Why convert?

If you have service prior to July 1980, you may want to convert it to the 5-year average current pension formula to increase your pension.

How it works

To be eligible, you must have service before July 1980 and you cannot be receiving a pension.

For service prior to July 1, 1980 – the salary used in your pension calculation is the average of your highest 7 salary years out of your final 12 years.

For service on and after July 1, 1980 – the salary used in your pension calculation is the average of your highest 5 salary years out of your final 12 years.

You have the option of paying to convert your pre-July 1980 service to a 5-year average. This will increase your pension because the average of 5 years is almost always higher than the average of 7 years.

The cost to convert is based on the increase to your pension. The higher the increase, the higher the cost.

How to proceed

If you would like the cost calculated, complete a Service Purchase Application. Once we receive your request, we will send you a letter detailing the cost and estimating the impact it will have on your pension.

You are not obligated to make the payment just because we have made the calculation. If you decide not to make the payment at this time, you will need to complete another Service Purchase Application to have the amount recalculated for a later date.

Generally, the best time to convert is at retirement when we know the exact amount of the increase to your pension.

Making payments

Once we calculate your cost, you have 90 days to pay before the cost expires. Depending on when you retire, these deadlines may change. Be sure to discuss this with a Member Service Specialist.

If you prefer, you can pay a portion of the cost and therefore convert a portion of your service. You can request a cost for the balance of your pre-1980 years anytime until retirement.

You also have the option of making your payments through a transfer of your RRSP funds. To make an RRSP transfer, ask your financial institution to help you complete Canada Revenue Agency’s T2033 form.

Income tax deductions

The total conversion payment can be deducted on your income tax return over time. Each year you may deduct the difference between $3,500 and your current annual TRAF contributions.

If your annual TRAF contributions are greater than $3,500, you have the option of carrying your payments forward to when you are making lower pension contributions or when you are no longer making pension contributions.

Payments made through RRSP transfer are not tax deductible.

Contact Canada Revenue Agency at 1-800-959-8281 for more information.