The commuted value of a government pension if bonds approach 0%
So, lets say I'm a government employee leaving for the private sector has the option of a deferred pension at 65 (a few decades away) or taking the commuted value of that pension. My understanding is that the commuted value is based on the current bond market, which are currently pretty damn low, thus making for a large commuted value (although not as large as 3-4 years ago). What would happen to this commuted value in the event of further lowering of Canadian bond rates towards zero, or even below zero as some countries are currently seeing? The pension office people can't tell me, would only tell me to hire the services of a financial advisor or actuary. Even after escalation got no one on the phone that would deal with the question. Surely the commuted value doesn't approach infinity, but what does happen? How's it calculated?
Would a smart move be to remain on a flexible contract in order to leave after the next recession hoping interest rates drop significantly?
Would a smart move be to remain on a flexible contract in order to leave after the next recession hoping interest rates drop significantly?