CN Pensioners Associations, Inc.

Increased Pension to Age 65 Option (IPO)

If you retire before age 65, you may elect the increased pension to age 65 option. Under this option, you receive more from the CN Pension Plan before age 65 and less after age 65. If you choose this option, your increased CN pension will be reduced for life once you reach age 65. Your decision to elect or decline this option is personal and irrevocable.

The following example illustrates how the IPO affects an employee retiring early at age 56 and 6 months on December 31, 2004:

With IPO Without IPO
Monthly pension before age 65 Monthly pension before age 65
CN basic pension $2,500 CN basic pension $2,500
IPO allowance $183 IPO allowance
Total monthly pension $2,683 Total monthly pension $2,500
Monthly pension from age 65* Monthly pension from age 65
CN pension $2,283 CN basic pension $2,500

* At age 65, the total CN monthly pension of $2,683 is reduced for life by the fixed amount of $400 a month ($2,683 - $400 = $2,283).

The increased pension to age 65 option is calculated so that the value of both options is, on average, the same. The amount of the IPO allowance reflects the age of the member at retirement, the applicable reduction of $400 at age 65, interest rates and whether the member retired early or on disability pension.

Because survivor benefits are calculated using the CN basic pension amount, your decision to elect or decline the IPO will have no bearing on pension benefits which may become payable to your survivors.