Under the Final Average Earnings Pension Plan (one type of DB pension plan), John has a final five years average earnings of $90, 000. John has worked for 35 years and retires at his age of 65. He is entitled to the maximum CPP retirement pension payable in 2023, which is equal to $15, 679.

(a) (i) Calculate the pension amount that John would receive under his employer's pension plan with a pension rate of 2.0% without integration with CPP.

(ii) With the CPP what would be the total pension income he receives?

(iii) Calculate John's total pension income as a percentage of his pre-retirement income

(in terms of his final 5-year average earnings).

(b) Assume that John's employer's pension plan calls for a step-rate integration. The formula is 1.3% of earnings up to the Yearly Maximum Pensionable Earnings (YMPE) and 2.0% of earnings in excess of the YMPE ($66, 600 in 2023).

(i) Calculate the pension income that John would receive under his employer's pension plan with the proposed step-rate integration.

(ii) With the CPP what would be the total pension income he receives?

(iii) Calculate John's total pension income as a percentage of his pre-retirement income (in terms of his final 5-year average earnings)

Answer rating: 100% (QA)

a Without Integration with CPP i Pension amount without CPP Pension rate 20 Final 5year average earnings 90000 Years of service 35 years Pension amoun... View the full answer