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  • Feb 21st, 2018 1:03 pm
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Jr. Member
Nov 1, 2013
182 posts
20 upvotes
Deepwater wrote:
Jan 4th, 2018 7:43 am
total of your Pension Adjustments during the time you were in the pension
Thanks a lot deepwater. This is precisely what I was looking for
Jr. Member
Nov 1, 2013
182 posts
20 upvotes
Unfortunately the sad truth is that Pension plans are untouchable for us, the poor mortals but not for the govt. I am not able to withdraw even a part of pension plan before reaching 55 and 65 but Govt is forcing me to take large value of the same pension plan in cash which obviously will push me into far higher bracket causing tens of thousands of tax loss. How Govts extract $$$$$ from us while telling us to leave pension plans intact for "our" future.
Disgusting
Deal Addict
Dec 8, 2008
1623 posts
107 upvotes
Louking wrote:
Jan 11th, 2018 11:14 pm
Unfortunately the sad truth is that Pension plans are untouchable for us, the poor mortals but not for the govt. I am not able to withdraw even a part of pension plan before reaching 55 and 65 but Govt is forcing me to take large value of the same pension plan in cash which obviously will push me into far higher bracket causing tens of thousands of tax loss. How Govts extract $$$$$ from us while telling us to leave pension plans intact for "our" future.
Disgusting
i am in the same situation as you - i have about 80k beyond what i can put into LIRA so that's 80k on top of my current salary that will result in $$$ tax for this year as i have $0 RRSP room. it's that or leave it in a pension until i am 55/65

what did you end up doing?
Jr. Member
Nov 1, 2013
182 posts
20 upvotes
leoben wrote:
Jan 12th, 2018 6:54 am
what did you end up doing?
it boils down to two questions
1. Is your ex-employer stable and likely to be around when time comes
2. Is the pension plan 100% funded.
in my case the answers are No and NO. The employers will not exist in next year or years and for sure plan is already underfunded and likely to result in me getting a hair cut. 20%, 30% who knows.
Better to take what I can, take the tax slap on the face and move on.
Deal Fanatic
Feb 1, 2006
9366 posts
491 upvotes
My wife just left HOOPP after 18 years, so we haven't received the letter yet, but are people here saying that she will be forced to take some of it in taxable cash? Iassumed it would just sit until she starts drawing it at 65.
Jr. Member
Nov 1, 2013
182 posts
20 upvotes
Bullseye wrote:
Jan 12th, 2018 9:39 am
Iassumed it would just sit until she starts drawing it at 65.
Assumption is the mother of all ......
Yes, that is what I assumed too. Makes zero sense. It is highway robbery.
PS I am not with HOOPP but in general yes there is a huge number that must be accepted in cash.
Sr. Member
User avatar
Feb 1, 2012
808 posts
763 upvotes
Thunder Bay, ON
Bullseye wrote:
Jan 12th, 2018 9:39 am
My wife just left HOOPP after 18 years, so we haven't received the letter yet, but are people here saying that she will be forced to take some of it in taxable cash? Iassumed it would just sit until she starts drawing it at 65.
This web page has a good description of what you can do with a pension when leaving a job.
http://www.avrexmoney.com/retirement/lo ... -road-map/

Yes, the money can be left in the pension, then start collecting somewhere between age 55 and age 65. HOOP would continue to administer the pension. Personally I think that is the best option for a well funded stable pension. Why would someone leave a pension that is well funded, indexed to inflation, and guaranteed for life to manage the funds themselves?

If you want to manage the money yourself you would need to transfer it to a locked-in retirement account (LIRA). If you do that, you may not be able to transfer all the money to a LIRA, and the non-transferable amount would have to either be contributed to an RRSP (if your wife has RRSP room), and if no RRSP room, taken as a taxable lump sum.

Here is what the above web site says about what you can do with the funds:
When I leave my company, what are my pension options?
  • You can leave the funds in the company plan. Some companies allow this option and will continue to administer the funds on your behalf. Some companies do not allow this option.
  • If you are going to work for another company, you can move your funds to your new company’s RPP (if one exists).
  • Purchase an immediate Life Annuity (if allowed).
  • Transfer to a Locked-in Plan.
  • a combination of the above.
If you decide to leave the pension, this website explains how the amount you can transfer to a LIRA (Maximum Transfer Value) is determined:
https://www.milliondollarjourney.com/ho ... ue-mtv.htm

Good luck.
Invest your time actively and your money passively.
Deal Addict
Dec 8, 2008
1623 posts
107 upvotes
Louking wrote:
Jan 12th, 2018 9:16 am
it boils down to two questions
1. Is your ex-employer stable and likely to be around when time comes
2. Is the pension plan 100% funded.
in my case the answers are No and NO. The employers will not exist in next year or years and for sure plan is already underfunded and likely to result in me getting a hair cut. 20%, 30% who knows.
Better to take what I can, take the tax slap on the face and move on.
my previous DB pension was with the federal government, so I think it's a yes and yes for me, but I wanted to combine my fed years of service with my new employer in order to retire as early as possible.. but my new employer's pension is not as expensive as the feds so i will have about 80k excess that i will be forced to cash out (and be taxed on) if i decide to transfer my former pension.. there are pros and cons to both and i'm still in a limbo about it..
Sr. Member
Jan 14, 2010
585 posts
142 upvotes
Bullseye wrote:
Jan 12th, 2018 9:39 am
My wife just left HOOPP after 18 years, so we haven't received the letter yet, but are people here saying that she will be forced to take some of it in taxable cash? Iassumed it would just sit until she starts drawing it at 65.
She will if you cash out. Depending on your ages, that's (literally) the million dollar decision. I had slightly less time than her, but as a result of the (low) interest rates when I cashed out, I got a significant payout (they give you the amount based on what the prevailing economy would deem sufficient to make up the resulting pension, I had pretty much perfect timing). I checked with an accountant, who ran essentially an actuarial cost/benefit analysis of my payout vs. expected future pension. I've noted in other posts, my required rate of return ended up being <3% even minusing the withholding tax, so I cashed out. It will be different depending on age and payout amount, but the deciding factor for me was that I had 15+ yrs at least left, and the pension $$ would just sit there languishing. With no further contributions I'd be starting out in 15+ yrs with today's pension.

I ended up getting about half in a LIRA, moved another 10% to my RSP, then pension fund cut me a cheque for the remaining ~40% with the 30% withholding tax. This is not the full tax you will owe! Be aware, because you will otherwise have a big surprise next April. I'm also grateful that after I cashed out I enjoyed the current market bull run, it almost made up for the pain of losing my job.

I never got a PAR (for those asking the ?s about it).
Last edited by cocodc on Jan 12th, 2018 7:59 pm, edited 1 time in total.
Sr. Member
Jan 14, 2010
585 posts
142 upvotes
Deepwater wrote:
Jan 12th, 2018 10:33 am
HOOP would continue to administer the pension. Personally I think that is the best option for a well funded stable pension. Why would someone leave a pension that is well funded, indexed to inflation, and guaranteed for life to manage the funds themselves?
I always value your posts Deepwater, and there are good resources in this one. Per your ? above, I guess it depends on your risk tolerance and discipline. Totally agree that HOOPP is in excellent health, and staying would be a safe solution for the pensioner. For future wealth accumulation, however, I would much rather have control; if anything happens I can include it as part of my estate. With a pension, it's the surviving beneficiary payment only. It's a risk you take if you will outlive the pension payout.

If you cash out and blow everything on a sailboat, all bets are off! Winking Face

It also depends on your family situation; personally we had another DB pension in my household, so it was almost a bit of diversification to grab mine and run with it.
Jr. Member
Nov 1, 2013
182 posts
20 upvotes
cocodc wrote:
Jan 12th, 2018 7:59 pm
then pension fund cut me a cheque for the remaining ~40% with the 30% withholding tax. This is not the full tax you will owe! Be aware, because you will otherwise have a big surprise next April.
Ouch ! Ouch Ouch !!
Sr. Member
Jan 14, 2010
585 posts
142 upvotes
Louking wrote:
Jan 12th, 2018 9:06 pm
Ouch ! Ouch Ouch !!
We mitigated by throwing some of the (taxed) cash payout into spouse's RSP (despite also having a DB plan, spouse had a bit of room as we hadn't invested there due to having the pension plans). Taken together with the refund generated by that, we only ended up owing an extra ~$4500 net (which was under half what I actually had to pay CRA in April). We kept the cash handy knowing this might happen.
It's important to be aware of this; I stressed for a bit before I knew how much I'd owe.
Sr. Member
User avatar
Feb 1, 2012
808 posts
763 upvotes
Thunder Bay, ON
Deepwater wrote:
Jan 12th, 2018 10:33 am
HOOP would continue to administer the pension. Personally I think that is the best option for a well funded stable pension. Why would someone leave a pension that is well funded, indexed to inflation, and guaranteed for life to manage the funds themselves?
cocodc wrote:
Jan 12th, 2018 8:15 pm
I always value your posts Deepwater, and there are good resources in this one. Per your ? above, I guess it depends on your risk tolerance and discipline. Totally agree that HOOPP is in excellent health, and staying would be a safe solution for the pensioner. For future wealth accumulation, however, I would much rather have control; if anything happens I can include it as part of my estate. With a pension, it's the surviving beneficiary payment only. It's a risk you take if you will outlive the pension payout.

If you cash out and blow everything on a sailboat, all bets are off! Winking Face

It also depends on your family situation; personally we had another DB pension in my household, so it was almost a bit of diversification to grab mine and run with it.
OK you caught me. I am guilty of oversimplification and excessive generalization. :rolleyes:

Yes there are a few cases where people may want to take the CV. I took the CV from my pension, but it was a non-indexed, chronically underfunded pension from a cr@ppy company that was bought out from an even cr@ppier US company that did not even seem to know what a DB pension is. HOOP and most government union pensions are much more stable.

I'd wager that more retirees have been hurt by taking the CV and managing it badly (or having an advisor manage it badly) than have been hurt by pension failures.

Yours is a good example of a reason to take the CV because there is another DB pension in the family, so it does seem like you will have enough guaranteed income for a safe retirement. :)
Invest your time actively and your money passively.
Deal Fanatic
Feb 1, 2006
9366 posts
491 upvotes
cocodc wrote:
Jan 12th, 2018 7:59 pm
She will if you cash out. Depending on your ages, that's (literally) the million dollar decision. I had slightly less time than her, but as a result of the (low) interest rates when I cashed out, I got a significant payout (they give you the amount based on what the prevailing economy would deem sufficient to make up the resulting pension, I had pretty much perfect timing). I checked with an accountant, who ran essentially an actuarial cost/benefit analysis of my payout vs. expected future pension. I've noted in other posts, my required rate of return ended up being <3% even minusing the withholding tax, so I cashed out. It will be different depending on age and payout amount, but the deciding factor for me was that I had 15+ yrs at least left, and the pension $$ would just sit there languishing. With no further contributions I'd be starting out in 15+ yrs with today's pension.

I ended up getting about half in a LIRA, moved another 10% to my RSP, then pension fund cut me a cheque for the remaining ~40% with the 30% withholding tax. This is not the full tax you will owe! Be aware, because you will otherwise have a big surprise next April. I'm also grateful that after I cashed out I enjoyed the current market bull run, it almost made up for the pain of losing my job.

I never got a PAR (for those asking the ?s about it).
Great info, thanks! And to Deepwater as well. We are mostly retired now at 41, so we will have to see what HOOPP is offering for CV when we/if we return home from Mexico. Our plan right now is to burn our savings (RRSP's mostly) from now till 55/65 and then live on the HOOPP plus CPP/OAS. But that means it will sit there for next many years, growing slowly. Also, we will have almost no taxable income for 2018, so wouldn't have too big a tax hit on the cash out portion. I know what the payout at 65 will be now (from annual statement), but no idea what the CV will be.
Jr. Member
Nov 1, 2013
182 posts
20 upvotes
in my case my required rate of return ends up being <5% which I think can be managed in 15 years. At least I won't have to worry about possibility of getting next to nothing 15 years later when the org ceases to exist or pension plan becomes severely underfunded or gets mired in litigation.
Since there were three components in your cases (locked in part, rrsp room, cash), did you have to get the financial institute fill out three different forms for the transfer?

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