If you have been a member of a pension plan for many years, the benefits that you have earned in the plan may be the largest source of income you will receive in retirement. When you leave your employer, your pension plan administrator will send you a written summary outlining your company pension plan options. You will be required to select one of the options by a specific deadline. Generally if you do not act before the deadline, the administrator may consider that you have chosen one of the options by default, which may or may not be the best option for you. Your pension plan options, including when you will receive the money, how much money you will receive and how your spouse and other dependants may be affected, will all depend on your specific pension plan as well as the applicable legislation that governs the benefits you have accumulated.
There are few personal finance decisions more difficult or complex than the choice between taking a deferred pension in retirement or a lump sum (commuted) value today. Many Canadians face this tough choice each year if they leave a job with a defined benefit pension plan. Each pension decision is unique based on your individual circumstances and the details of your pension plan. That’s why it’s important to get unbiased professional advice to help you make the best decision.