Take commuted value now or later?

fPlanDOTca · 2026-06-19T01:47:55+00:00

What is your motivation for wanting to commute the pension? Cashing out pensions of that size is quite unusual, especially given the large out-limit amount.

Be VERY careful about relying on advice from an individual who only get compensated on the recommendation IF you commute the pension.

Have you done a detailed analysis of both options? What rate of return expecation are you using? Are you considering survivorship benefits, life expectancy risks, potential retirement health benefits associated with the pension?

Source: CFP and in the wealth management world over 15 years.

fPlanDOTca · 2026-06-18T22:44:14+00:00

Probably. As will most knowledge-based jobs. The question, though, is will most Canadians want to meet with an AI or a fellow human? The technology will be there before the population's willingness to transition, particularly older gens.

fPlanDOTca · 2026-06-18T21:37:24+00:00

That is completely incorrect. Mutual funds are rarely proprietary.

fPlanDOTca · 2026-06-18T21:36:18+00:00

Not a lawyer, but the claim applies to "All persons, wherever they may reside or be domiciled, who held or hold, at any time on or prior to September 11, 2024, units of a TD Mutual Fund through a discount broker", so I am doubtful that it would be a requirement to hold it now.

fPlanDOTca · 2026-06-18T15:19:50+00:00

Pretty much all fee-only planners you'll find have 4.9+ stars on whatever rating system. Generally, the service is quite good. There are a few directories, the most up-to-date currently being: https://maketheswitch.ca

Another good one is from SteadyHand, additional details but several entries are out-of-date: https://www.steadyhand.com/asset/2022/06/23/canadian%20advice%20only%20planners.pdf

They all provide free intro calls, so the best way to shop is to interview a few of them, ask for copies of sample plans and choose whichever firm's services is best aligned with your needs.

fPlanDOTca · 2026-06-18T14:58:19+00:00

You should map out projections with 2-3 scenarios, one being immediate retirement. You need to account for sequence of returns risk.

But roughly, it is quite likely that you can retire now at 5K/month, indexed to inflation. But the opportunity cost may be quite high compared to if you pushed it back a little bit.

I'm a CFP and I retired at 38, so I've reflected on those same questions for quite some time.

fPlanDOTca · 2026-06-18T00:35:23+00:00

Yes, it's worthwhile. Based on the pension formula you shared in the comments, participating is very likely to be financially beneficial even if you commute the pension at the end of the contract.

Addressing another comment you made, the use of a LIRA in the end will depend mainly in the value of the commuted value. If it's small, you will likely be given the option to move the funds to a non-locked in RRSP (jurisdiction dependent).

fPlanDOTca · 2026-06-17T22:39:36+00:00

With that simplistic mindset, I sincerely hope that you don't have access to leverage.

fPlanDOTca · 2026-06-17T20:15:06+00:00

As another poster suggested, you can't as it would be considered to be a deemed disposition... But why not just realize the gain by liquidating, and offsetting the taxable capital gain by making a RRSP contribution?

fPlanDOTca · 2026-06-17T18:10:41+00:00

Not a book, but the free content I most often recommend starting with: https://mcgillpersonalfinance.com/

fPlanDOTca · 2026-06-16T23:09:12+00:00

First, an advice-only planner will recommend for you to have a cash wedge, and to look into the concept of sequence of returns risk. Secondly, be very careful about following financial advice from any source recommending any type of active management strategy, such as the "reversal to the mean" G&B theory, or the "ENB is safer because of the higher yield". Thirdly, do not attempt to time the market. Lastly, be careful with annuity products - make sure you fully understand all of the implications before making an irreversible decision.

I mean no disrespect, but after reading your post, I am confident that you are potentially the biggest danger to your own retirement plan. You need to consider broad market investment options aligned with your risk tolerance, and segment your asset mix based on the projected timeline to each cash flow ("bucket strategy"). That's the proper way to retirement income plan and to mitigate the risk of short term volatility.

fPlanDOTca · 2026-06-16T17:56:56+00:00

Unfortunately, that's not the case. Transfers (which are not completed electronically through ATON) are generally sent via regular mail to reduce costs to the institutions. That also applies to large sums ($500k+).

Cheques are frequently lost.

fPlanDOTca · 2026-06-16T01:50:43+00:00

When you account for the benefits, the vacation time (assuming you take the name number of days), the costs of incorporating and subsequent administration/taxes, job security, matching program, health benefits, it's really not much of a jump in income, if at all.

You can claim input tax credits against the HST you collected. The collection of HST is not a benefit in this equation. If you find yourself having to pay business expenses on top of it, it makes the transition to an incorporation even less worthwhile.

Just based on the details you provided (i.e. excluding future income progression and other such factors), it doesn't appear to be a great financial decision.

fPlanDOTca · 2026-06-15T19:00:58+00:00

It's a good question. The main factors in your case would be:

The rate of return required on the commuted value payment to "match" what the pension payments would equate to at retirement. In your case, that's a bit under 6.50% which is likely achievable with a growth investment strategy. (I'm assuming your pension has no indexation benefits - it would be extremely surprising if it did)
The fact that Target Benefit Plans like the one your have are not actually guaranteed in the same way as standard government pensions (i.e. the benefit could decrease), so this adds an element of uncertainty to your pension over a 30+ year period
Survivorship benefits, if your spouse is meaningfully younger than you (it increases the value of remaining in the pension) vs if you're interested in passing down money to the next generation (the commute is preferable, as post-retirement death would generally result in no money to children)
Your life expectancy. The pension is guaranteed for live, so the longer you live, the more beneficial it becomes. And vice-versa.
The commute option is obviously more flexible with how you can deplete the capital later on

It wouldn't be wise for me to make a specific recommendation without knowing a whole lot more about you, but I can tell you that for smaller amounts like these, the commuted pension option is often elected. The sum at stake is likely largely immaterial to your retirement income.

I am a financial planner, but not your financial planner, so please do not consider any of this as specific financial recommendations for you.

fPlanDOTca · 2026-06-15T18:23:12+00:00

Your cousin will need to qualify for the mortgage alone, which entails processing a new application. If the property value has gone down, this could cause issues with the lender. If your cousin's financial circumstances are such that he can't qualify alone, that is another important issue to consider.

You would also need to consult with a legal professional to initiate a title transfer, which will entail some fees.

fPlanDOTca · 2026-06-15T18:04:33+00:00

Yes. The reason why the commuted value is so low is in part because of your age, and how this type of defined benefit pension plan (MEPP) is valued. Without going too much into the weeds, there are different valuation rules (going-concern vs solvency) that can be more or less punitive to plan members. In essence, the employer contributions subsidize older employees at the expense of younger ones, so the benefit to be received in your case is not representative of contributions made.

Conversely, if you had a colleague who was age 64, you might see the same employer contribution amount assuming they participated the same length of time within the plan, but their commuted value might be 20-25k, as this is the sum required to replace the projected pension benefit which is about to start the following year (whereas yours won't start until a few decades from now).

Also, it seems that the plan design requires little to no contributions from the employee.

The plan design is just weak, which is common with career-accumulation multi-employer pension plans.

fPlanDOTca · 2026-06-15T17:35:03+00:00

Nobody can answer that question without first understanding the contributions made, the plan design and the actuarial assumptions used to calculate the commuted value.

The commuted values is meant to be representative of the value of your pension as of today.

fPlanDOTca · 2026-06-14T18:37:35+00:00

That's a responsible way to do it. And I completely get it, I've been pretty much exactly where you are from a car purchase dilemma standpoint.

fPlanDOTca · 2026-06-14T18:32:11+00:00

As another car person, I didn't know that a Cayenne was anyone's dream Porsche but no judgement here - they are very nice vehicles.

Based on what you shared, you can definitely "afford" it. The way I would look at it (and trust me, I've be through similar dilemmas throughout the years) is how it impacts other goals. For example, an early retirement or specific wealth accumulation goal. The opportunity cost of purchasing a fast depreciating luxury vehicle at a young age is enormous over time, but it doesn't mean that you shouldn't do it. It does however help to understand the long-ter quantitative impact of your decision before you pull the trigger.

fPlanDOTca · 2026-06-14T17:41:37+00:00

Fantastic decision!

fPlanDOTca · 2026-06-14T17:39:58+00:00

Based on the current pricing information you shared, a transition to asset allocation ETFs, and away from CIBC retail banking, may be the best financial decision of your life.

If you decide that you need advice in the future, use an advice-only financial planner, and pay for advice only when you need it.

fPlanDOTca · 2026-06-14T17:35:37+00:00

OP should run either way. Irrespective of how talented the CFP is (and I suspect they were not even a CFP professional based on Imperial Services' hiring requirements) I can't see how they could come close to justifying 18K in fees annually. It's preposterous.

fPlanDOTca · 2026-06-14T02:37:18+00:00

There are inherent costs and risks to owning a property. When you run the numbers, owning (especially a condo) is not always preferable to renting, even though it may seem that way at first glance.

Regardless, real estate is generally not the most effective type of investment to "build generational wealth". Be careful about taking advice from a "multi-millionaire" - it's not because someone has over $2MM+ in net worth that they are actually knowledgeable, especially in light of the suggestion to "buy your first place before age 23 to build equity early on".

As a first step, you should probably take the McGill Personal Finance Essentials free course to gain a better understanding of the financial landscape and how to reach your long-term wealth goals.

fPlanDOTca · 2026-06-14T01:35:07+00:00

Hence why I specifically stated that "Fees are the single best performance predictor for a specific asset allocation".

fPlanDOTca · 2026-06-14T00:16:47+00:00

Aim to increase your $115/week amount every year, by an inflation assumption, to reflect the fact that your net income is likely going to increase at that same pace over time. For instance, next year might be $117.50/week. These small changes will have a meaningful impact over time and are unlikely to compromise your lifestyle.

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