- April 5, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Handling Pension Options after Job Resignation
Hello all,
I recently resigned from my job and now have to make a decision on how to handle my pension. I am not well versed in anything pension-related and hoping for some guidance on my options.
### Exploring Pension Options
Options seem to boil down to:
A. Lifetime Pension payable from February 1, 2024
B. Lifetime Pension with 10-year guarantee payable from February 1, 2024 to January 1, 2034, payable from February 1, 2034
C. Lifetime Pension with 60% to your Surviving Spouse payable from February 1, 2024
D. Lifetime Pension with 100% to your Surviving Spouse payable from February 1, 2024
E. A deferred lifetime pension of $621.34 per month payable from August 1, 2056
F. An estimated transfer of $29,997.08 to a locked-in retirement savings arrangement. This option will result in a pension adjustment reversal (PAR) of approximately $22,640.00
### Age and Retirement Considerations
I’m guessing options A to D won’t apply since I’m still in my 30s and will not retire anytime soon. However, the spousal implications for options C and D are worth further exploration.
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Any insight is appreciated!
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Payable from Feb 2024 can’t be right if you are in your 30’s.
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For such a small amt just take the LIRA and use your RRSP room from the PAR if possible.
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$621/mo in 32 years is about a 4% return which is about what what an annuity would pay at 65 (1.04^32 * 30k) Not a terrible return if you want to be conservative but if you invest yourself and add the additional RRSP from the PAR room it would likely be more.
I would just do LIRA and buy a all in one ETF
If you ever think that you will be employed with this employer again, don’t cash out.
Option F.
I think you should call whoever is facilitating these pension plans. Manulife, sunlife, etc.
If you are in your 30’s I doubt they give you multiple pension options. I think you have the deferred option or a cv option available to you since most company’s won’t give you retirement options unless your minimum 55. Also are you joining another company that has a pension plan? Because you could transfer your current pension there. If you’re not joining a company with a pension plan then either the deferred option or transferring the cv to a LIRA.
F all the way. Put the money into a growth based ETF.
Couple additional points – does the deferred option include annual cola? This would offer inflation protection of your assets.
You mentioned that you are working with a government employer. Speak to your new pension plan asap for transfer agreements and possible buyback opportunities. Some can be time sensitive, so act asap.
Inquire if you can defer and collect the cv at a future date if you defer. Cvs are low right now due to high interest rates, so you could wait to see if you can take a cv at a larger when interest rates go down. This option does have risk, so talk with the current pension provider to verify.
Can you find out if it’s fully indexed or not? That might be a deciding factor to me. If it’s indexed I might want the pension itself when the time comes.
Same thing happened to me a year ago. I took option F and put it in my LIRA. Way better than the projected 4% annual had I kept it in my pension.
Option F and let it grow for the next 30 years, it should 10X.