Do you have a defined benefit pension plan at the company you are retiring from soon? Where do you see your employer in 10 or 20 years… will they still be handling your pension payments? It’s time to open the door to a new look at your retirement strategy. Yes, we’re talking about moving your company’s defined benefit pension plan to a trusted financial institution. The key to unlocking this opportunity? Say hello to your proven solution in this process: the Lifetime copy.
Buckle up as we explore how you can transfer your company pension to a financial powerhouse like Sun Life or Canada Life. Let the adventure begin!
Understanding the follower: Explaining follower rents
Ready for a pension revolution? Enter the follower annuity. It is an insurance product designed to accurately reflect your defined benefit retirement plan. Essentially, it promises to provide the exact same benefits as your current retirement plan. It’s like a look-alike for a company pension. And the best part? This annuity is designed to provide exactly the same benefits as your current retirement plan, hence the nickname “copycat.”
Why is it worth taking the follower annuity route?
Transferring your pension to a financial institution allows you to have greater peace of mind. You are no longer dependent on the financial health of your employer to provide for your retirement.
Questions worth asking yourself:
- Is your pension currently fully funded?
- Will my company be financially healthy in 25 or 30 years?
Whether you like it or not, you will live a long time. Don’t wake up at age 82 and find that your monthly retirement income will decline!
Transferring your pension to a financial institution such as Sun Life or Canada Life
Learn about the benefits and potential limitations of your existing retirement plan. Check out features like payment amounts, inflation adjustments and survivor benefits.
2. Assess your employer’s financial stability
Before setting up a follower annuity, check the financial health of your employer and the security of your current retirement plan. This step is fundamental in assessing the potential benefits of switching to an annuity follower.
3. Consult a financial advisor
Making such an important decision requires professional advice. An advisor can help you understand the implications of transferring your pension and determine whether a follower annuity is compatible with your financial situation and retirement aspirations. Click here to schedule a free call with a certified financial planner at Pension Solutions Canada.
4. Engage in the application and approval process
Applying for a quote from an insurer like Sun Life involves submitting an application. Once you decide to proceed, the transfer of your current retirement plan to the new follower annuity will begin.
Master your retirement with copycat annuities
Ultimately, the retirement journey is about finding the right path that suits your personal financial landscape. Whether it’s sticking with your company’s defined benefit plan or switching to a follower annuity, your choice should lead you to a retirement as sunny and serene as you imagined. After all, you’ve worked hard and now it’s time to enjoy the fruits of your labor. Safe travels on your path to retirement!
The decision to switch to another company is not a decision that should be taken lightly. seek professional advice from a financial advisor.
Follower Annuity FAQs
1. What is an imitative annuity?
The Copycat Annuity is an insurance product that mirrors your defined benefit retirement plan. It is designed to provide the same benefits as your current retirement plan. Think of it like collecting a company pension from Sun Life or Desjardins.
2. Why should I consider a follower annuity?
Transferring your pension to a financial institution through a follower annuity can provide greater retirement security and peace of mind. The security of your pension is no longer dependent on the financial health of your employer. Moreover, the follower annuity maintains existing retirement benefits.
3. How do I transfer my pension to a Copycat annuity?
The process begins with understanding your current retirement plan and assessing your employer’s financial health. To understand the implications of this move, it is extremely important to consult a financial advisor. If you decide to proceed, you must submit a request to your insurance company for a quote. We support the process together with you.
4. Will I lose any benefits if I switch to Copycat annuity?
A Copycat annuity is designed to provide the same monthly payments and often includes similar indexing features to your current defined benefit pension. So no, you won’t lose the benefits you currently have.
5. Are there any risks associated with Copycat annuities?
Potential risks include the financial strength of the insurance company. Please also remember that regulatory requirements govern the transfer of defined benefit pensions to insurance companies and compliance with them is mandatory.
6. How can I tell if a follower annuity is right for me?
It is very important to evaluate your current retirement plan, understand your employer’s financial stability, and consult a financial advisor. The following steps will help you make an informed decision about whether a follower annuity is compatible with your financial situation and retirement goals.
7. What are the legal requirements for converting to a follower annuity?
There are both federal and provincial rules and regulations that govern the transfer of defined benefit pensions to insurance companies. When making a change, be sure to comply with these legal requirements.
8. What will happen to my survivor annuity if the insurance company has financial difficulties?
Insurance companies are subject to strict regulations and are required to maintain reserves to meet their obligations. However, it is always a good idea to evaluate the financial health of any insurance company you are considering for an annuity follower. Remember that larger, more established companies like Sun Life and Canada Life tend to have strong financial results.
9. How does an imitative annuity differ from a traditional annuity?
A traditional annuity provides a fixed amount each month during retirement. The amount you receive usually depends on the amount of your investment, your age and the terms of the annuity. On the other hand, a copycat annuity is designed to mimic your existing defined benefit retirement plan by providing the same benefits as your current plan.
10. Can I go back to my company’s defined benefit pension plan after transitioning to a Copycat annuity?
Typically, once you transition to an annuity, you cannot return to your employer’s defined benefit retirement plan. Therefore, before making a decision, you should consider all factors and consult a financial advisor.
11. How will switching to a follower annuity affect my taxes?
The tax consequences of a follower annuity are similar to those of your current defined benefit pension. You will have to pay tax on the income you receive from the annuity. However, specific tax consequences may vary, so it is best to consult a tax advisor or financial advisor.
12. What role does a financial advisor play in transitioning to an annuity follower?
A financial advisor can help you understand the implications of transferring your pension, assess whether a follower annuity is compatible with your financial situation and retirement goals, and guide you through the application and transfer process. This professional advice is crucial to making an informed decision.
Remember that everyone’s retirement journey is unique and what works for one person may not work for another. Be sure to do your research, seek professional advice, and make the choice that best suits your personal financial landscape.
13. Can I transfer only part of my pension to a follower annuity?
Typically, switching to a follower annuity is an all-or-nothing decision. This means you usually can’t transfer just part of your pension to a follower annuity. This must be confirmed with your financial advisor or insurance company.
14. Can the terms of my follower annuity change after a change is made?
Once you lock in a Copycat annuity, the terms are usually fixed and do not change. The purpose of this type of annuity is to provide a steady, reliable stream of income during your retirement years that reflects the benefits of your original defined benefit plan.
15. What is the difference between an annuity plan and a retirement plan?
A pension plan is a type of retirement plan in which the employer contributes to a pool of funds intended for the employee’s future benefits. The amount an employee will receive upon retirement depends on the terms of the program, length of service and salary level. To be clear, a defined contribution (DC) plan pays you a lump sum of money when you retire, based on your investment returns. The employee is responsible for investment choices.
On the other hand, an annuity is a contract between you and an insurance company in which you make a lump sum payment or a series of payments and in return receive regular payments, starting immediately or at some point in the future. The purpose of annuities is to provide a steady source of income in retirement.
Remember that financial planning for retirement is a deeply personal process and what is best for you will depend on your individual situation, goals and risk tolerance. Always consult a financial advisor to help you make informed decisions.
