If you stop working with an employer who participates in the PSSP before you are eligible to collect a pension, you have a couple of options for the pension benefit that you have accumulated in the Plan.
Important term to know:
Commuted Value – The commuted value is the present value of the deferred pension to which you are entitled – it is a mathematical calculation based on your age, service and salary.
If you are 55 years old or older:
- You may choose to start your pension immediately or defer it, meaning you can leave your pension in the PSSP fund until you are ready to receive it.
- You cannot transfer your accrued pension to an RRSP or receive a refund.
If you are less than 55 years old:
- You may choose to defer your pension, meaning you can leave your pension in the PSSP fund until you are ready to receive it.
- You may transfer the commuted value of your accrued pension to a locked-in RRSP.
Note: If you are under the Rule of 80 and your age and years of pensionable service qualify you for retirement, you can begin to receive your pension.
Other termination options are:
Deferring your pension
Deferring your pension until a later date may be beneficial:
- if you think you may return to employment with another employer participating in the PSSP, or
- if you would prefer to receive your pension at a later date.
Transferring your pension
You may transfer your service to another pension plan if that plan has a reciprocal transfer agreement with the PSSP. For more information on reciprocal transfer agreements, please see our reciprocal transfer agreements page.
Refund of contributions
In certain circumstances, if you stopped working and you are not vested, you may apply for a refund of your contributions and elect one of the following options:
- A refund of your contributions plus interest and income tax will be deducted;
- A transfer of your contributions plus interest to an RRSP, and income tax will not be withheld.
Note: Repayment of Refunds – should you become re-employed with a PSSP employer after you received a refund of contributions, you may elect to purchase your previously refunded service. The Canada Revenue Agency (CRA) has imposed two rules regarding the source of the funds to repay the refund:
- If the original refund was transferred to a locked-in plan, the repayment must be returned from an RRSP or other tax-sheltered vehicle.
- If you were not vested at the time of the original refund, the funds can come from any source, that is, they do not have to be transferred from an RRSP.
You will be required to pay interest in addition to the amount you received as a refund. All of your pensionable service will be reinstated. Please check with the CRA regarding tax deduction rules.