- A Additional Details and Results for Natural Experiment A.1 Calculation of Potential CPP/QPP Pensions CPP and QPP pensions are calculated using the same formula, but the parameters differ in some of the years because of the 2010 pension reform. An individual who claims a pension at age a receives an annual pension Ba that is calculated as follows: Ba = 0.25(1+(aâ65)PAFa)  ï£ Paâ1 k=18 min Wk Y MPEk , 1 NCYa   | {z } =total adjusted pensionable earnings Pa s=aâ4 Y MPEs | {z } =averageY MPE , (A.1) where PAFa is the pension adjustment factor which depends on the claiming age, Wk are the annual earnings at age k, NCYa is the total number of contribution years, and Y MPEs is the yearâs maximum pensionable earnings.
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- The contribution period begins in the year an individual turns 18 or in January 1966, whichever is later. It ends in the year an individual turns 70, or the year before the individual starts receiving a CPP/QPP pension.19 The contribution period excludes any year that an individual receives a disability pension. Since we observe the year of birth and whether individuals receive a disability pension, we can calculate each individualâs NCYa at each potential claiming age.
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- We exclude the lowest adjusted pensionable earnings that fall under the general dropout provision. We ignore contribution years and adjusted pensionable earnings after age 59 because they are likely affected by how people respond to the reform.20 A challenge when calculating the adjusted pensionable earnings is that we do not observe earnings all the way back to age 18 because our data starts in 1982 when individuals in our sample are between 24 and 47 years old. To address this problem, we follow Milligan and Schirle (2020) and estimate gender-birth-cohort-specific growth rates in median earnings. We then use these growth rates to backcast earnings to age 18.
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