Deciding what to do with your pension assets can be an extremely complex matter. Your options will depend on the type of pension plan you have, whether your pension contributions have vested in your name and whether you are at retirement age. If you are a member of a registered pension plan, you will likely have three choices:
- Keep your pension with your previous employer
- Move it to a new employer’s pension plan, or
- Transfer the commuted value of the pension to a Locked-in RRSP or, if you are retiring, to a Life Income Fund or Locked-In Registered Income Fund.
You may receive your company pension benefit as guaranteed monthly payments beginning now, or in the future if you choose a deferred pension. You may have the option of receiving a lump sum, or the commuted value, of this monthly income instead. The decision to take the commuted value or monthly pension is a very serious one and can have long-term financial implications on you and your family.
Taking the commuted value may appeal to someone who wishes to leave an estate or whose pension is not indexed to inflation, while the pension may be a good choice for people with few other assets or who value continued health coverage.