When and how you elect to receive your pension will have a direct impact on your income. If you plan to take early retirement, find out the earliest date your pension plan will allow this and asses the financial impacts. Ask about when you could receive an unreduced pension and whether your pension plan includes a “bridging” benefit to provide slightly higher benefits until you reach age 65 when CPP benefits will kick in (when your pension amount will be reduced accordingly). Retiring at age 65 (usually normal retirement age) will generally provide a pension that pays you a fixed, guaranteed income, often monthly, for the rest of your life, and a reduced pension for your surviving spouse.
Your DB pension plan may have a portability feature that allows you to transfer your accumulated benefits into a locked-in, personally-directed plan- a LIF or LRIF. Make the decision to transfer to a locked in account with caution, because it could result in the loss of employer benefits like extended health care, dental care or pension increases that offset inflation.
With a group RRSP or DPSP, your choices are the same as for your personal RRSP: withdraw the entire investment in cash (fully taxable) or transfer it to a registered retirement income fund (RRIF) or an annuity.
DC plans allow you to take the lump sum and purchase a life annuity. In most Canadian provinces, pension legislation requires that if you are married, you must purchase a joint last survivor annuity unless your spouse agrees in writing to waive this right. You can also choose to receive pension income directly from the plan or transfer the accumulated value to a LIF or LRIF.
The ways you save, the choices you make about your pension plans and registered and non-registered investments, and the steps you take to protect your assets- all play a vital role in generating the retirement income you expect.