There is no guarantee that you will spend the rest of your active work days with MTS. Not to worry. The benefit you earn as a member of the MTS Pension Plan is yours to keep, regardless of whether you retire from the Company or not. If you leave MTS before you complete two full years of Continuous Service, you will receive a lump-sum refund of the benefit you have earned as a Plan member. You can take this money in cash, less withholding tax, or you can continue to defer tax on this money by transferring it directly to a personal Registered Retirement Savings Plan (RRSP). The choice is yours. If you leave the Company after completing two full years of Continuous Service, you may elect one of the following options with respect to the benefit you have earned as a Plan member.
- use the value of your vested benefit to purchase an immediate or deferred annuity;
- transfer the value of your vested benefit to a Locked-in Retirement Account (LIRA) (formerly known as a Locked-in RRSP);
- transfer the value of your vested benefit to a Life Income Fund (LIF);
- transfer the value of your vested benefit to your new employer’s pension plan, provided that this plan permits transfers (Note: plan-to-plan transfers remain locked-in under current legislation); or leave your benefit in the Plan until you qualify for retirement. If you elect to receive your deferred pension prior to age 65, early retirement reductions may apply.
Buyer Beware if you are considering transferring funds out of the MTS Pension Plan.
A Quick Look At Your Options
Upon completion of two full years of Continuous Service, your pension benefits are “locked in” under current pension legislation. In other words, you can’t cash this money out; you must use it to provide a retirement income beginning on, or sometime prior to December 1st in the year in which you turn 71. The following is a quick description of your available options.
|Annuity||Provides you with a level of guaranteed income payable for your lifetime.|
|LIRA (Locked-in Retirement Account) Formerly known as a Locked-in RRSP||Similar to a personal RRSP, a LIRA gives you control over your investments. However, unlike a personal RRSP, you cannot withdraw funds, even on a taxable basis. Locked-in funds transferred from a registered pension plan must be used to provide you with a retirement income and your financial institution will sign and agree to administer the funds accordingly. You may use your LIRA to purchase an annuity or transfer it to a Life Income Fund.|
|LIF (Life Income Fund)||Locked-in pension money can be transferred to a LIF between the ages of 55 and 71. A LIF allows you to withdraw income on a regular basis after you have reached a certain age. You continue to control the fund investments and you may decide how much you will withdraw in a given year (subject to certain minimum and maximum restrictions). For more information on LIFs, please speak with your financial advisor.|
We strongly recommend that you consult with an independent financial advisor before making your decision.
When employees terminate their employment or retire, they are faced with the decision about whether to keep their pension funds inside the Pension Plan or transfer the funds to a locked-in retirement vehicle. This is a difficult decision to make, and one that should not be made without receiving some sound advice. It may or may not be in your best interests to transfer your money out of the MTS Pension Plan once you are no longer an active employee. Everyone’s situation is different. However, before making this decision, we strongly suggest that you seek input not only from your financial advisor but from someone knowledgeable about income taxes. It is important that you be absolutely sure of your decision. Once the funds have been transferred out of the Plan, MTS and the MTS Pension Plan no longer guarantee or remain in any way responsible for your pension. Any financial losses that you might incur due to your or your financial adviser’s investment decisions are completely your responsibility.