Leaving a Job? Your Pension Options Explained

A guide to your options when you leave an employer pension plan.

Why it matters

When you leave a job before retirement, you’ll get a statement with a deadline to decide what happens to your pension. It’s often one of the largest sums you’ll ever decide on.

• $1,508 a month is the most anyone starting CPP at 65 can receive in 2026.
• $925 a month is the average new CPP pension at 65, so a workplace pension matters.
• Age 71 is when locked-in pension money must start paying you an income.

Sources: Service Canada, CPP maximum and average benefits, 2026; Pension Benefits Act (New Brunswick).

Your main options

Leave it in the plan

Take a deferred pension from your former employer when you retire.

Transfer the value

Move the lump-sum value to a Locked-In Retirement Account (LIRA) you control.

Move to a new plan

If your new employer’s plan accepts transfers, you may be able to move it there.

Things to weigh

1. Guarantees. A defined benefit pension pays a set income for life and may include indexing and survivor benefits.
2. Control. A LIRA lets you choose the investments and how they’re managed.
3. Tax. Any amount over the tax-sheltered transfer limit is paid to you in cash and taxed.

Have a defined contribution plan? The money in your account can usually move straight to a LIRA, with no commuted value to calculate.

From LIRA to income

• Now: Grow in a LIRA. Tax-sheltered growth, invested your way. Withdrawals aren’t allowed in most cases.
• When ready: Convert to a LIF. Draw income within a yearly minimum and maximum.
• NB rules: Transfer some out. A one-time move to a RRIF of up to three years’ maximum or 25%, whichever is less.
• By 71: Income starts. A LIRA must be converted by the end of the year you turn 71.

Unlocking options

Locked-in money is meant to last through retirement, but the rules allow access in some cases.

• Small balances. Small locked-in balances may be unlocked in full.
• Shortened life. Funds may be withdrawn if a doctor confirms a shortened life expectancy.
• Leaving Canada. People who have become non-residents may be able to unlock.

Rules follow the plan. Locked-in money follows the pension law of the original plan, which may be federal or another province’s, not the province you live in.

Getting started checklist

• Find the deadline on your termination statement.
• Compare the deferred pension with the commuted value.
• Check the survivor and indexing benefits you’d give up.
• Ask how much of a transfer would be taxable.
• Name a beneficiary on your LIRA.
• See how it fits with your RRSP and TFSA.

Don’t forget your benefits

Leaving a job can also end your group life, health and disability coverage. Plan for these at the same time.

• Group life: Many plans let you convert to an individual policy within a short window, without medical questions.
• Health and dental: An individual plan can replace workplace coverage, especially if you’re starting a business.

Your next steps

1. Get your termination statement and options package.
2. Bring it to a meeting with me.
3. Decide before the deadline.
4. Set up your LIRA, or confirm your deferred pension.

Don’t let the deadline pass. If you don’t choose in time, the plan may choose for you, usually leaving the money as a deferred pension.

Let’s review your options

Bring your pension statement and I’ll walk you through what each choice means for your retirement.

Book a conversation with Michael, or call the office at 506-406-6100 (cell 506-440-6196). Email: [email protected]. Ask for a printed copy of this brochure at your next meeting.

For general information only; not tax or legal advice. Pension and unlocking rules depend on the law that governs your plan and can change. We’ll review the details that apply to you together.