Long-term disability benefits and your pension
Learn how a long-term disability leave might affect your pension.
If you are off work for an extended period because of illness or injury, you may qualify for long-term disability benefits from a group disability plan provided by your employer.
When you receive disability benefits for time away from work, your pension may be affected. How your pension is affected depends on whether your group disability plan has been approved by BC's College Pension Plan for pension purposes. Contact your employer to find out if you are covered by an approved group disability plan.
Receiving long-term disability benefits from an approved group disability plan
If you receive benefits from a group disability plan that's approved for pension purposes:
- You will accumulate pensionable and contributory service in the College Pension Plan as if you were working
- We will send you a pension adjustment statement each year; you must submit this statement with your annual income tax return
If you receive other sources of income while on long-term disability, such as Canada Pension Plan disability benefits or WorkSafeBC benefit payments, your long-term disability benefits from your approved group disability plan may be reduced by the value of these other benefit payments. However, even if these other sources of income reduce your group disability plan payments to zero, you should still apply for long-term disability benefits from your approved group disability plan. This will ensure you accumulate pensionable and contributory service in the pension plan even though you are not making contributions.
If you are still receiving benefits from an approved group disability plan when you apply to retire:
- Your pension will be calculated using the highest average salary you earned before you stopped working
- We will adjust the salary amount we use in this calculation to reflect increases in the cost of living (as measured by the Canadian consumer price index) that occurred while you were off work
Receiving long-term disability benefits from a non-approved group disability plan
If you receive long-term disability benefits from a group disability plan that's not approved for pension purposes, and you're under 65:
- You will not accumulate pensionable and contributory service in the pension plan, so the value of your pension will not increase while you are off work
- Your time on long-term disability will count as a general leave of absence
When your long-term disability ends, you may be able to increase your future pension by buying service for the time you were off work. You can also contact the plan to see if you are eligible to apply for a disability pension.
Accepting a lump-sum payment to end your long-term disability claim
You may decide to accept a lump-sum payment from your employer's group disability plan to settle your claim and end your benefits. If you choose this option:
- Your employment will be considered terminated
- You will not continue to accumulate pensionable and contributory service in the pension plan
- You will not be eligible for a disability pension from the College Pension Plan
- You may be eligible for a regular pension or termination benefits
For more information, contact the plan.
What happens if you return to work
If you return to work following long-term disability, you and your employer will resume making contributions to your pension based on your current salary.
Returning to work for your previous employer (or another employer participating in the plan) may affect your highest average salary and the amount of pension you receive.
Contact the plan if you have questions about how returning to work after a long-term disability might affect your pension.