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Work Pensions – to transfer or not to transfer? That is the question

    We don’t face this decision very often.
    This will occur when:

    1 You leave a company that has a pension plan
    2 You retire from a company that has a pension plan

    Types of Pensions


    • A defined-benefit plan is an employer-based program that pays benefits based on factors such as length of employment and salary history.
    • In contrast to defined-contribution plans, the employer, not the employee, is responsible for all of the planning and investment risk of a defined-benefit plan.
    • Benefits can be distributed as fixed-monthly payments like an annuity or in one lump-sum payment.
    • The surviving spouse is often entitled to the benefits if the employee passes away.



    • Defined contribution (DC) retirement plans allow employees to invest pre-tax dollars in the capital markets where they can grow tax-deferred until retirement.
    • DC plans are commonly used by companies and organizations to encourage their employees to save for retirement.
    • DC plans can be contrasted with defined benefit (DB) pensions, in which retirement income is guaranteed by an employer.
    • With a DC plan, there are no guarantees, and participation is both voluntary and self-directed.
    • Could be accessible after vesting period (the time an employee must work for an employer in order to own outright employee stock options, shares of company stock or employer contributions to a tax-advantaged retirement plan.) OR  Locked in until retirement

    Choices you are usually offered when you leave a company
    1  Leave pension as is
    2  Transfer pension to new companies pension plan
    3  Transfer to locked in RSP

    Choices you are usually offered when you retire from a company
    1  Annuity Payments
    2  Lump Sum Transfer with minimum and maximum withdrawal amounts The maximum annual withdrawal limit is intended to maintain a retirement income for the fund or account holder or their survivor, as the case may be, until at least the age of 90.
    Example – Age 60 minimum withdrawal 3.33% maximum withdrawal 6.85%

    1  What does your current retirement income look like?
    2  Do you have someone that counts on your income?
    3  What is your risk tolerance?
    4  Will this decision impact other results – for example OAS clawback?

    When making the decision:
    1  Do your homework
    2  Work with your financial professional to look at your options
    3  You can’t usually reverse the decision so it’s worth your time