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Navigating Ford Motors Pension Options After Being Laid Off

If you’re a recently laid-off employee from Ford Motors in Canada, losing your job is daunting, but knowing your options and having the right guidance can make navigating your next steps smoother. With options ranging from the standard company pension to more complex avenues like the copycat annuity, ensure you’re making an informed choice that best suits your financial needs and future goals.

Understanding the Ford Pension Plan

Upon retirement or parting ways with Ford Motors, employees are typically presented with a pension statement outlining several choices:

a. Company Pension

Opt for the consistent monthly payout from Ford until the end of your life. If you have a spouse or partner, they will be eligible for a continuation pension at a reduced amount after your passing.

b. Commuted Value Option

This option allows you to cash out your pension. In essence, you can move your lump sum pension amount to a different financial institution and manage this sum, preferably with the help of a financial advisor from Pension Solutions Canada, to optimize tax benefits. Watch out for the possible tax hit. Connect with us to discuss.

c. Copycat Annuity

An interesting third choice, a copycat annuity replicates the Company pension but is sourced from another financial institution like Canada Life or Sun Life. The commuted value you’ve cashed out is transferred to these institutions, ensuring you get the same pension amount without having it tied to Ford.

d. The +1: Delaying the Pension

This option allows you to postpone the start of your pension, leading to a higher monthly payment once you do start drawing from it. It’s crucial to evaluate if waiting makes financial sense, given your age, debt, spouse or partner income,  & will you work?

Treading the Copycat Annuity Path

Let’s share an example with you of a client we recently worked with here at Pension Solutions Canada. A former Ford employee came to us and he preferred the stability of a pension but wanted to disassociate it from Ford for personal reasons. The solution? He opted for a copycat annuity. In many cases, insurance providers such as Sun Life or Canada Life are willing to take up the pension responsibility for less than the commuted value, giving YOU a cash surplus.

Case in point: Let’s say your pension’s commuted value is $750,000. When this amount is presented to Sun Life or Canada Life, their actuaries might determine they only need $700,000 to provide the same pension payouts. This leaves a surplus of $50,000, which can ideally be invested into an RRSP or put into your jeans [after tax].

Reach Out for Expert Guidance

Before making any decisions, it’s beneficial to consult with experts like Bruce Youngblood at Pension Solutions Canada. Not only can we guide you through the ins and outs of these options, but we can also quarterback the process, ensuring your interests are safeguarded every step of the way.

Want to dive deeper? Click here and schedule a free 15-minute Zoom call to discuss your unique situation.

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