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 transfer the commuted value of your pension, we will transfer it to a locked-in retirement vehicle. You can only choose this option if you are younger than the earliest retirement age.
When we calculate the commuted value, we guarantee the amount quoted until the guarantee date on your Termination selection statement. We must receive your signed selection and required documents by this date. If we don’t, and you are still eligible and would like to pursue this option, we will recalculate the commuted value of your pension. The recalculated value may be higher or lower, 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. This means that any part of your commuted value over the limit must be taken as a cash payment and we will deduct income tax from it.
We deduct tax at the following rates for Canadian residents, where applicable:
- 10 per cent for payments of $5,000 or less
- 20 per cent for payments of $5,000.01 to $15,000
- 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 is 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.