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 benefits under a long-term disability plan provided by your union or employer.
How benefits under a long-term disability plan affect your pension
When you receive long-term disability benefits for time away from work, your pension may be affected. It depends on whether your long-term disability plan has been approved by BC Pension Corporation. Contact your union or employer to find out if you are covered by an approved group disability plan.
Receiving disability benefits from an approved long-term disability plan
You and your employer will not make pension contributions while you are receiving long-term disability benefits from a plan approved by BC Pension Corporation. However, you will continue to accumulate pensionable and contributory service in BC's Teachers’ Pension Plan as if you were working.
If you are still on long-term disability leave when you apply to retire, your pension will be calculated using your highest average salary before your long-term disability leave. This will be increased by any inflation adjustments provided by the pension plan.
If you go on a rehabilitation program, you and your employer will resume making contributions to your pension on your earnings. However, your pension will continue to be based on your highest average salary before your long-term disability leave and increased by any inflation adjustments provided by the pension plan. In addition, you will continue to accumulate pensionable service as if you were still working.
If you receive other sources of income while on leave, such as Canada Pension Plan disability benefits or WorkSafeBC benefit payments, your long-term disability benefits may be reduced by the value of these other benefit payments. However, even if your long-term disability payments are reduced to zero because of these other sources of income, you should still apply for long-term disability benefits from your plan provider. This will ensure you accumulate pensionable and contributory service in the pension plan even though you are not making contributions to it.
Because you accumulate service while receiving disability benefits under a long-term disability plan., we will send you a pension adjustment statement each year. You will need to submit this statement with your yearly income tax return.
Receiving benefits under a long-term disability plan that is not approved
If you receive benefits under a long-term disability plan that is not approved by BC Pension Corporation and you are under 65, you will not accumulate pensionable and contributory service in the pension plan while on leave. This means the value of your pension will not increase while you are away from your job.
You can contact the plan to see if you are eligible to apply for a disability benefit.
You may be able to increase your future pension by buying service for a general leave for the time you were off work and receiving long-term disability benefits.
Accepting a lump-sum payment to end your long-term disability claim
You may decide to accept a lump-sum payment from your union's or employer’s long-term disability plan to settle your claim and end your benefits. If you choose this option:
- You will not continue to accumulate pensionable and contributory service in the pension plan
- Your highest average salary, which is used to calculate your pension, will no longer be indexed to keep pace with increases in the cost of living
- You will not be eligible for a disability benefit from the Teachers’ Pension Plan
If you accept a lump-sum payment from a long-term disability plan, you may be eligible for a retirement pension or termination benefits. For more information, contact the plan.