notched option
A method of
integrating private pension plans with Canadian public pension
plans. Under this option, a participant who retires before age 65
receives a greater benefit from the private plan until age 65 and a
smaller benefit after 65, when the participant begins to receive
public pension payments. When both the public and private plan
benefits are considered, the participant receives the same combined
benefit payment before and after age 65. However, this benefit
payment is smaller than the payment the participant would have
received had he or she waited until reaching age 65 before beginning
to receive benefits. The
notched benefit
is designed so that the sponsor pays the same total
benefit as it would
have if the amount of the private
benefit payments had been constant throughout. Compare to
bridging supplement.
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