The client
A retired municipal employee in Camrose retired in 2019 at 58 and elected the Local Authorities Pension Plan's coordination option -- a temporary bump to her monthly pension, paid only until she reaches 65, after which it is removed and her pension permanently drops. She turned 65 this year, and her mortgage renewal landed the same season.
Coordinated pension (pre-65)
$3,800/month
Included the temporary coordination top-up
Pension once coordination stops
$2,900/month
Permanent, ongoing figure from age 65 on
Spouse's employment income
$4,300/month
Still working
Switch balance
$210,000
No funds added, straight switch
The problem
LAPP's coordination option let members who retired before 2021 draw a temporary, higher pension until age 65 -- designed to bridge the gap before Canada Pension Plan and Old Age Security begin -- after which the coordination amount is removed and the pension permanently reduced. LAPP discontinued the option for anyone retiring on or after January 1, 2021, but members who elected it before then still experience the reduction exactly as promised, on schedule, at 65.
What the file was originally built on
- ▸The lender's file used a T4A(P)-equivalent pension statement from before her 65th birthday
- ▸That statement showed the full $3,800 coordinated figure, still current on paper
- ▸By the time the switch was underwritten, the coordination amount had already stopped -- her real pension was $2,900
- ▸Nothing on the statement itself flagged that a reduction was coming
A pension income figure that is accurate the day it's printed can still be wrong by the time a switch closes, if the household doesn't know a scheduled reduction is built into the plan.
The numbers
The switch itself never changed -- what changed was which pension figure correctly described her household income going forward.
| Requalifying on the correct, post-65 income | Amount |
|---|---|
| Payment on the $210,000 switch (5.15%, 20 years) | $1,397/mo |
| Property tax + heat (lender estimate) | $430/mo |
| Spouse's own car loan | $260/mo |
| Total monthly obligations | $2,087/mo |
| Scenario | TDS |
|---|---|
| Using the stale, still-coordinated pension figure ($3,800 + spouse's income) | 25.8% |
| Using her real, post-65 pension figure ($2,900 + spouse's income) | 29.0% |
Both figures clear a typical total debt service ratio comfortably, so the switch was never in jeopardy -- but a file built on the wrong number is still wrong, and a 3.2-point gap is exactly the kind of thing a lender's own file review, or a future renewal, can catch later if it isn't corrected now.
The solution
A mortgage associate licensed under Alberta's Real Estate Act treated the coordination benefit as a scheduled, known event rather than a surprise -- LAPP publishes exactly when and how much a coordinated pension drops, so there was no need to guess.
First, confirmed directly with LAPP's own statement whether she had elected coordination, and if so, the exact date it would stop.
Second, requested her current, post-65 pension confirmation rather than relying on the older statement the file had started with.
Third, requalified the switch on the corrected, lower figure -- still comfortable, and now accurate for every year going forward rather than just until the next review caught the gap.
The outcome
The switch closed on her correct, post-65 pension income of $2,900/month, combined with her spouse's employment income, at a total debt service of 29.0%.
This uninsured switch did not require CMHC ratio testing, so 29.0% is shown for serviceability, not as a regulatory ceiling; it comfortably clears typical lender comfort either way.
What to take from this file
- 01A pension figure that's accurate today can still be scheduled to drop. Ask directly whether a public-sector pension includes a coordination or bridge benefit tied to age 65.
- 02LAPP's coordination option was discontinued for new retirees in 2021 -- but anyone who elected it before then still sees the reduction on schedule, at 65.
- 03Always request a current pension confirmation, not last year's statement, when the client is near or past a known reduction date.
- 04A file that still qualifies on the corrected number is the right outcome -- but qualifying on a stale number, even if it happens to work out, is not correct practice.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸the $3,800 coordinated and $2,900 post-65 pension figures — every LAPP member's coordination amount is individually calculated; these are illustrative deal figures.
- ▸5.15% contract rate — rates move daily; not a quote.
- ▸$4,300 spousal income and the $430 tax/heat estimate — illustrative deal figures consistent with this file.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.