Layoffs in banks. Have you recently terminated your contract with a bank? Your defined benefit pension plan may still offer you the choice of moving to another employer or taking a value-added benefit, or it may be your only option to take an immediate or deferred pension.
In a recent YouTube video, Bruce goes into detail about the retirement options you should consider if you’ve been given that dreaded pink slip. Let’s break it down, shall we?
Added value: Golden ticket 🎫
First, Bruce talks about the “added value” of your pension. What is it, you ask? This is essentially the present value of your future retirement benefits. If you don’t feel comfortable keeping your pension with your employer, you can choose to transfer the money.
Quick takeaways: drive-thru value
- Transfer retirement money from your current employer.
- Buy your pension from another company, such as Sun Life.
- Your pension is safe, regardless of the future of your business.
- Please consult us, there are tax consequences.
- Are you drowning in debt? Make a fresh start with the replaced value.
- You are sick? Drawing a pension may not offer good value, see a lump sum.
- Do you want to leave a legacy? Pensions leave nothing after the second death.
Changing jobs thanks to your pension
Changing lanes for another job? Bruce suggests asking your potential new employer if they will accept transferring your existing retirement plan. This is especially important if you are moving within the same industry, for example from one bank to another. Government job offers allow this. Small private employers are unlikely to allow this transfer.
Ask HR:
- Will you accept transferring my current retirement plan?
- What are the conditions?
Age matters: when to start drawing your pension
Bruce points out that if you’re around 45, you can’t start drawing your pension until you’re 50 or 55. So you need to do the math and see how much your lump sum CV will increase over this period. this period. What does the math say? Is a pension better than a CV?
Age and pension:
- 45 years? You may have to wait until 50 or 55 to start.
- Check whether your pension increases during the grace period.
Tax dilemma
Ah, taxes, the eternal noise. If you plan to go back to work and earn good money, taking extra pension could mean losing some to taxes. Bruce suggests you delay taking advantage of this pension. Maybe that would be a smarter move. ps the same applies to CPP and OAS.
Tax Tips:
- Delay your pension to avoid high taxes.
- Consider commutated value to swallow the tax problem now and invest.
- Always try to complete your RRSP to avoid income tax upfront.
Rare deferred retirement
Finally, Bruce mentions the elusive “deferred retirement.” You can choose to start your pension at a later date, at a higher amount. This is similar to commutated value, where you take cash now and invest it for the future. This option is part of the FORD MOTORS package.
Deferred pension:
- Start your pension later at a higher amount.
- Similar to commutated value, but without direct tax consequences.
Conclusion
If you have been laid off and are in a difficult retirement situation, Bruce Youngblud is fair Zoom call. Book a free 15-minute chat to discuss your options.
Disclaimer: This blog post is for informational purposes only. For personalized financial advice, it is best to consult a specialist.
