Exploring Pension Benefit Options: Transfer Value

(Background music: Welcome page with a logo of the Government of Canada Pension Centre.)

At the Government of Canada Pension Centre, we are here to help.

Hi, I'm Melissa.

Do you know what a transfer value is? This could be an option available to you when you leave the public service. Let's take a look at it together.

In a nutshell, a transfer value is a lump sum that represents what your future pension is worth.

At retirement, you would usually receive your pension every month.

In the case of a transfer value, you would receive a one-time payment when you terminate your employment.

(The narrator turns to a 45-degree angle.)

To be eligible, you must have at least two years of pensionable service.

You must also be under age 50 if you became a plan member on or before December 31, 2012, or age 55 if you became a plan member on or after January 1, 2013.

(When the narrator says “To be eligible …,” a grey text box appears on the top-right corner of the screen with the words 2 YEARS OF PENSIONABLE SERVICE UNDER AGE:/50 IF YOU BECAME A PLAN MEMBER ON OR BEFORE DECEMBER 31, 2012 written in white. When the narrator says “… or, age 55 …,” the words 2 YEARS OF PENSIONABLE SERVICE UNDER AGE 55:/55 IF YOU BECAME A PLAN MEMBER ON OR AFTER JANUARY 1, 2013 appear. The text box disappears to the right side of the screen.)

Since you will be responsible for the risks associated with your investment, you will need to invest wisely to grow your retirement income. When you retire there is no guarantee your investment return will be equal to the benefits you would have received from the pension plan.

Taking a transfer value is an important decision.

You should therefore seek independent financial advice before going forward with this option.

So how do we calculate a transfer value? It's a little complex, so bear with me! To determine this amount, we use economic and demographic assumptions such as mortality, disability and interest rates.

(When the narrator says “… we use economic and demographic assumptions …,” a text box appears on the top-right corner of the screen with the words MORTALITY/DISABILITY/INTEREST RATES. The text box disappears upward.)

As these are only assumptions, the values can change over time. Because we use the assumptions on the date of your transfer value payment, the amount can vary from when you received your estimate.

As a result, the amount of the payment could be higher or lower than what you were expecting. That's the nature of an actuarial calculation.

A transfer value payment is usually divided into two portions. One portion is not taxable, this is known as the in limit. And the other portion is taxable, this is known as the out limit.

You need to transfer the amount of the in-limit to a locked-in registered retirement savings plan, another registered pension plan, or a financial institution to purchase a life annuity.

To transfer the in-limit amount, you and your financial institution must complete and return the following forms: PWGSC-TPSGC 2347-18 certification of lock-in and T 2151 direct transfer of a single amount.

If your transfer value has an out-limit amount, it is paid directly to you.

If you have enough RRSP room, you can use all or a portion of your out-limit as an RRSP contribution.

To transfer the out-limit directly to an RRSP, you must complete and return the following form: ADM 494E Transfer Value Out-Limit Payment option.

(The screen becomes blurry, and a grey chart fills the screen entirely. On the top of the chart is written TRANSFER VALUE. When the narrator says “… is usually divided into two portions,” the words IN-LIMIT/NOT TAXABLE appear on the top left part of the chart. On the top right part of the chart, the words OUT-LIMIT/TAXABLE appear. When the narrator says “… you need to transfer the amount of the in-limit …,” the words LOCKED-IN RRSP/ANOTHER REGISTERED PENSION PLAN/LIFE ANNUITY appear in the left portion of the chart. When the narrator says “… you and your financial institution must complete and return the following forms,” the words CERTIFICATION OF LOCK-IN PWGSC-TPSGC 2347-18/DIRECT TRANSFER OF A SINGLE AMOUNT T2151 appear in the left portion of the chart. When the narrator says “If you have enough RRSP room …,” the words PAID DIRECTLY TO YOU/RRSP IF AVAILABLE ROOM appear on the right portion of the chart. When the narrator says “To transfer the out-limit directly to an RRSP, you must complete and return the following form …,” the words TRANSFER VALUE OUT-LIMIT PAYMENT OPTION ADM 494E appear on the right portion of the chart. The chart disappears completely and the narrator is facing the camera.)

If you have purchased past service, you must pay the full cost of your service buyback to include it in the transfer value payment. This must be done before the transfer value payment is made.

Otherwise, only the portion of service you have paid will be included in the calculation.

Let us know if you decide to make a payment for your service buyback.

You can expect to receive the payment of your transfer value within 45 calendar days from the later of: your termination date or the date we receive all documents correctly completed.

(When the narrator says “… within 45 calendar days …,” a text box with the words PAYMENT WITHIN 45 DAYS FROM THE LATER OF:/TERMINATION DATE/DATE ALL DOCUMENTS ARE RECEIVED appear in the top-right corner of the screen. The text box disappears.)

Now, did you know that you only have one year to choose a transfer value? If you don't make your pension option within one year from leaving the public service, you no longer qualify for transfer value.

Instead, you would have to choose between other pension options like a deferred annuity or an annual allowance. As well, you cannot choose a transfer value if you leave your employment for reasons of disability.

(The narrator turns to a 45-degree angle. When she says “If you don’t make your pension option within one year …,” a text box with the words 1 YEAR FROM LEAVING THE PUBLIC SERVICE appear in the top-right corner of the screen. The text box disappears by the right side of the screen.)

Remember that choosing a transfer value is permanent.

Once you've made the decision, you cannot change your mind for a monthly pension. With a transfer value, there are also no other benefits payable to you and your survivors.

Plus, you and your family will not have health and dental coverage from the Public Service Health Care Plan and the Pensioners Dental Services Plan.

(When the narrator says “Remember that choosing a transfer value is permanent,” the words CHOOSING A TRANSFER VALUE IS PERMANENT appear in a text box in the top-right corner of the screen. The text box disappears upward.)

Do you need help making a valid pension option? To assist you in this process we have prepared a video on how to complete the Pension Benefits Option Statement form.

To get an estimate for your transfer value, simply go to the Compensation Web Applications or CWA website.

Access the pension portal for active members to the public service. Once you sign in, click on pension tools and then Pension Benefits Calculator. Or call us.

(The narrator stands up, facing the camera. When she says, “… go to the Compensation Web Applications…” a screen shot of the Web page that leads to the Compensation Web Application appears in the top-left corner of the screen. When the narrator says “Access the Active Member Pension Application” a screen shot of the Web page that leads to the Active Member Pension Application appears in the top-left corner of the screen. When the narrator says, “… click on the Personalized Pension Tools…” a screen shot of the Web page that leads to the Personalized Pension Tools appears in the top-left corner of the screen. The screen shot disappears.)

I hope this video was helpful.

For more information about the transfer value, please visit our website at canada.ca/pension-benefits.

(When the narrator says “… please visit our website …,” the words CANADA.CA/PENSION-BENEFITS appear on the bottom of the screen. The text disappears.)

Thanks for watching.

(Text on screen: Contact information: Government of Canada Pension Centre – Mail Facility, PO BOX 8000, Matane QC G4W 4T6. Telephone: 1-800‑561‑7930. Email: pwgsc.pensioncentre-centredespensionstpsgc@pwgsc-tpsgc.gc.ca)

(Text on screen: Check us out: facebook.com/PSPC.SPAC, instagram.com/pspc_spac, twitter.com/pspc_spac, youtube.com/PWGSCanada)

[Music stops]

(Public Services and Procurement Canada signature)

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