What you should know about the commuted value of your pension

Do you have a defined benefit (DB) pension plan and have you ever wondered what it's worth in today's dollars? Well you've come to the right place!

Retirement Advice for Canadians (RAC) provides a unique online calculator that instantly serves up this information through its proprietary report, called MyCV. While you could get this data from an actuary or a financial institution, it will cost you hundreds of dollars and take a significant amount of time.


What is the commuted value of a defined pension plan?

Put simply, when you commute your defined pension plan to a dollar figure, that lump sum value (before tax) is called the commuted value (CV). It's a different way of looking at the value of your pension: instead of a lifetime income, the CV is a total dollar figure.

We calculate your CV based on actuarial assumptions about future events using data from your most recent pension statement.

When you commute your pension, you will be required to transfer all or a portion of it to a Locked-in Retirement Account (LIRA) without any immediate tax hit. The amount of this transfer is governed by the Income Tax Act. Any money that cannot be transferred will have to be paid to you in a cash lump sum after deducting withholding tax, typically at 30 percent. Our report shows you the breakdown of your CV into what will be transferred into your LIRA and what you'll receive as cash (if any).


Why is it a good idea to know MyCV?

There are a variety of situations when you'll need to know how much your DB pension is worth:



Run the MyCV calculator to make better retirement planning decisions today!



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Always seek advice from your financial planner. If you are a member of one of the BC Public Sector Pensions plans, you can see what the Pension Corporation says about your situation. Their pages provide a detailed summary of your options.