Moving Your Pension When Leaving Your Job

If you’re leaving your job or were recently terminated by your employer and your company has a pension plan, you may want to consider moving your defined-benefit or defined-contribution pension away from your employer and into a secure financial institution that your employer does not have any control over.

Vesting Period

The first question to ask is whether or not your defined-benefit or is fully vested and you have full rights over the accumulated contribution amount made by your employer and any investment earnings on those employer-sponsored contributions.

The ‘vesting period’ varies from company to company, but typically is limited to two years or less. Depending on the province you live in, your company may be required to immediately vest your company pension.

Statement of Pension Benefits

Next, you’ll want to get a written statement of benefits from your employer as proof of what retirement benefits you’re entitled to. Make sure you keep this document safe!

Companies are given a 30-day window from the date that you resign/terminate your employment to provide you with this statement.

It should include:

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  • All of the information about the benefits you are entitled to in your company’s pension plan
  • The commuted value of your plan
  • Your options for what to do next and any deadlines you have to make a decision
  • Contact information of the pension plan administrator so you can contact him/her with any questions about the pension plan

Keep Your Pension With The Company Or Move It Out?

Now that you know exactly what pension benefits you have, you have an important decision to make… Do you leave the money with your current employer’s pension plan and trust them with it? Or, do you move the money out of the company pension plan.


Do nothing. Leave your pension with the company. If you do this, your retirement benefit stays locked in with the company and will continue to accumulate depending on how the company decides to invest it and how the economy and markets perform.

Ask yourself, in 30 years is the company still going to be making vehicles here in Canada and employing people to contribute to my pension? Or will the Canadian auto industry be located in Mexico? Who will be putting money into your pension so you can take it out?

If you decide to go this route, ask the pension plan administrator if there are increased administration fees, because some companies will no longer give you the discounted ‘group’ rate.


The copycat annuity (also known as a “mirror annuity”) is a popular choice for employees coming out of a defined-benefits pension plan. It allows you to receive the same pension that your employer promised you, but it gets paid out by a secure Canadian insurer instead of the company you worked for.

Sun Life, Canada Life and Desjardins will bid on your pension. The Canadian insurance company you choose will pay you the exact same pension, same bridge and the same spousal pension.

Plus, sometimes your company’s pension has a surplus and the Canadian insurance company may pay you your pension plus extra cash. We’ve seen bonus cash payouts up to $30,000. You might qualify.


Taking the cash is known as the commuted value. You’re able to move the money out of the company pension plan so it can be self-managed by you.

Your employer cuts 2 cheques to you, one is locked in pension money, the other is cash.

Watch out for the government tax grab, but beyond that, this is your money. Use it for retirement or to pay off your mortgage or buy a boat or RV. Take a trip. The rest is your estate.

Keep in mind that if you choose this option, you’ll want to make sure to contact a financial planner to help you invest your funds so that you’ll have enough money to last you for the rest of your life. We can help. Call us to speak with a pension expert at 1-888-554-6661.

Using a Locked-in Retirement Account (LIRA)

If you take the cash, you have the option to transfer the money into to what is called a “Locked-in Retirement Account” (LIRA) for accumulation purposes. A LIRA is similar to a registered retirement savings plan (RRSP) except that you can’t access the money until you retire (it’s locked in).

Talk To A Certified Financial Planner Today

Let us analyze your multiple income streams in retirement. We’ll make sure to minimize your income tax. Retirement planning is about budget and taxes. You address your spending. We address tax minimization. Schedule a 15-minute call here with one of our Certified Financial Planners!

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