Treasury Board of Canada Secretariat
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Weighing Your Options
Transfer Value
When to make your option: You must choose whether you want a transfer value within one year of your departure from the Public Service. However, you must be younger than age 50 when you leave. If you do not make a choice within that time limit, then you are deemed to have opted for a deferred annuity.
Why is the valuation date important: The valuation date is the date from which a transfer value is calculated. The valuation date corresponds to the date when you leave the Public Service or the date on which you opt for the transfer value, whichever is later.
What happens to the pension amounts payable under the Retirement Compensation Arrangement (RCA): When you opt for a transfer value, you receive not only the actuarial value of your Public Service Pension Plan (PSPP) pension credits, but you must also receive the value of the pension amounts payable under the RCA, if applicable. The RCA portion of the transfer value is paid directly to you and is taxed at source.
Where must the funds be transferred: The Income Tax Act places annual limits on the amounts that can be paid into tax-sheltered pension vehicles (see the calculation of limits related to a transfer value in "Formulas and Methods "). The Transfer Value amount which falls within the Income Tax Act limits must be moved directly into a registered pension plan, a locked-in registered retirement savings plan (RRSP where withdrawals are regulated and fixed in the form of an annuity), or a financial institution in order to purchase an annuity.
If your total Transfer Value amount exceeds the limits defined by the Income Tax Act , then the funds that are in excess of the limits will be paid to you in cash and will be taxed at source. However, if you have not exceeded your RRSP limits, then you may ask that all or part of the taxable portion of your Transfer Value be moved into an RRSP.
All the pension vehicles that your Transfer Value can be transferred into have withdrawal rules in accordance with the Pension Benefits Standards Act, 1985; the Pension Benefits Standards Regulations, 1985 and the Income Tax Act . Ask your tax and/or financial advisor about these rules.
What is the tax impact: Any tax you pay will reduce the capital that you have available to invest for your retirement. You may ask the offices of the Canada Revenue Agency for assistance.
What happens to your insurance plans: If you opt for a transfer value, then you are no longer a member of the PSPP. Therefore, you are no longer eligible to participate in the Public Service Health Care and Dental Care Plans nor the Pensioners’ Dental Services Plan, and you no longer have disability coverage. You may, however, ask to participate in the Supplementary Death Benefit (SDB) plan, but conditions and additional costs apply. To learn more, visit Protecting Your Survivors and Death and Bereavement.
What happens if you are re-employed: If you again become employed in the Public Service and a PSPP contributor, then you may be able to reinstate all or part of the pensionable service for which you were paid the transfer value(s). Consult Reinstatement of Transfer Value Service for more information.
