The YMPE is an amount set by the federal government each year. It is used as the ceiling for contributions to the Canada Pension Plan. We use the average YMPE from the three calendar years immediately prior to your retirement to calculate your pension.
For each year of contributory service, you receive 1.5% of your average annualized earnings up to the average YMPE, plus 2% of your average annualized earnings above the average YMPE. The rate is lower on earnings up to the YMPE to reflect that you’ll also receive Canada Pension Plan benefits on these earnings.
Your contributory service is the period of time that you have been making contributions to the Plan.
Everyone’s financial situation and pension calculation is unique; to get a rough idea, if you’ve been in the Plan for 30 years, you can generally expect to receive total pension income from HOOPP and government pensions to equal about 60% of your average annualized earnings before retirement.
Your pension, like your regular employment income, is taxable.