(NC)-If your employment comes to an end before you reach retirement age, you should be familiar with the rules governing the money you may have accumulated in a registered pension plan.
It's important to know that the retirement income system in Canada is a blend of mandatory and voluntary arrangements. In Ontario, the Pension Benefits Act sets out the rights of individuals who are members of registered pension plans.
According to the Financial Services Commission of Ontario (FSCO), the regulator of employee pension plans in Ontario, you should be aware of your pension rights if you leave your employer before retirement age.
Information rights
Within 30 days of termination, the company pension plan administrator must provide you with a written statement that includes details about the benefits payable to you, the options you have, plus the deadline for any decisions. If you are entitled to a refund of your contributions, the statement must also provide information about your refund.
Transfer rights
If you are not yet eligible for early retirement under the terms of your pension plan when your employment ends, you have two choices:
• You can transfer the commuted value of your deferred pension (a lump sum that is equal to the current value of your future pension payments) out of the plan; or
• You can leave the funds you have accumulated in the plan, to receive the "deferred pension" that will be paid at retirement.
If you are eligible for early retirement when your employment ends, as set out in the plan, you cannot transfer the commuted value out of the plan, unless the terms of the plan specifically allow it.
If you choose to transfer funds from your pension plan, it is important to note that the transferred funds are still locked-in. The commuted value may be transferred to:
• Another employer sponsored pension plan that agrees to accept the transfer;
• One of two tax-assisted retirement savings accounts: a Locked-in Retirement Account (LIRA), or a Life Income Fund (LIF); or
• An insurance company for the purchase of a life annuity, payable at the time you would be entitled to pension payments.
To learn more about your pension rights, visit FSCO's website at www.fsco.gov.on.ca and click on Pensions.
- News Canada