Hi folks,
Wondering if I can get some collective brainpower to help me choose my best option.
Here’s the story:
I currently work for the government with a defined benefit pension plan (DBPP #1). I contributed to the plan for 2.5 years before moving to a different employer, also with a DBPP. I worked for employer #2 for six months, also a public sector employer with a different DBPP. I quit that and I am now in a new role with the government with much higher pay, contributing again to DBPP #1. I now have to decide what to do with my pension contributions I made to DBPP #2.
These are my options according to all my paperwork between the plans:
1. Keep my $ in DBPP #2, and will receive $87/mo at age 55
2. transfer my $ to DBPP #1, which will give me an additional $45/mo in DBPP #1 plan at age 55. I won’t get credited for all my service from plan #2, but I will be able to purchase the shortfall if I choose (not sure what the cost would be at this time)
3. Pull the $ from DBPP #2, which would be just over $10,000 and transfer to an RRSP.
I went a long time ago to a seminar from pension plan #1 that, for reasons I can’t remember, had me convinced that if I ever had the opportunity to purchase back service when you temporarily left the plan, it’s the best deal possible. The math isn’t working for me but I feel like I don’t know enough about what all this means.
For what its worth, I did a simple calculation of investing the $10k for 20 years at a 6% annual return, and if I were to then start pulling 4% of the money at that time, would be roughly $1,200/year.
Additional info:
- currently age 34 and have wild plans on retiring by age 50 if I can swing it (or even earlier if I can). I am undecided as to whether I want to stay in this position until retirement, but it seems to be the best gig I have found thus far in my career (I do not enjoy my day job)
- I have plenty of RRSP room and would invest it in index funds, which I currently have in a high risk allocation