Learn about commuted value transfers

Find out what's involved if you transfer the commuted value of your pension to a locked-in retirement vehicle.


If you choose to take the commuted value   of your pension out of the plan, we will transfer it to a locked-in retirement vehicle. You can only choose this option if you are younger than 55 when you apply.
 

When we calculate the commuted value of your pension, we guarantee the amount quoted until the guarantee date indicated on your Termination selection statement. We must receive your signed selection and required documents by this date. If you do not make a selection by the guarantee date, but are still eligible and interested in pursuing a commuted-value transfer, we will recalculate the commuted value of your pension. The recalculated value may be higher or lower than the original amount quoted, depending on interest rate fluctuations since the original calculation.

We will not deduct income tax from any transfer to a locked-in   retirement vehicle. However, the Income Tax Act limits the amount of commuted value payment that can be tax-sheltered in this way. Any part of your commuted value over the limit must be taken as a cash payment, with income tax deducted.
 

We deduct tax at the following rates for Canadian residents, where applicable:

  • 10 per cent for payments of $5,000.00 or less
  • 20 per cent for payments of $5,000.01 to $15,000.00
  • 30 per cent for payments of $15,000.01 or more

If you are not a Canadian resident when we transfer the lump-sum payment, the amount of tax held back will be based on your country of residence. Twenty-five per cent is a common amount.

The above flat rates are set by the Canada Revenue Agency. These rates do not represent the actual tax you may owe, which is calculated using your personal tax rate when you file your tax return for the year in which you receive the lump-sum payment.


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