"If I had eight hours to chop down a tree, I’d spend six sharpening my axe." - Abraham Lincoln

Pay Attention to your pension! 

Most individuals in their late 40's to late 50's concern themselves with providing retirement income during their lifetime. And with a third of their lives still left to live, many are beginning to realize their needs are different as they think through the various stages of life ahead.Government Plans are not sufficient as a sole of retirement income. The maximum CPP and Old Age Security payments for single person in 2008 are approximately $16,643 per year. With increasing cost of living on basics such as shelter, food, transportation and heath care we must look for additional sources for retirement income. Tax incentives exist to encourage Canadians to save for their retirement such as RRSP's, TFSA, and Pensions. Pensions are significant tool to enhance your retirement income.

Most pensions can be divided into 2 categories:

DBPP (Defined Benefit Pension Plans) or DCPP (or Money Purchase Plan). DBPP – an employer-sponsored retirement plan where employee benefits are sorted out based on the formula, using factors such as salary history, duration of employment etc. There are also restrictions on when and how you can withdraw these funds without penalties. In DBPP, the employer guarantees that the employee will receive a Definite amount of benefit upon retirement, regardless of the performance of the underlying investments DCPP – a defined contribution plan to which employer contributions are fixed. Employers can contribute up to 25% of employee’s compensation, but the final amount of the benefit received by employee depends on the market performance.

Pension Options
Generally pensions have three major options:


  1. Pension Income option
  2. Transfer Commuted Value option
  3. IPP (Individual Pension Plan) option

Quite often you may have several sub-option. For example: Under Pension option you may defer the start of you pension to a later date, or wave spousal benefit in lue of high pension income for retiree. Some options have age restrictions or portability restrictions. This is why it is very important to explore all the options with their advantages and disadvantages before you make your decision on which option to take.

Remember: Pay Attention to your Pension!

For you pension options review please do not hesitate and call Natalie Fletcher, CDFA and Pension Specialist at (905) 508-2545 or 1-888-864-2221.