Variable Pension Benefit

Overview

PEPP's Variable Pension Benefit (VPB) is one of the retirement income options available to you as a Plan member. The VPB provides you with flexibility and control over when and how much retirement income to withdraw. You also decide how your money is invested within the Plan and continue to benefit from investment earnings.

What is a VPB?

The VPB is designed specifically for retired or retiring PEPP members who would like control of their retirement income.

Members can choose a combination of PEPP’s Variable Pension Benefit (VPB) and the Lifetime Pension for their retirement income. VPB offers you flexibility and control over when and how much retirement income you withdraw, and choice over how your money is invested within the Plan. Lifetime Pension is designed 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.

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

VPB Eligibility

You are eligible for a VPB if:

1. Your are not currently contributing and have terminated employment with a PEPP participating employer.
2. You are at least 50 years old.
3. You have a PEPP account balance or are able to show prior PEPP membership.
4. You have a minimum PEPP account balance of approximately $10,000.

Other Options:

1. 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 Variable Pension Benefit or Lifetime Pension.
2. 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 VPB Works

• You use all or a portion of your PEPP account to purchase a VPB account.
• The money in your VPB account can be invested in the PEPP investment options available.
• Scheduled and/or lump-sum pension payments come from your VPB account and are paid directly to your bank account.
• You are not required to withdraw minimum payments as determined by the Income Tax Act (Canada) until the calendar year you turn age 72.

How VPB Funds are Invested

• You decide how your VPB account is invested.
• PEPP has eight investment options to choose from with varying asset classes.
• You can invest in up to three funds at one time - a combination of one asset allocation fund and two specialty funds.

For more information on the investment options available to you, see our section on Fund Information and Performance.

Your VPB Pension Payments

You determine what your payments will be.

• You can receive monthly, annual, or lump-sum payments.
• You can withdraw any amount at any time.

Scheduled payments are made on the last banking day of each month.

If you have more than one PEPP investment option, you must supply your payment instructions to PEPP. The default when there is more than one investment option is to pro-rate payments based on the account balances.

In the calendar year you turn age 71, you are required to withdraw the minimum amount as defined by the Income Tax Act (Canada).

Once your VPB account has $0.00 remaining, no further payments are made to you.

Other Considerations

Administrative Fees

There are no additional fees when you purchase a VPB.

Income Tax

Your VPB account is tax-sheltered and tax-deferred until withdrawals/payments are made. PEPP is required to withhold income tax from all payments and forward it to CRA on your behalf. You will receive a T4A reporting withdrawals and income tax paid for the calendar year.

Income Splitting Option

VPB Pension payments qualify for pension income splitting at age 65.

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

Death Benefit

The death benefit is your pension account balance, which is payable to your spouse as a Specified Beneficiary or as an Other Beneficiary (options are outlined below in the Available Options Section).

Compliance and Regulatory Oversight

In Saskatchewan: Our VPB complies with the variable benefit guidelines implemented by the Income Tax Act (Canada), The Pension Benefits Act, 1992, and The Public Employees Pension Plan Act.

The VPB account cannot be attached or seized by creditors, except through The Family Property Act and The Maintenance Enforcement Act.

Please contact PEPP about possible legislative variances if you work outside Saskatchewan.

How to Purchase a a VPB

What Funds Can be Used to Purchase a VPB? 

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

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

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

Applying for VPB

To apply for the VPB:

1. Complete the Application for Variable Pension Benefit (VPB) form and any other applicable forms in the Apply For Variable Pension Benefit Section of our website.
2. If you have a spouse, your spouse must complete a Spouse’s Consent and Waiver of Post‑Retirement Survivor Benefits form at the time of your application for VPB.
3. The Comments and Instructions section of the application form has a complete list of the required documents and certificates.
4. Return the form(s) to PEPP along with any certificates and Canada Revenue Agency (CRA) forms required.

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.