Author Topic: Pension question (Canada)- what is the value of my pension?  (Read 3481 times)

PharmaStache

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 Iím hoping someone can help me with figuring out the value of my pension.  Here's the email thread between myself and the pension provider: 
 
Hi,
My Registered plan # is XXXXXXX.  My ID is XXXXX. 
I see on the pension website that upon termination, I may transfer the value of my pension to a LIRA. 
Are you able to tell me what the current value of my pension is?
Thanks,
PharmaStache

Reply from pension providers:
Hello, Thank you for your email.  We will be able to provide you with a value of your benefit only when you terminate.  Please refer to your annual pension statement for any values. 

Thank you for your reply!
On my pension statement, it states my balance at Dec 31, 2014 is $51,190.41.  My understanding that this is NOT the value of my pension that I would receive upon termination, partly because this hasn't taken the employers contributions into account.  Is this correct?  Is there a way to estimate the pension value?  I'm not looking for an extra number, just something approximate.
Thank you for your help!

Reply from pension providers:
Nada!


Well that was very unhelpful!  What kind of person quits their job and THEN figures out how much they get?  How am I supposed to ever FIRE if I have no idea what the value of a large chunk of my retirement savings is?  Iíve seen other posts from people with exact numbers- why is my plan being so secretive?

Meggslynn

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #1 on: July 17, 2015, 04:24:56 PM »
All I can say is good luck. I have been trying to figure out the same thing with my company pension :(

MDM

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #2 on: July 17, 2015, 04:36:00 PM »
Don't know about Canada, but in the US there is something a Summary Plan Description (SPD) that by law has to spell out how your pension is calculated, and you are entitled to a free copy.

This is not necessarily an easy read, but you may be able to decipher the portions important to you.

PharmaStache

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #3 on: July 17, 2015, 05:29:06 PM »
All I can say is good luck. I have been trying to figure out the same thing with my company pension :(

Ugh, that is not good news :(

PharmaStache

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #4 on: July 17, 2015, 08:07:35 PM »
Came across this article today.  http://business.financialpost.com/personal-finance/retirement/how-the-bank-of-canadas-rate-cut-may-have-added-100000-to-your-pension-in-one-day  That helped me understand things a bit better.  Strange that I decided to check with my plan at the same time interest rates decreased. 

So am I actually sitting on a commuted value of like a million?  LOL.  I've worked enough to get 12k/year from my pension, so if I bought an annuity that paid that it would cost….how much?  Time to quit my job and find out!

RichMoose

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #5 on: July 18, 2015, 03:24:43 PM »
I have a municipal pension and they will not tell me the pension value either. Only thing I can get is a summary of contributions and a monthly pension estimate using numbers that assume I would work until I'm at least 55. I can understand they would be reluctant as some people might view this a free money etc.  for the excess portion of the pension, but it does make planning more difficult.

c-kat

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #6 on: July 19, 2015, 06:48:44 AM »
Is this a Canadian government pension?  If so they have a calculator online that will give you a good idea of the value.  You enter your start date, end date and average 5 year salary.

Filliteracy

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #7 on: March 10, 2016, 09:56:50 AM »
Pharmasave,

If you don't mind me asking, who is your employer? I'm waiting on an answer from my pension provider (military) and I'm afraid that might be the very same answer I'll get (no transfer value answer, only the value of a pension starting at 55, or the sum of my contributions thus far).

c-kat

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #8 on: March 11, 2016, 04:51:26 PM »
Came across this article today.  http://business.financialpost.com/personal-finance/retirement/how-the-bank-of-canadas-rate-cut-may-have-added-100000-to-your-pension-in-one-day  That helped me understand things a bit better.  Strange that I decided to check with my plan at the same time interest rates decreased. 

So am I actually sitting on a commuted value of like a million?  LOL.  I've worked enough to get 12k/year from my pension, so if I bought an annuity that paid that it would costÖ.how much?  Time to quit my job and find out!

Its probably more like 200K. I work for the Canada government and every year they give us a statement telling how much our pension would be at 60 if we left now and what the lump sum transfer value is. Mine was 20k a year or 300k lump sum.  The 4% rule doesn't apply when you run the numbers.

Al1961

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #9 on: March 11, 2016, 07:49:35 PM »
The calculation of a pension value is done in accordance with the Canadian Institute of Actuaries Revised Standards of Practice 3800. ( http://www.actuaries.ca/members/publications/2008/208083e.pdf )

Crudely, calculating the commuted value of a defined benefit pension is a two step present value calculation. Pension payments are projected out to the estimated (average) life expectancy of plan members. Payments that are expected to be made MORE than 10 years into the future are present valued to a date ten years out, using the prescribed interest rate for that period. That amount is then present valued to the measurement date (today) using a different interest rate in the PV calculation.  Rates can be found here: http://an-actual-actuary.com/Pension%20Plan%20Interest%20Rates.xls

I had built a spreadsheet using the information in the links above to estimate my commuted value payout. Because I used annual, rather than monthly payments it wasn't exact, but was within ~$2,500 on a ~$800k payout.

In order to estimate your commuted value, you need to know when your pension could start (to an extent, this is a choice that is up to you); how much the periodic payments would be (adjusted for any early retirement penalties); the estimated average mortality date for someone of your age and gender; rules of your pension plan that govern vesting, withdrawals, early retirement options; impact of pension partner on future payments (survivor benefits of spouse); nature and extent of COLA....

Al

PS: Yeah, with ~12k in annual benefits, you don't have anywhere near $1M. If you're in your thirties, there is a whole lot of discounting involved in getting the commuted value

PharmaStache

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Re: Pension question (Canada)- what is the value of my pension?
« Reply #10 on: March 12, 2016, 02:26:40 PM »
Pharmasave,

If you don't mind me asking, who is your employer? I'm waiting on an answer from my pension provider (military) and I'm afraid that might be the very same answer I'll get (no transfer value answer, only the value of a pension starting at 55, or the sum of my contributions thus far).

Provincial healthcare, not military.  Sorry!