Recently, it was announced that the Provincial Government was ordering layoffs of approximately 600-700 workers at Manitoba Hydro as the crown corporation looks to find cost savings during the Covid-19 Pandemic. This is the unfortunate reality that is facing many people during this difficult time and is also putting people in a position where an important financial decision needs to be made with their pension plan. There are a number of options available to individuals who lose their employment and who have contributed to a pension plan, and given the recent events I wanted to explore those options as it relates to the Civil Service Superannuation Board (CSSB). These options will be more specific to this pension but could relate to others as well. As with anything in Financial Planning, the decision needs to be made based on your own individual needs and goals, there is no one size fits all. So, what options do you need to explore?
1) Deferred Pension– If you are under the age of 55 you may be able to choose to leave your money in the CSSB pension and simply defer it until you reach retirement age. You will receive cost of living adjustments to your estimated benefit and can start collecting when you retire.
2) Transfer to Another Pension Plan –If you are commencing work somewhere else you may be able to transfer your pension plan from the CSSB to your new plan, if they will accept the transfer. This will generally provide you with credited service from your time in the CSSB plan and potentially keep your long-term plan on track. CSSB has Reciprocal Transfer Agreements in place with many pension plans in Manitoba and across the country and so there may be added benefits in addition to just a straight transfer. For many, this is a good option which will help keep their retirement plan on track if available to them.
3) Transfer to a Personal Plan –The third basic option available to you would be to transfer your funds out of the plans into investments in your own name. The value of your pension will be provided to you and the funds can be transferred into a locked in retirement account or a LIRA through most financial institutions. There may be excess funds as well which will need to be initially transferred into non-registered funds or could be transferred into an RRSP if you have contribution room available, likewise with a TFSA. Locked in Funds can be drawn on at age 55 or later and will need to be converted into a Life Income fund or a LIF account when you plan to do so. What is important to note about excess funds that are not transferred to locked in accounts is that they are subject to income tax and so utilizing the tax benefits of RRSP contributions may be extremely beneficial. 
The question becomes, what is the best option for you and your family? That depends on a great many factors including your age, when you want to retire, whether or not you have a job prospect currently on the table, your family situation and many more. In order to effectively evaluate which option is best I would suggest that you need an updated financial projection completed. The decision you make today could have lasting impact for the rest of your life. It’s important to evaluate how each option will not only impact you today but decades down the road and a proper Financial Plan will allow you the opportunity to make an educated decision. At Endeavour Wealth Management we have extensive experience in working with the CSSB pension plan and other defined benefit plans just like it. We would be happy to assist anyone with questions and evaluating your options. Unfortunately, there are likely to be many more people laid off before the end of this pandemic and so now more than ever we are ready to serve the community.
-Grant White, CIM®, CFP®
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager for Industrial Alliance Securities Inc. (iA Securities) and does not necessarily reflect the opinion of iA Securities. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.