A transfer value is a calculated lump-sum value of your accumulated pension benefit that would be payable in the future. You may choose to receive your accumulated pension in the form of a transfer value rather than as future monthly pension payments if you leave the public service:
- Before age 50 with at least 2 years of pensionable service if you became a member of the public service pension plan on or before : or,
- Before age 55 with at least 2 years of pensionable service if you became a member on or after .
- How the transfer value is calculated:
The transfer value is calculated on the date the payment is made.
The benefit to be valued is the deferred annuity.
The calculation takes into account a variety of elements:
- Economic and demographic assumptions made by actuaries;
- Any accumulated indexing;
- The probability of a person becoming disabled;
- The projected survivor benefit and child allowance amounts; and
- The current interest rate (not indexed) at the valuation date.
If you are making service buyback contributions, only the service you have bought up to the date of the payment will be included in the transfer value. Any overdue amounts will be deducted from the total. Therefore, you should consider the possibility of paying the balance owing to increase the amount of the transfer value.
- What happens to the pension amounts payable under the Retirement Compensation Arrangement:
- When you opt for a transfer value, you receive not only the actuarial value of your pension accumulated under the public service pension plan, but you must also receive the value of the pension amounts payable under the Retirement Compensation Arrangement, if applicable. The Retirement Compensation Arrangement portion of the transfer value is paid directly to you, and you must pay income tax on this amount.
- Where the funds must be transferred:
You can transfer the value to another registered pension plan (if such plan allows it), to a locked-in registered retirement savings vehicle, or to a financial institution to buy an annuity.
If a portion of the transfer value exceeds the limit set by the Income Tax Act, that portion will be paid to you in a lump sum and will be taxable. If you have not exceeded your RRSP contribution limit, you can have all or part of the taxable portion of your transfer value moved to your personal RRSP.
All the pension vehicles that can receive your transfer value have withdrawal rules in accordance with the Pension Benefits Standards Act, 1985, the Pension Benefits Standards Regulations, 1985 and the Income Tax Act. Ask your tax and/or financial advisor about these rules.
- Limits for tax-sheltered transfers:
- The Income Tax Act sets annual limits on transfer values that can be paid into tax-sheltered pension vehicles.
- What is the tax impact:
- Any income tax you pay will reduce the capital that you have available to invest for your retirement. You may ask the Canada Revenue Agency for assistance.
- Effects of re-employment in the public service:
- If you opt for a transfer value, and become re-employed in the federal public service after , the post-2013 pension plan terms will apply to any pensionable service you incur, and your retirement age will be age 65. Refer to Re-employment for more information.
- In the event of death:
- If you die before the transfer value payment is issued, the entire transfer value amount must be issued to your estate with tax deducted at source.
Visit Public service group insurance benefit plans for information on benefits.
Report a problem or mistake on this page
- Date modified: