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Retirement Planning

Should I transfer my Pension Plan to an RRSP?

January 11, 2007

Over the years you may have switched employers or been offered a severance package. Through your previous employer you may have been part of a pension plan. Below are four facts to consider when transferring your pension plan to a Registered Retirement Savings Plan (RRSP).

1. Possibility of returning to employer/pension plan

What are the chances of returning to your previous employer and/or pension plan? This is especially relevant if you were a member of a defined benefit pension plan where pension benefits are based on length of service, age and earnings. A nurse who takes time off to have a family or for other reasons may some day return to her previous employer. In those situations, consideration should be given to staying in the plan.

2. Rate of return

What is the historical performance of the pension plan? What is the internal rate of return the pension plan is using to fund pension benefits based on life expectancy? Can you do better investing yourself?

3. Worry Factor

If the money is kept with the pension plan there is little you need to do except for filing the annual statement. Once the money is transferred, you need to work with your financial advisor to monitor your investments to make sure your investments stay on track.

4. Estate Planning

Who owns the money? In a pension plan, if both the pensioner and pensioner’s spouse pass away, the remaining money is returned to the pension plan. By transferring out of the plan, the money becomes part of the pensioner’s estate.

Each situation is different. It is recommended that you contact myself or another trusted financial advisor to help you work through this scenario.


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