Coordination

Coordination is a feature of LAPP that allows some members to receive a temporary increase to their pension until they turn 65. This is one way to help keep a steady amount of money coming in both before and after receiving other kinds of retirement income which are often started at age 65. Canada Pension Plan (CPP) and Old Age Security (OAS) are two examples of this.

After you turn 65, the coordination increase is removed and your LAPP pension is reduced permanently. The coordination reduction will continue as long as you live and could eventually add up to more than the increase you received in the years before you turned 65.

LAPP Pension Without Coordination 

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The first graph shows a LAPP pension without coordination. You will notice that the amount of your LAPP pension (in blue) remains the same from the time you start collecting before age 65 for the rest of your life.

In the second column, your retirement income grows after 65 as you start collecting your government pensions benefits (in green) from CPP and OAS.

LAPP Pension With Coordination

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The second graph shows what happens with your pension when you choose the coordination option.

The first column shows the increased income to your LAPP pension from coordination in the years before you turn 65.

The second column shows that when you turn 65, your retirement income will include your federal government benefits from CPP and OAS (in green) and a permanently reduced LAPP pension (in blue).

It is important to understand that if you take this option, your LAPP pension will be smaller after 65, for the rest of your life, no matter how long you live.

With coordination, the amount of total retirement income paid for the rest of your life may not be the same as if you took a pension without coordination. It will depend on how much coordination you take and how well you can estimate how long you will live.

Is Coordination the Right Choice for You?

  1. Seek independent financial advice. If you choose coordination, you cannot change your mind once your pension payments start.
  2. Think realistically about how much money you will need before and after age 65. You could live another another 20 years with a reduced pension after 65 but only collect an increased pension for a few short years before turning 65.
  3. Consider the sources of the money you will receive before and after 65 on Retirement Planning, as well as how your income tax will be affected.
  4. Determine how much CPP and OAS you will be receiving based on your own personal details, and decide when you plan to start this income. Visit the CPP/OAS calculators or talk to a representative at the Government of Canada at 1-800-277-9914.

Your Financial Advisor Might Recommend Coordination If:

  • You have a shortened-life expectancy and need more income before age 65 than after;
     
  • You plan to wait until age 65 to begin receiving Canada Pension Plan (CPP) benefits;
     
  • You will have additional sources of retirement income at age 65, such as Old Age Security (OAS), RRSPs, other employment pensions or personal savings; or
     
  • You will need more income before age 65 than after.

Your Financial Advisor Might Not Recommend Coordination If:

  • You do not know the amount of pension you will receive from CPP or OAS at age 65; 
     
  • You plan to start receiving CPP or any of your additional income sources before age 65; or
     
  • You plan to live a long and healthy life. 

It is always best to seek independent financial advice before choosing this option.

The amount of coordination offered on your Retirement Benefit Statement will be based on the maximum amount of CPP and OAS a Canadian can receive, and not based on how much CPP and OAS you will receive.

  • You can choose any amount of coordination you wish, up to the maximum amount.
  • It is very important that you determine how much CPP and OAS you will be receiving based on your own personal details, which can change depending on when you plan to start receiving them.
  • It is important to predetermine how much income you will receive after you turn 65 when your LAPP pension is decreased.

You would then base the amount to coordinate on this information. You can find out how much you will receive from CPP and OAS by using the CPP/OAS calculators or by talking to a representative at the Government of Canada at 1-800-277-9914.

If the reduced amount of your pension after age 65 is below a minimum threshold, the amount of coordination you will be offered will be less. Your Retirement Benefit Statement will show you all the options you can choose from.

What happens if I die with a coordinated pension?

If You Started Your Pension After 2003:

  • Coordination will continue as long as you are alive.
  • If you die before age 65 with a coordinated pension, the increase to the monthly payment will stop. Any amount paid to your pension partner or beneficiaries reverts to your original pension choice without coordination. The pension will not be reduced on the date you would have reached 65.
  • If you die after age 65, the reduction in the monthly payment will stop and your pension partner or beneficiaries will receive the original monthly LAPP survivor pension.

Remember, these changes only refer to your coordination. There can be other decreases if you chose a pension option with a reduced survivor benefit, such as Joint Lifetime Reduced by 1/3.

If You Started Your Pension Before 2004:

  • Coordination will continue for as long as a pension is being paid to you or your pension partner or beneficiary.
  • If you die before age 65 with a coordinated pension, the increase to the monthly payment will continue until the point at which you would have turned 65. Any amount paid to your pension partner or beneficiaries will be reduced on the date you would have reached 65.
  • If you die after age 65, the reduction in the monthly payment will continue for the survivor pension your pension partner or beneficiaries will receive.

Remember, these changes only refer to your coordination. There can be other decreases if you chose a pension option with a reduced survivor benefit, such as Joint Lifetime Reduced by 1/3.