You’re planning a career move – that’s great! But how could it impact your pension?
Note: regardless of the reason, Provident10 is notified of a termination of employment by your employer.
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What happens if I leave my employer, or my employment terminates?
Your options will depend on how long you’ve been a Plan member.
- If you have less than five (5) years of pensionable service, you are a non-vested member.
- If you have at least five (5) years of pensionable service, you are a vested member.
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You’re a non-vested member
If you have less than five (5) years of pensionable service, you are a non-vested member. If you terminate employment and are non-vested, you will have the following options:
- Receive a cash refund of your contributions and interest (less required withholding tax), or
- Transfer your (employee) contributions and interest to an individual RRSP, thus deferring tax implications, or
- Transfer your termination benefit directly from the PSPP to the pension plan of your new employer (provided your new employer’s pension plan permits such transfers), or
- Leave your contributions in the PSPP. This would enable you to link your service accumulated to the date of termination, with future pensionable service should you be re-employed in a pensionable position under the PSPP.
An election form, detailing your options, will be provided upon termination of employment.
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You’re a vested member
If you have at least five (5) years of pensionable service, you are a vested member.
Vested means that you have earned the right to receive a lifetime pension from the Plan. If you terminate employment and are vested, you will also have some options to transfer your entitlement out of the Plan (provided you are not eligible for an immediate unreduced pension). The options of a vested member may vary according to age and service.
An election form, detailing your options, will be provided upon termination of employment.
Upon termination, you may elect one of the following options within a certain timeframe following termination:
- To receive your deferred pension benefit, based on your accrued service, at 58, 60 or 65.
- To leave your termination benefits in the plan and either:
- Choose an early reduced pension benefit (if applicable) payable as early as your earliest eligible retirement age, or
- Leave the vested service in the Plan to be added to any future service if you are re-employed in a pensionable position under the PSPP.
- To transfer your termination benefit directly from the PSPP to the pension plan of your new employer (provided your new employer’s pension plan permits such transfers).
- To transfer the commuted value of your pension entitlement to a locked-in retirement account (LIRA).
Furthermore:
- If you have less than 10 years of pensionable service and have not been continuously employed for 10 years, and are not yet age 45, you may elect within a certain timeframe after termination to receive:
- A return of your pre-1997 (employee) contributions plus interest; and
- A transfer of the commuted value of your pension entitlement representing pensionable service performed after December 31, 1996, to a LIRA.
- If you have accumulated 10 years of pensionable service or you have been continuously employed for 10 years, and you are at least age 45, you may elect within a certain timeframe after termination to receive:
- A return of your pre-1987 (employee) contributions plus interest; and
- A transfer of the commuted value of your pension entitlement representing pensionable service after December 31, 1986, to a LIRA.
Note: Your commuted value will not be less than the total of your own contributions, plus interest. Plan members who do not elect an option within a certain timeframe after termination are deemed to have elected a deferred pension.
If you choose to remove your termination benefits from the Plan, there may be other benefits that are impacted or forfeited. Please contact your employer regarding the impact this decision may have on other employer benefits.
