Personal Finance

Received a letter for early pension options

  • Last Updated:
  • Mar 7th, 2017 8:36 am
Deal Expert
Dec 4, 2010
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Quarantine Bubble

Received a letter for early pension options

It's nothing substantial but I got a letter from the Canadian Commercial Workers Industry telling me I'm entitled to some money from my time working at a Metros some years back.

It stated I could wait until age 65 to get monthly payments or take an early package either in mostly instalments or a lump sum. It's such a small amount even when I reach the age of retirement, I figure taking the lump sum is better than taking what may amount to a cup of coffee a day as the early retirement payout.

Has anyone been through this before? I have no called them for specifics as yet, but wanted to gauge the populace on what they think. It's all new to me so I figure asking couldn't hurt.

Thanks
5 replies
Deal Fanatic
User avatar
Jan 27, 2007
5116 posts
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T.
If you take a lump sum it will be taxable. If you wait at least the tax will be deferred.

If you dont need it, I would wait.
Deal Fanatic
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Dec 27, 2009
7941 posts
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Victoria, BC
From the sounds of it, waiting for the annuity, the amount would be so insignificant as to not make any impact on your life whatsoever. If the amount is that low, I'd just take the lump sum. I don't know the actual figure, but it is bound to make more of a positive impact getting it all at once, right now, than a pittance dribbled out over years.
Deal Addict
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Feb 1, 2012
2214 posts
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Thunder Bay, ON
Here are some links that discuss the alternatives:
http://www.advisor.ca/images/other/ae/a ... npaths.pdf
http://www.pensionstrategies.ca/files/N ... 202012.pdf
http://www.theglobeandmail.com/globe-in ... e27633794/

If it is a small amount taking the lump sum is likely a better choice. Otherwise if you change jobs several times you might end up with several small pensions. But make sure you save it for retirement in a low cost investing portfolio.

If it is a significant amount read the articles thoroughly and consider carefully before making a decision. There were probably more people hurt by taking a lump sum from a pension and having it mismanaged than by pensions becoming insolvent.

This is a road map of the options, although if it is a small amount you may be able to take it as cash rather than put it in a LIRA.
http://www.avrexmoney.com/retirement/lo ... -road-map/
When I was young, I was poor. Now, after years of hard work, I'm no longer young.
Deal Addict
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Dec 20, 2006
2279 posts
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It is all how you wish to plan your taxes in your retirement years.

If you take the option of a lump sum payment, you can make the amount tax-free into your own RRSP. It is usually half now and half in five years if you are still 'young'. The second half does earn interest, Otherwise, keep the sum with CCIW if you do not plan to withdraw any RRSP funds before your retirement in a way you get 2 pension cheques CPP and CCIW.
“Ninety percent of all human wisdom is the ability to mind your own business.”
— Robert A. Heinlein

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