Plan 2 lowers the normal retirement to age 60 and provides post-retirement indexation of 2 percent per annum. A 6 percent interest rate was assumed. The PAs are the same for both plans because PA is not dependent on age or the value of RPP benefits. The CV is much greater in the much richer plan 2 and the PAR is reduced accordingly. Neither the PAR nor the richer plan 2 can match the RRSP retirement savings.
Age is important.
Consider an RPP member who was 40 or 50 in 1990. The PA and RRSP balances are not affected. The second table shows the PARs and CVs for plan 1. There is no PAR at either age for plan 2 members, who receive CVs greater than the cumulative PA cost paid throughout their membership. The PAR rules seek to prevent such an individual from using the low PA cost of her benefits to recreate opportunities for retirement savings.