Pension transfer in—Issues to consider
You should not assume that the amount of funds available from your former employer will be sufficient to credit you, under the Public Service Superannuation Act (PSSA), with all of the pensionable service accumulated with your former employer. There may be differences between the pension benefits provided by each plan and also differences in the actuarial assumptions each plan uses in the pension transfer calculation.
As you review your options, it is important to consider the costs involved, the tax implications, and the eligibility requirements. Consideration must also be given to factors such as inflation protection (pension indexing), age and service thresholds for benefit entitlement, survivor benefit provisions, health and dental care plans, and projected career and retirement date expectations. There may also be costs and medical requirements associated with the purchase of any service not credited by the transfer.
A pension transfer agreement (PTA) is not always the most cost effective way to have your pensionable service credits from your former employer's pension plan recognized under the PSSA. You may be eligible through Service buyback package to purchase the pensionable service with your former employer through the elective service provision of the PSSA. If this option exists for you, Contact the Pension Centre will provide you with an Estimate of Cost for Prior Service (PWGSC-TPSGC 2057) for the same period of service you are considering transferring under a PTA. Once you receive your pension transfer estimate, you should take the opportunity to compare the relevant issues surrounding both portability options in order to determine which one best suits your personal needs.
You may also want to consider how long you intend to remain in the public service. If you choose to transfer your service under the terms of a PTA, those funds are locked-in regardless of how long you remain in the federal public service. If you choose to purchase the service under the elective service provision and voluntarily leave the public service before reaching two years of continuous service, your only entitlement will be a return of your contributions. If you would like more information on this issue, contact Contact the Pension Centre.
Given the complexity of pension issues, you may wish to obtain additional counselling from a financial advisor before making a final decision.
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