Pension Formula
The pension formula used to calculate your pension amount at age 65 is:
2 per cent x best sequential five-year average annual salary rate x years of pension service
minus
0.655 per cent x the lesser of your best sequential five-year average annual salary rate or the YMPE averaged over the final five years x your pension service (to a maximum of 35 years)
Pension service – the total period of time during which a member contributes to the pension fund or has contributions made on his or her behalf.
Year's Maximum Pensionable Earnings (YMPE) – this is the maximum earnings from employment on which CPP contributions and benefits are calculated. The CPP earnings maximum is changed every year according to a formula based on average industrial wage levels.
