This is a personal decision. Integration is an option that lets you get a higher pension from the pension plan until age 60 for Canada Pension Plan (CPP) integration and age 65 for Old Age Security (OAS) integration but less pension from the pension plan after those ages. Because your benefits from these three plans can all start at different times, this option may help you level out your income through retirement.
If you retire before age 60 you can integrate your pension with OAS or CPP, or both. If you retire after age 60, but before age 65, you can integrate your pension with OAS. Integration is not available if you are at least age 65 when you retire.
With an integrated pension, you would receive an additional amount of pension from the pension plan until age 60 for integration with CPP and age 65 for integration with OAS. These additional amounts would then cease and your basic pension would be reduced. This reduction is intended to recover the additional amounts previously paid to you. This reduction continues for your lifetime. The plan recovers on average the same amount it pays out. However, as the repayment amounts are based on average life expectancy, each individual may pay back more or less than they received, depending on how long he or she lives.
If you are being paid a minimum guaranteed pension (e.g., 10 or 15 years), CPP integration adjustments would cease upon your death and would not impact any payments made to a beneficiary. If you are under age 65 when you pass away, OAS integration increases would continue to be paid until the earlier of the date you would have reached age 65, or the end of the minimum guarantee period. No reduction to recover the additional amounts paid would be made to a beneficiary payment.
For any form of pension other than a minimum guaranteed pension, integration adjustments apply only during your lifetime, and any increase or decrease would cease upon your death. Survivor pension option amounts payable to a spouse or partner would therefore be no different whether you integrate or not.
Please note that selecting the integration option will not cause your CPP or OAS benefits to start automatically. If you select the integration option, any reductions to your pension from the pension plan at age 60 or 65 will occur as scheduled, regardless of when your CPP and OAS benefits start, how much you actually receive, or any changes that might be made to those plans.
“The Risk: Taking advantage of this early retirement option is a gamble in the sense that individuals may be paying back the debt longer than they collected the benefit.” (Provincial Ombudsman Report)
Spouse or Partner Consent for Integration Election
We are unable to pay an integrated pension to a member with a spouse or common-law partner unless the spouse or common-law partner has provided written consent to the election or the member is living separate and apart from the spouse or common-law partner by reason of a breakdown of their relationship.
This consent can only be given by completing a form required by the Superintendent of Pensions (Form 5B).