Members > Pamphlets > Retiring Early: the 50/20 option

Taking a Commuted Value transfer

Commuted Value

Your benefit leaves with you

If you do not wish to receive a pension from the CAAT Plan and you are under age 55, you would then have the termination option to consider, up to the end of 2012. In this case, you can transfer the Commuted Value of your pension benefit out of the Plan. The Commuted Value is the amount that your pension is worth today, in a lump sum. You cannot take this money to spend as you like - you would be required to move it into a locked-in RRSP or another employer's pension plan, or use it to purchase a lifetime annuity.

Keep in mind that you are entirely responsible for subsequent investment returns, and you will receive no other benefits from the CAAT Pension Plan. Once you reach age 55, the Commuted Value transfer is no longer an option.

There is a good chance in this situation that you will be subject to the maximum transfer amount set by the Canada Revenue Agency. This is a cap on the amount you can transfer on a tax-sheltered basis to a locked-in RRSP. There are a couple of things you can do with any difference between the cap and your Commuted Value.

Whichever you choose, the amount would be taxed. You can take it as cash in a lump sum; or, you can receive it in the form of a temporary monthly pension. This monthly pension will have a set end date: no later than the date you reach age 65.

Excess Contributions

When you take a deferred pension, or a Commuted Value transfer, there is another calculation to consider. The Plan compares 50% of your Commuted Value to the total of your own contributions plus interest. Contributions your College made on your behalf are not included. If your own contributions plus interest are more than 50% of your Commuted Value, then you are entitled to a refund of the difference. These Excess Contributions are payable only in cash, less tax.

January 2009