Responsibilities | Pension Plans
Information for Pension Plan Members

Termination Options
If you quit or lose your job, and you are a vested member of the plan, you may choose to leave the accumulated money in the pension plan. This option is valuable as it may allow you to participate in future benefit improvements under the plan.

If you are a vested member of a defined contribution plan, or a vested member of a defined benefit plan and younger than age 55 when you terminate, the PBSA requires that your plan allow you to transfer the value of your vested pension to any of the following:

• a pension plan of a subsequent employer (if that plan accepts such transfers);
  
  
• a locked-in registered retirement savings plan (a "RRSP");
  
  
• a life income fund (a "LIF"), if the pension plan has a retirement age that is earlier than age 55;
  
  
• an insurance company to purchase a deferred annuity.

Transferred pension benefits must remain locked-in to provide you with a pension when you retire . In the case of a locked-in RRSP, this means that the RRSP funds cannot be paid out in a lump sum, but must be transferred to a LIF, or be used to purchase a life annuity by age 69, or can be transferred to another locked-in RRSP prior to age 69.

A LIF is basically a Registered Retirement Income Fund (RRIF), with certain conditions imposed by the PBSA. Under the LIF, your locked-in pension monies provide you with an adjustable income; you can withdraw some of the principal each year, subject to maximum and minimum withdrawal limits based on factors such as your age and the balance remaining in the fund.

If you wish to transfer your pension entitlement to a LIF, and you have a spouse, your spouse must consent to the transfer before it can take place. In order to consent to a transfer, the spouse must complete a Form 3 , and the completed form must be filed with the institution that will be receiving the money.

Note that the PBSA allows you to transfer the whole of the commuted value of your pension, not just benefits earned after January 1, 1993.

A defined benefit plan does not have to provide portability of vested benefits if you leave your job at age 55 or later, since the PBSA gives you the right to start receiving monthly pension benefits at age 55. Some defined benefit pension plans, however, do allow portability of benefits after age 55.

If you die before you begin receiving a pension, and have a spouse, your spouse is entitled to receive survivor benefits from the plan. If you were vested at the time of your death, your spouse is entitled to receive a pension from the plan. If you were not vested, your spouse may only be entitled to a return of your contributions plus interest. In any event, your spouse is entitled to the same portability options you would have had if you had terminated employment the day you died.

Accrued vested benefits with respect to membership prior to January 1, 1993, are not locked-in by the PBSA and may be paid out in a lump sum on termination, if the plan allows.

Note, however, that any lump sums withdrawn from a pension plan are fully taxable as income for the year in which they are withdrawn.

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