DOSSIER B / EMPLOYER PLAN
5 FILES
Workplace pensions
Defined benefit and defined contribution plans, commuted values, locked-in accounts and the survivor option.
Defined benefit and defined contribution pensions are not the same promise
One plan promises an income. The other promises contributions. The difference decides who carries the investment risk, and it shows up on every annual statement.
How the survivor option on a workplace pension changes the monthly amount
A pension that continues to a spouse pays less each month from day one. The law sets a minimum for the survivor, and waiving it takes a signed form and a deadline.
What a locked-in account turns into at retirement
A LIRA cannot simply be cashed. At retirement it becomes a life income fund with a floor and a ceiling on withdrawals, and a one-time unlocking option in some jurisdictions.
Commuted value or monthly pension when you leave an employer
Leaving a defined benefit plan before retirement can mean choosing between a lump sum and a pension for life. The tax limit on the transfer is the part most people meet for the first time.
Why some workplace pensions shrink at 65 when CPP begins
A bridge benefit pays extra until 65 and then stops, whether or not CPP has started. Integrated plans are designed that way, and the drop is on the pension statement for anyone who looks.
THE FRIDAY FILE / WEEKLY / FREEThe Friday File. One source of retirement income, explained on a single page.
Every Friday: one rule, one date or one number worth checking on CPP, workplace pensions, RRSPs, RRIFs or the tax on them. Free, and you can unsubscribe from any issue.