Pension Transfer Value / Lump Sum Pymt [Merged]

Starlight1

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It took around 90 days for my husband to receive first pension payment, and thats after he placed several calls to pension services.  Turns out that the local release section hadn't entered him as "released" in the system, so although all the paperwork was in place and ready to go, pension services didn't receive notification to proceed.  Once discovered, the backdated payment was in the bank in days.  Release date early March, payment in hand in before mid June.
 

Jody266

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I did a search and haven't come up with anything newer then apr 2017, but just curious on others experiences recently with medically released members severance and pension wait times? It was promised to be addressed and promises of “no release until pensions and benefits are in place” but first hand i know This is still not the case, as 45 day wait times for pension and 4 months wait time for severance. These timings are way better then some poor folks had to endure previously but still not the promised regulations. Is there anyone out there medically released where everything was smooth and short wait times? Just curious if the system has improved or not as nobody seems to be talking about it within the last year.
 

blade_101

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Jody266 said:
I did a search and haven't come up with anything newer then apr 2017, but just curious on others experiences recently with medically released members severance and pension wait times? It was promised to be addressed and promises of “no release until pensions and benefits are in place” but first hand i know This is still not the case, as 45 day wait times for pension and 4 months wait time for severance. These timings are way better then some poor folks had to endure previously but still not the promised regulations. Is there anyone out there medically released where everything was smooth and short wait times? Just curious if the system has improved or not as nobody seems to be talking about it within the last year.

I was released 3b first week of April. Got my severance about 30 days later. I opted for the transfer value and submitted my paper work in first week of June. Gave them a call yesterday and they said it should be in within 2 weeks which would be within the 45 days.
 

runormal

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dapaterson said:
You were correct.  The transfer value is a lump sum.  Well, two lump sums: one amount is transferred into a locked-in RRSP that can't be touched until about age 65; the balance comes as cash that is taxable in the recipient's hands in the year it is received.

I don't see why it wouldn't, but does this "locked in" RRSP portion country against your RRSP room? I'm not planning on releasing this year, but I'll be shocked if I get my CD. I'll need to do some calculations, but given my age / value of my annuity vs the interest that could be compounded, I'd be crazy not to transfer everything into an RRSP.
 

dapaterson

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No. The locked in portion does not count against your RRSP limit; your RRSP limit was reduced over time due to your CFSA contributions.

Point to note: in some cases, leaving the money in the CFSA may be a viable option.  Not only will you receive an annuity at age 60, but you will be eligible for medical and dental insurance when retired. Taking the transfer value denies you that option.
 

kratz

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dapaterson said:
No. The locked in portion does not count against your RRSP limit; your RRSP limit was reduced over time due to your CFSA contributions.

Point to note: in some cases, leaving the money in the CFSA may be a viable option.  Not only will you receive an annuity at age 60, but you will be eligible for medical and dental insurance when retired. Taking the transfer value denies you that option.

Interesting. Learning something new.

The SCAN seminars, and release process go to great lengths to cover as much as possible, and mention the retirement medical / dental benefit.
From all of that information, I don't remember hearing about the potential of losing the benefit for any reason, including the transfer value.

Thank you for mentioning that part.
 

dapaterson

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Eligibility is tied to being in receipt of benefits under the CFSA (Part I or part I.1).
 

runormal

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dapaterson said:
No. The locked in portion does not count against your RRSP limit; your RRSP limit was reduced over time due to your CFSA contributions.

Point to note: in some cases, leaving the money in the CFSA may be a viable option.  Not only will you receive an annuity at age 60, but you will be eligible for medical and dental insurance when retired. Taking the transfer value denies you that option.

Good to know thanks - re locked in portion.

I'll do some research and compare the offerings between the federal government retirees coverage and the army's retiree coverage. I'd imagine that they are similar, but over time (the additional 34 years of service that I need to retire w/o a penalty), I'd be willing to bet that the army's retiree package may be stronger.

I'll also re do my calculations to see if I made an error.

Thanks again as always.
 

Pusser

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runormal said:
I'll need to do some calculations, but given my age / value of my annuity vs the interest that could be compounded, I'd be crazy not to transfer everything into an RRSP.

I wouldn't be so sure about that.  Although there is certainly potential to make out big time (especially over the long term), there is also the opportunity to lose big time.  Talk to anyone who invested heavily in Nortel (including all the ex-Nortel employees whose pensions were tied up in Nortel stock and are now gone).  Unless you're rolling the money into another defined benefit public superannuation plan (e.g. PSSA, RCMPSA or provincial equivalents), I would be leery of taking the commuted value.  A defined benefit plan (even a small one) is pretty valuable because it's indexed and guaranteed by legislation, and not at all dependant on the financial markets.
 

brihard

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Pusser said:
I wouldn't be so sure about that.  Although there is certainly potential to make out big time (especially over the long term), there is also the opportunity to lose big time.  Talk to anyone who invested heavily in Nortel (including all the ex-Nortel employees whose pensions were tied up in Nortel stock and are now gone).  Unless you're rolling the money into another defined benefit public superannuation plan (e.g. PSSA, RCMPSA or provincial equivalents), I would be leery of taking the commuted value.  A defined benefit plan (even a small one) is pretty valuable because it's indexed and guaranteed by legislation, and not at all dependant on the financial markets.

Anyone transferring something as substantial as a pension into an RRSP should be getting professional financial planning advice. Investing ten years' worth of pension contributions is a not inconsequential sum, and anyone who knows their stuff will be seeking diversification in assets. Yes, if you dump a ton of your wealth into one specific stock or a very narrow cluster of investments you can get burned badly (as I myself have when I was younger, dumber, and had a bunch of cash to play with). Definitely seek professional advice on this, but generally speaking, transferring your pension value to a locked in RRSP that is properly managed is probably going to be a pretty good bet.
 

Humphrey Bogart

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Brihard said:
Anyone transferring something as substantial as a pension into an RRSP should be getting professional financial planning advice. Investing ten years' worth of pension contributions is a not inconsequential sum, and anyone who knows their stuff will be seeking diversification in assets. Yes, if you dump a ton of your wealth into one specific stock or a very narrow cluster of investments you can get burned badly (as I myself have when I was younger, dumber, and had a bunch of cash to play with). Definitely seek professional advice on this, but generally speaking, transferring your pension value to a locked in RRSP that is properly managed is probably going to be a pretty good bet.

Sage advice!

I do my own investing.  The key is diversification and having the right spread of assets and securities in your possession.  Also, not putting all your eggs in one basket.

Cashing out your pension and investing in a single stock is stupid.  Cashing out your pension and investing in a healthy spread of stocks, mutual funds and bonds is very smart and you will most likely see a higher rate of return than if you just let your money sit in an RRSP or defined benefit plan. 

It's called having a strategy  8)

1.  Pay off all bad debt i.e. no credit cards, line of credit, etc.  Anything with a high interest rate as you will not make any money if your interest payments on bad debt are higher than your securities growth and/or dividend payments.

2.  Build a large cash reserve.  Before I started investing, I built a large cash reserve that I don't touch.  It is my "rainy day money" that just sits in a savings account as my Reserve.  As in warfare, always have a Reserve ;)

3.  Set some goals for yourself, is the money you want to invest for something you want 5, 10, 25 years from now.  This will influence what you put your money in to. 

4.  Pick a diversified set of securities to invest in to and also accounts that are tailored to your situation. 

My strategy is fairly simple:

I have a non-registered TFSA that I use to buy securities in a number of different Exchange Traded Funds (ETFs) , three to be precise.

One is an S&P 500 Indexed ETF (medium risk)
Another is a High Dividend ETF (medium-low risk)
Final one is a Consumer Discretionary ETF (high risk)

The reason I chose ETFs over mutual funds is because the fees are lower and  I don't trade frequently.  Rather I buy and hold and only in relatively large quantities to cut down on my fees which will kill you if you trade all the time.    My investment strategy involves investing my TFSA contribution limit each year in those ETFs and simply holding on to the securities for years. 

ETFs also allow you to invest money in a spread of securities so you don't put all your eggs in one basket.

I personally think the TFSA is the single greatest thing ever, it's my own little personal tax shelter for gains.  The greatest thing is you are only constrained by your contribution limit and gains cannot be taxed!  The government has been very lucky that more people aren't using it to its full potential!

This along with my pension will hopefully set me up nicely for what I call Freedom 45  8).  My future goal is to diversify further within the next five to ten years by acquiring some rental properties. 
 

AKa

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Good day,

Have anybody heard lately what the wait times are for receiving your pension?  The advisor at the Pension office told me it should be around 45 days.  I know the wait was significantly longer in the recent past and would like to hear from somebody who has recently released.

I'm planning on releasing soon.  Once I find a secure position, it might be a fairly short fuse depending on the new employer's ability to wait for me.  Hoping that that won't overly complicate the pension process.

Cheers,

AK
 

Loganm7

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Hello all,

I have decided that it is time for me to leave the regular force after 9 years. I would like to carry out a CT to the PRes directly from the reg force. Before I originally put in my release memo I contacted the pension office to discuss my pension options. I was told during that phone call that when I transferred from reg to reserve I would receive the transfer value payout of my reg force pension, and I would start a new reserve force pension. With this info, I decided to start the release process. At my release appointment I was told the same thing from the release section, but they also added I would not be able to contribute to my reserve pension before I received the payout from my reg force pension. I am now 2 months out from my release and I just phoned the pension office again to receive my SCAN package, and during this phone call I was told that I would not receive a transfer value if I was still enrolled in the reserves. She told me I would have to completely release from the forces IOT receive the payout, and that if I simply CT to the reserve my reg force plan will be held and rolled over into my reserve plan, which would then be paid out after retirement from the reserves. I have done a search and cant seem to find up to date info on this specific question so any help will be greatly appreciated. Obviously I will continue to dig and if I find a solid answer I will update in this thread.
 

kratz

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**Disclaimer: The only person who can answer SME who can answer pension related questions is from PSPC, or DGPS. **

During the SCAN seminar last week in Halifax, the pension expert (from DGPS) did mention a word of caution about how you transfer from the RegF to the PRes.
If my notes are correct, a one day unpaid break was required between your time between the two organisations. He did make it clear both the part 1 and part 1.I are part of the same pension agreement. That officially, there is no pension title called RegF or PRes. Since a member can not be part of both parts of the pension at the same time, your file will shift to one, or the other.

Based on what you've posted here, your RegF time entitles you to Part 1. That one day break is required to kickstart payouts of your pension or allow for the Transfer Value. The ability to advise on pensions was removed from Release sections years ago. Everyone has opinions, but those can affect members later on. With pension questions the two expert sources are:  the Pension Centre with PSPC and DGPS.  The main difference between these groups of experts: PSPC administers the plan and DGPS knows the act and how to apply the policies.

Moving forward. The good news is with the PRes, your pension remains with part 1, instead of restart from zero in part 1.I at a lower rate. Your best 5 years (career: Ref and Res) will still count now and since you are not drawing a pension, you are not restricted on class B days per year. These are some of the benifits of not taking the transfer value.

 
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