How to transfer the value of your benefits
The following information will be useful if you want to transfer benefits from your defined benefit pension plan
What are the conditions that apply to transfers?
To be entitled to transfer your benefits under the plan, you must no longer be an active member of the pension plan. That is usually the case if you have left or lost your job.
Exceptions to the rule
Generally, you are not entitled to transfer your benefits if one of the following situations applies:
- You are receiving a pension under the plan.
- You are entitled to an unreduced early retirement pension.
- You continue to work for the same employer and participate in another, connected plan offered by the employer.1
- For the two plans to be connected, the plans must contain specific provisions to that effect. To find out if that is the case, contact the plan administrator.
When can transfers be made?
You can request a transfer of your benefits:
- within 90 days following receipt of your statement of cessation of active membership, if you are more than 10 years away from the normal retirement age under the plan (for example, if you are under 55 and the normal retirement age is 65)
- thereafter, once every 5 years, within 90 days following the anniversary of the date on which your active membership ceased
- a last transfer when you are 10 years the normal retirement age, during a period of 90 days (for example, if you are 55 and the normal retirement age is 65)
A plan can be more generous and provide, for example, that you can apply for a transfer within 10 years of the normal retirement age. Consult the summary of your plan for the rules that apply to you.
When informed that your active membership has ceased, the plan administrator has 60 days to send you your statement of cessation of active membership. The statement will show the value and nature of your benefits credited under the plan.
A helpful example...
Rachel turned 47 years old on 15 January 2020. Her active plan membership ends on 31 January 2020. She receives a statement of cessation of active plan membership from the plan administrator on 15 March 2020. The normal retirement age under the plan is 65.
Rachel can apply for a transfer of her benefits at the following times:
- between 16 March 2020 and 13 June 2020 (at age 47)
- between 1 February 2025 and 1 May 2025 (at age 52)
- a last time between 16 January
2028 et 14 April
2028 (at age 55).
To whom do you make an application for a transfer?
Your application for a transfer must be made to the administrator of your plan. Do you know how to reach the administrator? Your statement of cessation of active membership gives the plan administrator's address and the name and address of the person you should contact for information. You can also use our online service for consulting supervised pension plans.
What can be transferred?
Under a defined benefit pension plan, you can transfer a sum of money that represents the value of your benefits, that is, the present value of:
- your vested pension
- your excess member contributions (if any), with interest
- your additional voluntary contributions (if any), with interest
- sums transferred to the plan (if any), with interest
- your additional pension benefit (if any)
- any contributions (with interest) that you made after the normal retirement age, that is, during the postponement of your pension
A helpful example...
Suppose that your age is 47 when your active plan membership ceases. You are entitled to a pension of 1 000 $ a month as of age 65. If the present value of that pension is 37 500 $ and the present value of your other plan benefits is 2 500 $, you could request a transfer of 40 000 $.
Where can you send your transferred benefits?
You decide where your benefits will be transferred.
You have the following transfer options:
- a locked-in retirement account (LIRA)
- a life income fund (LIF)
- a deferred or immediate life annuity contract purchased from an insurer
- your new employer's pension plan (if transfers can be received under the plan's provisions)
- an RRSP or a registered retirement income fund (RRIF) for any sums that can be directly refunded to you.
Your benefits can be left in the plan's pension fund (unless the plan is terminated). However, the payment of your retirement income must begin no later than 31 December of the year in which you reach age 71.
In what circumstances can you receive a cash refund?
In some situations, you can recieve a cash refund. Your plan must provide for certain refunds; others may be offered as options.
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