Lifetime Pension

Overview

PEPP's Lifetime Pension is the latest retirement income option available to you as a Plan member. We designed the Lifetime Pension to provide you with dependable monthly payments for life, regardless of how long you live and, depending on the options you choose - your spouse’s life too.

The details described on the Lifetime Pension relate to Saskatchewan legislation.

What is a Lifetime Pension?

The Lifetime Pension is designed specifically for retired or retiring PEPP members who would like a dependable monthly pension payment for life – eliminating the risk of outliving their retirement savings.

Members can choose a combination of PEPP’s Variable Pension Benefit (VPB) and the Lifetime Pension for their retirement income. Lifetime Pension is designed to provide you with dependable monthly payments for life regardless of how long you live, while the VPB option offers you flexibility and control over when and how much retirement income to withdraw, and choice over how your money is invested within the Plan.

This combination provides you with the flexibility and stability to enjoy your retirement.

Lifetime Pension Eligibility

Here are the eligibility requirements to purchase a Lifetime Pension:

1. You must be a PEPP member between the ages of 50 and 94.
2. You must have terminated employment with your PEPP employer(s) and cannot be currently contributing to your PEPP account; OR you already have some or all of your funds in a VPB account.
3. Your Lifetime Pension purchase amount must be greater than 20% of the Year's Maximum Pensionable Earnings (YMPE) and total purchases cannot be more than $1 million.
4. The money used to purchase your Lifetime Pension is governed under Saskatchewan legislation.

Other Options:

• If you’re a former PEPP member, even if you have no money in your PEPP account, you could return to the Plan to purchase a Lifetime Pension or use the Variable Pension Benefit.
• If you’re the surviving spouse of a deceased PEPP or VPB member, you have the option to purchase a Lifetime Pension with the death benefit if you meet the eligibility requirements above.

How Lifetime Pension Works

Overview

• When you buy a Lifetime Pension, your money goes into a pool with other Lifetime Pension members.
• Your lifetime monthly pension payments come from this pool.
• Payments are adjusted annually based on the Moderate Fund’s investment performance and the longevity experience of members in the Lifetime Pension.
• Lifetime Pension funds are invested in PEPP’s Moderate Fund.
• The Lifetime Pension has an annual rate of return goal of 4% (also known as the hurdle rate). Moderate Fund returns above the 4% goal will increase pension payments.
• PEPP will adjust pension payments annually. Payments may be adjusted up or down each year, however, we expect payments to generally increase over time, which should help your pension keep up with inflation.
• Funds used to purchase a Lifetime Pension must come from PEPP accounts administered under Saskatchewan legislation.
• Funds are locked in permanently. This ensures a stable income stream for all members in the fund.

How Lifetime Pension Funds are Invested

• Your contributions, along with those of other Lifetime Pension members, are pooled and invested in PEPP's Moderate Fund.
• The annual rate of return goal (or hurdle rate) for Lifetime Pension is 4%.
• The Moderate Fund’s annual performance will vary from year to year, which will impact the annually adjusted monthly pension payments.

Your Lifetime Pension Monthly Payments

You’ll receive monthly pension payments based on several contributing factors, including:

• the amount used to purchase the Lifetime Pension;
• the type selected (single life: which covers your lifetime only, or joint life: which also covers your spouse’s lifetime);
• your age (and your spouse’s age if you purchase a joint life) at the time of purchase;
• the survivor benefits you choose (60% of your Lifetime Pension continuing to your spouse or 100%);
• the death benefit guarantee period you choose (life-only, 5, 10 or 15-year guarantee); and
• the annual investment performance and longevity experience of the Lifetime Pension fund.

Keep in mind that the longer the guarantee period, or the larger the survivor benefit, the smaller your monthly pension payment will be. The younger you are when you start also decreases the monthly payments.

All retirement income payments from a pension are taxable but note that payments from the Lifetime Pension are eligible for the tax advantages of pension income splitting, regardless of age.

Payment Adjustments

You can expect your monthly pension payments to be adjusted every year. These annual adjustments ensure that the Lifetime Pension payments remain sustainable and aligned with the fund's financial health.

Annual payments will be adjusted each year and may go up or down. However, over the long term we expect payments to increase. This gradual increase is designed to help your pension keep up with inflation and maintain the purchasing power of your retirement income.

The Lifetime Pension fund follows PEPP’s fiscal year of April 1 to March 31. An actuary will perform an annual review based on the fund’s year-end results as of March 31.

PEPP will send you a letter detailing the adjustments to your pension payments every June. You will then receive your adjusted monthly pension payment at the end of June, which will remain at that amount until the following June.

Pension payment adjustments are calculated by actuaries and are based on two main factors:

1. Annual investment performance of the Lifetime Pension fund

All Lifetime Pension funds will be invested in PEPP’s Moderate Fund.

The Lifetime Pension annual rate of return goal (or hurdle rate) is 4%. Annual pension payment adjustments will be made based on the difference between the 4% hurdle rate and the Moderate Fund’s annual rate of return (ROR) net of fees.

• If the Moderate Fund’s annual ROR is greater than 4%, monthly payments will be adjusted upwards.
• If the Moderate Fund’s annual ROR is less than 4%, then monthly payments will be adjusted downwards.

2. Longevity experience within the Lifetime Pension fund

The longevity adjustment accounts for the following components relating to the longevity of fund members:

• differences between the estimated number of members in the Lifetime Pension fund and the actual number of members remaining in the fund over the year; and
• changes in the future life expectancy of those within the Lifetime Pension fund.

Other Considerations

Purchasing a Lifetime Pension Part Way Through the Year

You can purchase a Lifetime Pension at the beginning of any month. However, a full year of participation starts from April 1 to March 31, which reflects the fiscal year for PEPP and the Lifetime Pension fund.

If you join partway through the fiscal year, note that the investment performance adjustment described in the Payment Adjustments section above will be pro-rated based on the number of full months you participated in the Lifetime Pension fund in the first fiscal year. 

Example: Let’s say a member purchases a Lifetime Penson on May 1, 2025.

Year 1: The member will receive the initial monthly pension payment from May 2025 to May 2026. 
Note: While a full year of participation is from April 1 to March 31, PEPP’s actuary needs time to calculate the annual adjustments based on the March 31 year-end results and therefore, the payment adjustments are reflected in the June payments.

Year 2: In June 2026, the member will receive a letter detailing the adjustment to their monthly pension payments. The adjustment to the member’s monthly pension payment will be pro-rated to reflect their participation in 11 of the 12 months of the prior fiscal year (May 1, 2025 to March 31, 2026).

Year 3: In June 2027, the member will receive a letter detailing the adjustment to their monthly pension payments without any pro-rating since they participated in the fund for the full 12 months (April 1, 2026 to March 31, 2027). These annual adjustments each June will continue for as long as the member (and/or spouse/beneficiaries) are entitled to receive payments.

Income Splitting Option

Lifetime Pension payments qualify for pension income splitting.

For more information on income splitting and how it works, visit the Canada Revenue Agency website.

Survivor Options and Death Benefits

The Lifetime Pension provides survivor options and death benefits to ensure financial security for your beneficiaries. To learn more about the options available, refer to the Lifetime Pension Options section in this document.

Administrative Fees

There are no additional fees when you purchase a Lifetime Pension. This fund incurs the same operating expenses and investment fees as the other PEPP funds. These fees are incorporated into the fund’s net return.

You can view the Moderate Fund’s performance for more information on the Fund and its investment performance.

Binding and Permanent

When you submit an application to start a Lifetime Pension, you are entering a binding and permanent contract based on the options you have selected. After the purchase date, you cannot change your mind, nor can you or PEPP change the selected options or terms of the contract.

Also, once you purchase a Lifetime Pension, your funds are locked in permanently. This ensures a stable income stream for all members in the fund.

Compliance and Regulatory Oversight

PEPP’s Lifetime Pension is governed by several federal and provincial regulations, including the Income Tax Regulations (Canada) and The Public Employees Pension Plan Act. The Plan must adhere to these regulations, and any significant changes to the Lifetime Pension must be reviewed and approved by the Public Employees Pension Board.

Annual Reporting

PEPP’s plan administrator, Plannera Pensions and Benefits, is responsible for any reporting required under The Pension Benefits Act (Saskatchewan).

How to Purchase a Lifetime Pension

What Funds Can be Used to Purchase a Lifetime Pension? 

You can transfer either a portion or your entire account balance from your PEPP or Variable Pension Benefit (VPB) account to purchase a Lifetime Pension.

Funds outside of PEPP must be transferred to a PEPP or VPB account before they can be used to purchase a Lifetime Pension.

Purchases must be at least 20% of the Year’s Maximum Pensionable Earnings (YMPE) and total purchases per member are capped at one million dollars.

Choosing a combination of PEPP’s Variable Pension Benefit (VPB) and Lifetime Pension for your retirement income is recommended for most members.

Lifetime Pension Estimate/Projection 

If you’re interested in the Lifetime Pension option, contact PEPP and we will provide you with estimated monthly pension payments based on your personal information.

Our Lifetime Pension calculator is a self-service option that gives an accurate projection of what your payments could be in the first year and allows you to explore what combination of VPB and Lifetime Pension might be right for you.

Applying for the Lifetime Pension

To apply, complete the Application for Lifetime Pension form and Spousal Waiver form (if applicable). Return the form(s) to PEPP along with any certificates and Canada Revenue Agency (CRA) forms required. The Comments and Instructions section of the application form has a complete list of the required documents and certificates.

Have Questions?

We encourage you to meet with a member of our Financial Planning Team or use our Lifetime Pension calculator to help choose the best combination for you.