120
$1,195
$1,270
$1,345
$1,420
$1,495
$1,570
$1,645
$1,720
$1,795
$1,870
$1,945
$2,020
$2,095
$2,125
$408
$467
$525
$583
$661
$744
$828
$911
$994
$1,078
$1,161
$1,244
$1,328
$1,411
$1,494
$1,578
$1,661
$1,744
$1,828
$1,911
$1,994
$2,078
$2,161
$2,244
$2,328
$2,361
$449
$513
$578
$642
$727
$819
$911
$1,002
$1,094
$1,186
$1,277
$1,369
$1,461
$1,552
$1,644
$1,736
$1,827
$1,919
$2,011
$2,102
$2,194
$2,286
$2,377
$2,469
$2,561
$2,597
$490
$560
$630
$700
$793
$893
$993
$1,093
$1,193
$1,293
$1,393
$1,493
$1,593
$1,693
$1,793
$1,893
$1,993
$2,093
$2,193
$2,293
$2,393
$2,493
$2,593
$2,693
$2,793
$2,833
$531
$607
$683
$758
$859
$968
$1,076
$1,184
$1,293
$1,401
$1,509
$1,618
$1,726
$1,834
$1,943
$2,051
$2,159
$2,268
$2,376
$2,484
$2,593
$2,701
$2,809
$2,918
$3,026
$3,069
$572
$653
$735
$817
$925
$1,042
$1,159
$1,275
$1,392
$1,509
$1,625
$1,742
$1,859
$1,975
$2,092
$2,209
$2,325
$2,442
$2,559
$2,675
$2,792
$2,909
$3,025
$3,142
$3,259
$3,305
$613
$700
$788
$875
$992
$1,117
$1,242
$1,367
$1,492
$1,617
$1,742
$1,867
$1,992
$2,117
$2,242
$2,367
$2,492
$2,617
$2,742
$2,867
$2,992
$3,117
$3,242
$3,367
$3,492
$3,542
$653
$747
$840
$933
$1,058
$1,191
$1,324
$1,458
$1,591
$1,724
$1,858
$1,991
$2,124
$2,258
$2,391
$2,524
$2,658
$2,791
$2,924
$3,058
$3,191
$3,324
$3,458
$3,591
$3,724
$3,778
$694
$793
$893
$992
$1,124
$1,265
$1,407
$1,549
$1,690
$1,832
$1,974
$2,115
$2,257
$2,399
$2,540
$2,682
$2,824
$2,965
$3,107
$3,249
$3,390
$3,532
$3,674
$3,815
$3,957
$4,014
$735
$840
$945
$1,050
$1,190
$1,340
$1,490
$1,640
$1,790
$1,940
$2,090
$2,240
$2,390
$2,540
$2,690
$2,840
$2,990
$3,140
$3,290
$3,440
$3,590
$3,740
$3,890
$4,040
$4,190
$4,250
$776
$887
$998
$1,108
$1,256
$1,414
$1,573
$1,731
$1,889
$2,048
$2,206
$2,364
$2,523
$2,681
$2,839
$2,998
$3,156
$3,314
$3,473
$3,631
$3,789
$3,948
$4,106
$4,264
$4,423
$4,486
$817
$933
$1,050
$1,167
$1,322
$1,489
$1,655
$1,822
$1,989
$2,155
$2,322
$2,489
$2,655
$2,822
$2,989
$3,155
$3,322
$3,489
$3,655
$3,822
$3,989
$4,155
$4,322
$4,489
$4,655
$4,722
$858
$980
$1,103
$1,225
$1,388
$1,563
$1,738
$1,913
$2,088
$2,263
$2,438
$2,613
$2,788
$2,963
$3,138
$3,313
$3,488
$3,663
$3,838
$4,013
$4,188
$4,363
$4,538
$4,713
$4,888
$4,958
$898
$1,027
$1,155
$1,283
$1,454
$1,638
$1,821
$2,004
$2,188
$2,371
$2,554
$2,738
$2,921
$3,104
$3,288
$3,471
$3,654
$3,838
$4,021
$4,204
$4,388
$4,571
$4,754
$4,938
$5,121
$5,194
$939
$1,073
$1,208
$1,342
$1,520
$1,712
$1,904
$2,095
$2,287
$2,479
$2,670
$2,862
$3,054
$3,245
$3,437
$3,629
$3,820
$4,012
$4,204
$4,395
$4,587
$4,779
$4,970
$5,162
$5,354
$5,430
$980
$1,120
$1,260
$1,400
$1,587
$1,787
$1,987
$2,187
$2,387
$2,587
$2,787
$2,987
$3,187
$3,387
$3,587
$3,787
$3,987
$4,187
$4,387
$4,587
$4,787
$4,987
$5,187
$5,387
$5,587
$5,667
$1,021
$1,167
$1,313
$1,458
$1,653
$1,861
$2,069
$2,278
$2,486
$2,694
$2,903
$3,111
$3,319
$3,528
$3,736
$3,944
$4,153
$4,361
$4,569
$4,778
$4,986
$5,194
$5,403
$5,611
$5,819
$5,903
$1,062
$1,213
$1,365
$1,517
$1,719
$1,935
$2,152
$2,369
$2,585
$2,802
$3,019
$3,235
$3,452
$3,669
$3,885
$4,102
$4,319
$4,535
$4,752
$4,969
$5,185
$5,402
$5,619
$5,835
$6,052
$6,139
$1,103
$1,260
$1,418
$1,575
$1,785
$2,010
$2,235
$2,460
$2,685
$2,910
$3,135
$3,360
$3,585
$3,810
$4,035
$4,260
$4,485
$4,710
$4,935
$5,160
$5,385
$5,610
$5,835
$6,060
$6,285
$6,375
$1,143
$1,307
$1,470
$1,633
$1,851
$2,084
$2,318
$2,551
$2,784
$3,018
$3,251
$3,484
$3,718
$3,951
$4,184
$4,418
$4,651
$4,884
$5,118
$5,351
$5,584
$5,818
$6,051
$6,284
$6,518
$6,611
$1,184
$1,353
$1,523
$1,692
$1,917
$2,159
$2,400
$2,642
$2,884
$3,125
$3,367
$3,609
$3,850
$4,092
$4,334
$4,575
$4,817
$5,059
$5,300
$5,542
$5,784
$6,025
$6,267
$6,509
$6,750
$6,847
$1,225
$1,400
$1,575
$1,750
$1,983
$2,233
$2,483
$2,733
$2,983
$3,233
$3,483
$3,733
$3,983
$4,233
$4,483
$4,733
$4,983
$5,233
$5,483
$5,733
$5,983
$6,233
$6,483
$6,733
$6,983
$7,083
$1,266
$1,447
$1,628
$1,808
$2,049
$2,308
$2,566
$2,824
$3,083
$3,341
$3,599
$3,858
$4,116
$4,374
$4,633
$4,891
$5,149
$5,408
$5,666
$5,924
$6,183
$6,441
$6,699
$6,958
$7,216
$7,319
$1,307
$1,493
$1,680
$1,867
$2,115
$2,382
$2,649
$2,915
$3,182
$3,449
$3,715
$3,982
$4,249
$4,515
$4,782
$5,049
$5,315
$5,582
$5,849
$6,115
$6,382
$6,649
$6,915
$7,182
$7,449
$7,555
$1,348
$1,540
$1,733
$1,925
$2,182
$2,457
$2,732
$3,007
$3,282
$3,557
$3,832
$4,107
$4,382
$4,657
$4,932
$5,207
$5,482
$5,757
$6,032
$6,307
$6,582
$6,857
$7,132
$7,407
$7,682
$7,792
$1,388
$1,587
$1,785
$1,983
$2,248
$2,531
$2,814
$3,098
$3,381
$3,664
$3,948
$4,231
$4,514
$4,798
$5,081
$5,364
$5,648
$5,931
$6,214
$6,498
$6,781
$7,064
$7,348
$7,631
$7,914
$8,028
$1,429
$1,633
$1,838
$2,042
$2,314
$2,605
$2,897
$3,189
$3,480
$3,772
$4,064
$4,355
$4,647
$4,939
$5,230
$5,522
$5,814
$6,105
$6,397
$6,689
$6,980
$7,272
$7,564
$7,855
$8,147
$8,264
For salaries in excess of $157,024 and/or for service commencing before 1966, please see your employer.
This table overstates pensions estimated for future years because the YMPE typically increases each year.
LA806/4
January 2015