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ATRF Advance and Reduction

Optional Advance

If you retire before age 64, you can choose to receive an optional “advance” with your monthly ATRF pension. The intent of the optional Advance/Reduction Program is to smooth out your pension income before and after you begin to receive Canada Pension Plan (CPP) payments, which usually begin at age 65 (they can begin as early as age 60, however).

The advance is a payment from the Plan that must be repaid with interest. The amount of the advance is based on what ATRF estimates your CPP pension will be at age 65 by using the service you have accumulated under ATRF. This amount may differ from the amount stated by CPP. The advance is paid for your lifetime as a supplement to your ATRF monthly pension.

Advances are considered as income and are taxed accordingly. Choosing an advance will not affect your CPP pension, which is paid directly from the federal government.

If you want the advance, you must choose it when you choose your pension option – you cannot choose to add it after your pension has begun. The amount of the advance cannot be changed or discontinued once your pension payments have begun.

The repayment begins at age 65 by a reduction to your total monthly pension payment from ATRF. This reduction continues for your lifetime regardless of when you start to receive your CPP pension, or whether the federal government changes eligibility requirements for CPP, the benefits available or the tax rules.

The payment of the advance, as​ well as any responsibility for repayment, stops at your death.

Cost of Living Adju​stments (COLA)

Cost-of-living adjustments (COLA) are applied each January to your ATRF pension before income tax is deducted.

If you take part in the optional Advance/Reduction Program:

  • before age 65, the COLA will be based on your ATRF pension including the advance, and
  • at age 65 and older, the COLA will be based on your ATRF pension including the advance and the reduction.

The COLA is based on the following formula:

​60% of annual increase​​
in the Alberta Consumer Price Index
multiplied by​
pension payable on pensionable service before 1993​
​​PLUS​​​
​​​70% of annual increase​
in the Alberta Consumer Price Index
multiplied by
pension payable on pensionable service after 1992​​

​Example of the A​​dvance​ and Reduction

For example, a plan member is retiring at age 55 with a monthly pension of $1,708 from the Plan. The plan member has two choices.

Without advance/reduction

One choice is not to receive an advance with the monthly pension. With this choice, the plan member will receive the monthly pension from the Plan of $1,708 starting at age 55. At age 65, the overall retirement income will increase to $2,284 when the member expects to receive a monthly CPP pension of $576.

withoutAdvance.gif

The second choice is receive an advance of $226.  When added to the pension from the Plan of $1,708, the plan member will have retirement income of $1,934 starting at age 55.  At age 65, the member expects to receive a monthly CPP pension of $576 but the total retirement income from ATRF will decrease to $1,358, so overall the retirement income will still be at $1,934.

withAdvance.gif

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