Yet another Canadian fed employee here (wow, this thread is bringing us all out of the woodwork). I started at age 35, currently age 40, expecting to reach FI around age 44.
Gashford, any worries that taking the retirement course is going to 'out' you at work? ;) Many newer employees do take it (never offered to me, though I think it would be good to take so you understand how it all works). I'm not sure I'd be able to get through it with a straight face, or else I'd probably be pretty bored at this point, since I've done a fair amount of "independent study", and it's too soon for me to plan in earnest. I'm really interested to hear what you get out of it, though!
I have a couple thoughts on the lump sum vs. pension decision:
1) The lump sum, as far as I can tell, is also influenced by bond rates, so it will fluctuate from time to time. If you take the lump sum into an RRSP, you'll still have a bit of a tax hit in the year you retire (maybe less, though, if you retire early in the calendar year). But, you can start gradually transferring it into a TFSA as contribution room allows, while paying very little tax on your RRSP income, if you stay in a low tax bracket. From then on, any earnings are tax free, and don't count as income. Then, once you're of a certain age (65?), you'll qualify for GIS in addition to OAS, since you're "so poor", with virtually no income. It's possible that the GIS could even be worth more than your defined benefit indexed pension, if you've had a relatively short tenure in the PS. Now, there have actually been a series of news articles discussing this very topic in the past couple of days, saying that this TFSA loophole could result in "millionaires on welfare". Honestly, I doubt there are many who could pull it off, and who knows if that option will still be available in 25 years. The ethics of it might be questionable, I suppose, but if our ridiculously complex tax system has shot itself in the foot, I sure wouldn't fault anyone for making the most of it.
2) Taking the pension sure provides a nice safety net; you know you'll just have to make your savings last until age X, when your pension kicks in, and then it's there for you for the rest of your life. Of course, you walk, bicycle, avoid eating out, and generally live a low stress life, so you might be collecting that pension for many more years than the actuaries have predicted, right? :)
3) Don't forget that gains in your RRSP are taxed as income (at 100%) vs. capital gains in unregistered accounts (taxed at 50%), so RRSPs may not be as awesome as they sound, depending on how many years of tax-sheltered growth you anticipate, and what tax bracket you plan to be in upon withdrawal.
However much I like the idea of trying to take advantage of our taxation system as much as it tires to take advantage of me, I'm personally leaning towards the nice safe pension. I plan to live a long time, and that pension will cover my very modest living expenses, so I'd rather rely on that than on a GIS that could get reduced or yanked entirely.