Defined benefit pension plan Puns

I am a mid-30s single male in Toronto, ON. I work for a bank in a tech role and I am currently enrolled and vested in a defined benefits (DB) pension plan. An year after I became eligible for pension, our bank stopped offering DB to any new hires who are instead offered a defined contribution (DC) plan like most employers. Sometimes, recruiters from big tech companies like Amazon / FB etc. reach out on linkedin to ask if I am open to new roles. However, I've been a little reluctant on taking up on those offers as I am reluctant to give up the DB guaranteed pension. I make a fairly comfortable salary but I would potentially make 30-40k more on base salary if I switch jobs. So I was wondering if I am overvaluing a defined benefits plan in my mind and if this hesitancy to switch jobs is rational at all? I was hoping for some feedback on this so that I can make an informed decision. Thanks a lot in advance for your thoughts and feedback. Thanks.

Edit: I have a doctorate and I know that my colleagues and friends in the same field with same academic background are making much more than I am in tech companies (like Shopify, Fb etc.). However, it's very cushy job with very nice manager, supportive team and meaningful work (a combination of tech and financial crimes detection/ mitigation), which I value a lot.

I have such a plan, however I am curious what it's value is right now even though I can't touch it.

If I quit my job, it's vested, and would begin to pay out at age 60 based on how many years I have been a member as well as the average of my best 5 years. But I am not close to 60.

I checked this website which gives annuity prices from life insurance companies:

https://lifeannuities.com/annuity_rates/index.html

Using that, I determined at age 60 how would money I would need to spend to buy an annuity that would provide the same monthly benefit as my plan. This is not exact, since my plan offers a spousal survivor benefit of 50%, and the annuities listed don't seem to have that. So I priced the annuity offering a 10 year survivor period. Since they are not indexed, I assumed 3% inflation (historical average) and (using Excel) grew the monthly value by 3% annually and adjusted the annuity benefit a bit higher. Probably what I did was not exact, but it was an attempt to make the annuity sort of match the plan I have roughly.

So what I did was to take the price of the annuity, and I calculated the amount I would need to have today, that if invested at 5.75% (the inflation adjusted average return of the S&P500), would yield that amount of dollars at age 60 to enable the annuity purchase.

Is there a formula that can be followed to do this? Is my napkin math OK? What is the actual present day value of a DB plan that is vested but not mature?

My employer is closing our defined benefits pension plan and converting its value into a defined contribution plan.

I'm about half-way through my career. What are the issues I should be looking out for?

This is a big company (based in Quebec) so they have a million lawyers.

Left a job with an Alberta university. The pension plan administrators sent me a letter saying I can:

a) leave the pension in the plan.

b) transfer the pension value to an RSP.

c) take a (taxed) cash lump sum.

I'm not doing C because I don't need the cash and a good portion of it will be taxed, but I'm wondering if it's better to transfer the pension value to an RSP or leave it with the pension plan.

For reference, there's about $14.4k in there. The monthly pension payable starting in October 2055 is about $160 per month, with a cost-of-living-adjustment of 60% of the Alberta CPI over the last year. The pension is transferred to my spouse if I die before retirement.

Hi all,

Hypothetical scenario.

Let's say you are offered two jobs offers and you are in the 35-40 years old range:

Offer #1 (finance/wealth management sector, private)

155k base, 45-55% bonus. Defined contribution plan, employer match 7%

Offer #2 (banking sector, private)

135k base, 15-25% bonus. Defined benefits pension plan, indexed

Same stress level, same numbers of hours (45-60hrs/week)

What would you pick and why?

Is a defined contribution plan really that much worth it these days?

Thanks

I work in government and I have a defined benefit pension plan. I'm nearly midway through my career if I wanted to work until the point where I max out my pension benefit.

My question is how do I decide what pay rate I would require to move to the private sector and thus limit my pension benefit to my current years of service?

I quit my job with a government org. for a job overseas that will only last a few years (I'll come back to Canada eventually). I think I might want to go back to work for the gov. org. in the future, but it will be difficult due to hiring preferences, so I'm not sure it will happen.

I have two options.

1. Leave the money in the plan and get $2XX (indexed to inflation) when I retire in three decades.
2. Take the money ($36K) now.

According to the document from the org., $23K can transfer into my RRSP with the rest paid in cash. I'll have to figure out if I can move all of it into an RRSP without any immediate taxation (CRA says my RRSP deduction limit is $80K+ for this year, but I think that's different than the contribution limit... something for me to figure out).

Part of me wants to the money and take the tax hit so that I can almost fully pay off the mortgage of a condo I rent out. Part of me hopes to go back to work for the org. and add to my pension (keep the money there). Another part thinks I could earn more money by using this $36K in an RRSP account.

I'll probably ask a financial planner for advice, but I thought I'd see what r/PersonalFinanceCanada thinks. Any advice, please?

My goal is to have $1 million invested to comfortably FIRE.

I have $500k invested in ETFs.

My employer requires me to work another 10 years to retire with a pension. My pension statement indicated that I have almost $500k (my contributions+company match+growth) in my pension account. If I were to quit tomorrow that $500k would be transferred to a LIRA that I won't be able to access until 55.

Should I count my pension account towards my Fire number and be able to quit tomorrow?

Or should I disregard?

Anyone in a similar situation?

I have a job that has a defined benefit pension plan. Just curious if taking CPP early would always be beneficial for those with DB pension plans, since the pension is reduced by CPP at age 65?

warning: long as heck, tl;dr's below:

I recently joined the federal public service, and I'm 22. I am in a permanent position and am a member of a defined benefit pension plan. I make ~$72,000/year, and live in BC, with the possibility of needing to relocate to Ontario in 2022. I contribute approximately 10% of my salary to the pension plan (~$7,200), and my employer contributes an additional 11% to my pension plan (~$7900).

The pension plan I am a member of has 3 additional features:

• A Bridge Benefit in addition to pension payments, meant to offset CPP payments if I retire before turning 65.
• Access to the Public Service Health Care and Dental Plan at cost (~$1300/year), assuming I accumulate at least 6 years of service and remain a pension plan member.
• The ability to defer pension payments to age 60 with no penalty (70% of top 5 years of earning), or age 55 with a 25% penalty (52.5% of top 5 years of earning), assuming I accumulate 30 years of service. I will still receive a bridge benefit if I opt to retire early.

I will be buying back 2 years of service. Even if I don't plan on remaining in the pension, this will allow for the funds to be matched by my employer. This means I will have 30 years of service by age 51, assuming I contribute to the pension for the full period (e.g. if I continue to make pension payments while on leave without pay).

tl;dr I have a pretty sweet pension plan with no risk borne by me if I complete a full 30 years of service, and health benefits at cost + CPP if I retire at 55.

##What does this mean if I leave the public service?

30 years is a long time, and a lot will change in that meantime. I don't plan on leaving anytime soon (at least not before 6 years). I am very appreciative of my job because I have tremendous work-life balance and completed an Arts degree, and I make above the median for a holder of a Bachelor of Arts degree because I specialized in a field of research in demand by government. Despite this, there are some considerations for whether I'll be here for the long run:

• Salary: I make significantly less than most people in this community, and my long-term earnings are capped somewhere around ~$110,000 in today's dollars if I somehow manage to overcome the following challenge.

• Language: The Federal Government under Trudeau is increasingly turning to bilingualism. Most positions in my field (policy) are bilingual beyond the junior level. However, I'm autistic (but high functioning), and for t

I'm trying to help my partner decide between two pension options after the company she works for has been acquired by a larger company. I would like to help her make the best short-term financial decision, as she has been unhappy at her position for some time and has been looking for other jobs.

Here are the details of the two plans:

Defined Benefit:

Lowest contribution option is 1% of salary deduction for 1% of salary benefit annually, starting at 65. This increases by 1% per year of service.

Highest contribution option is 9% of salary deduction for 2% of salary annually, starting at 65. This increases by 2% per year of service.

Defined Contribution:

Lowest option is 1% of salary deduction for 3% of salary contribution from employer.

Highest option is 4% salary deduction for 7% of salary contribution from employer.

I can valuate the defined contribution easily enough, and the extra employer contribution at 7% would be nice. The defined benefit option is hardest to valuate as I read it's done by an actuary based off of many factors. What would the approximate transfer-out value of the defined benefit pension be per year? I was thinking if it's high enough, the 1% contribution option for defined benefit would be worth and then just tuck extra in RSPs.

I am new to this choice as my employer has only one mandatory pension option.

Can anyone offer advice?

Thank you in advance.

Hello everyone,

I have an opportunity to take a job as an IT project manager in the public sector.  It is an interesting opportunity, but the pay is almost $15,000/year less.  In contrast, this public sector job offers a defined benefit pension plan, which I currently do not have. Other benefits (e.g. life insurance, dental, health benefits, etc.) are very similar, so the only real difference would be in the salary (less) and the (increased) pension.

Is there a way I can calculate the net present value of a future pension vs the reduced salary that I would receive today? Is this difference even measurable? I have googled this topic, but have not really found a clear answer.

Thank you!!

Hi all,

Just curious on your thoughts about this.

I am 21 but will most likely be bridged into the Federal Government. I’m in Ottawa and studying Finance. I have my TFSA maxed and have been making monthly contributions into my non-reg account buying XEQT.

If government is the route I choose, and I keep investing on the side for 30 years or so ($500-$1000 a month), am I theoretically on track to have an extra large sum of money that won’t even need to be used for my retirement fund? As I will have the defined pension plan as well?

Sorry if it’s a dumb question, it just sounds too easy to be true.

Mid 30s, looking for some help from the smart folks in this sub.

I contribute to a DBPP through my employer (retirement age 55), TFSA is maxed, and have around $20k in a RRSP. I doubt I'll stay at the same employer for another 20 years, so looking at options on how best to save.

I have around $20k in unused RRSP room (in addition to the $20k already in there), which I'm thinking about using next. Is it best to contribute to the RRSP now, or contribute to a non-registered (taxable) account, knowing that I can use that RRSP room in the future when I quit my job and take the LIRA? I guess I'm torn on whether to invest in the RRSP or non-registered (taxable) account. What would you do?

TIA!

Is there a formula for figuring the value of a defined benefit pension plan in determining net worth? My wife and I have liquid assets of roughly $380,000. We have zero debt, and own 2 homes and a piece of recreational land with a combined total value of around $200,000. We are both 60 and retired and I have a defined benefit pension plan that has no cashout option, but will pay $5000 per month for the rest of our lives. For grins and giggles, I would like to put a number on our net worth, but have no idea how to calculate the pension aspect of our finances. We live in the US, if that matters. Also, the pension has no residual value upon our deaths, it just evaporates.

In 2018 my employer closed our DB pension to new hires. The employees that are still on the DB plan continue to accrue benefits on this plan.

What effects will this have long term on the people still on the plan?

I am 40 years old and still have 17 years left until I am eligible to retire. Will this negatively affect how much pension I will be able to receive?

Our contract is up right now (union workplace). Should we fight to bring the DB plan back for everyone?

I've recently been offered a role and the time has come to decide on which pension plan I would like. They both have their pros and cons but I'm inclined to go for the Alpha scheme since it is a defined benefit scheme, and these can be very lucrative given a few years service. An I right in my thinking?

Is it worth contributing to a pension plan knowing that I won’t see it through to 65 and retirement?