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Retiring can be a very stressful time. It’s a big decision that can impact all aspects of your life. There are so many decisions to make, like what to do with your assets, how to invest, how you want to spend your time, what you want to do in retirement, and what you think will help you live the kind of life you want.

Some companies offer a pension plan. Know whether your plan is a DefinedContribution Plan or DefinedBenefit Pension Plan, and understand the differences between the two.

Defined Benefit Plans:
Some plans are called defined benefit plans. These are the most common plans. They are also sometimes referred to as “finalpay plans”, because the amount you receive from the pension plan depends on the pension you were earning near the time you retired. Your yearly pension is based on a formula that takes into account your salary near the time you retire.

A defined benefit pension plan is a type of pension plan where the company you work for (your employer) ‘sponsors’ your retirement plan by promising a specified pension payment.

The great thing about definedbenefit pensions is that employers guarantee a very specific retirement benefit amount for each participant in the plan.

The plan is called ‘defined’ because the benefit formula is defined and known in advance. This way you can do the calculation based on their formula and know exactly how much your pension is worth and what you’ll be paid out when you retire.



In this video we explore your 3 options when retiring or leaving your employer, and you have a definedbenefit pension plan with the company.

YOUR 3 OPTIONS:

CHOICE #1: DO NOTHING

Do nothing. Leave your pension with the company. If you do this, your retirement benefit stays locked in with the company and will continue to accumulate depending on how the company decides to invest it and how the economy and markets perform.

Ask yourself, in 30 years is the company still going to be making vehicles here in Canada and employing people to contribute to my pension? Or will the Canadian auto industry be located in Mexico? Who will be putting money into your pension so you can take it out?

If you decide to go this route, ask the pension plan administrator if there are increased administration fees, because some companies will no longer give you the discounted ‘group’ rate.

CHOICE #2: COPYCAT ANNUITY

The copycat annuity (also known as a “mirror annuity”) is a popular choice for employees coming out of a definedbenefits pension plan. It allows you to receive the same pension that your employer promised you, but it gets paid out by a secure Canadian insurer instead of the company you worked for.

Sun Life, Canada Life and Desjardins will bid on your pension. The Canadian insurance company you choose will pay you the exact same pension, same bridge and the same spousal pension.

Plus, sometimes your company’s pension has a surplus and the Canadian insurance company may pay you your pension plus extra cash. We’ve seen bonus cash payouts up to $30,000. You might qualify.

CHOICE #3: TAKE THE CASH

Taking the cash is known as the commuted value. You’re able to move the money out of the company pension plan so it can be selfmanaged by you.

Your employer cuts 2 cheques to you, one is locked in pension money, the other is cash.

Watch out for the government tax grab, but beyond that, this is your money. Use it for retirement or to pay off your mortgage or buy a boat or RV. Take a trip. The rest is your estate.

Keep in mind that if you choose this option, you’ll want to make sure to contact a financial planner to help you invest your funds so that you’ll have enough money to last you for the rest of your life. We can help. Call us to speak with a pension expert at 18885546661.



Pensions and investing is a very complicated topic. If you don’t have the time or knowledge to invest, it’s important to use a Certified Financial Planner (chat with one from Pension Solutions Canada for free by calling 18885546661). A Certified Financial Planner can look at your finances and help you decide the best way to invest your money. They can help you identify your goals and then develop a strategy to help reach them. If you have any money that you want to invest or if you’re planning on retiring soon, work with your financial planner to not only make sure you have all your ducks in a row, but also to make sure you’re going to ENJOY retirement to the fullest!

More resources and tips can be found on our website...
https://pensionsolutionscanada.com/