Transfer value

Instead of receiving a monthly pension, can I choose to cash out my pension to receive a lump sum?

Discover how you have the option to transfer your pension by watching the video below. You will also learn how a Transfer value is affected by taxation and the significance of making such a decision. Click on the link below for more information on this topic.

Transcript of the Transfer value

The transfer value is a one time lump sum payment available if you have at least 2 years of pensionable service and represents the present value of your future pension benefit. You are eligible to opt for a transfer value if you cease to be employed more than 10 years prior to normal retirement age, meaning that the age limit is 50 if you became a plan member on or before December 31, 2012 and, the age limit is 55 if you became a member on or after January 1, 2013. You have one year after leaving the public service to make this option.

The transfer value amount is determined using an actuarial calculation based on the deferred annuity that would have been payable at age 60, if you became a member of the pension plan on or before December 31, 2012. If you became a plan member on or after January 1, 2013, the actuarial calculation is based on the deferred annuity at age 65. The transfer value takes into account potential disability and survivor benefits as well as indexing.

The Income Tax Act places certain limits on the amount of the transfer value which can be transferred to a registered retirement vehicle without tax taken at source. The amount of the transfer value within the tax limit has to be transferred to a locked-in Registered Retirement Savings Plan or RRSP, to another Registered Pension Plan or to a financial institution to purchase a life annuity. The portion of the transfer value payment that is outside the tax limit is paid to you and is taxed at source. However, if you have available RRSP room, the portion outside the tax limit may be transferred to an RRSP.

If you choose a transfer value, there are no other benefits payable to you and your survivors. As well, you would no longer be covered by the Public Service Health Care Plan and the Pensioners' Dental Services Plan.

If you are thinking of taking a transfer value, we strongly encourage you to obtain counseling from a financial institution or a financial planner because you are responsible for the risks associated with your investments.

If you become re-employed as a plan member, you could buy back your prior transfer value service. There are, however, conditions and time limits associated with buying back this service. In addition, if you become re-employed as a plan member after having received a transfer value, you would be covered under the post-2013 pension plan terms where the normal retirement age is age 65. To learn more, you may view the Re-employment after Retirement video.

For more information, also take the time to visit Pension and benefits web portal or contact the Government of Canada Pension Centre.

Public Services and Procurement Canada

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