With so many of our brothers and sisters taking advantage of the current pension, we are often asked for our opinion as to whether they should stay with the pension plan or take their commuted value and manage their own investments.While we feel there are obvious advantages to staying with our pension plan, it is a very personal decision that only you can decide with some very sound financial advice.Take all of your financial information to a trusted personal financial advisor and have them evaluate your information.In fact, we strongly advise getting the opinion of at least two or even three advisors.
Gerry LaRouche, a former Teck employee and currently associated with The Affolter Financial Group,has written a paper expressing his own personal views that has some good, sound information for you to consider.I will reprint this paper in full for anyone who would like a copy or I can e-mail the article to you.I have reprinted excerpts of the article below for you to consider:
“If you select the boy-out option, you will be left to manage all those investment accounts and your retirement income.This will become your self-directed registered income plan.Unless you have the knowledge and experience, it is strongly suggested that you let a qualified financial advisor do it for you.The annual fee to manage your investments can range from 1 - 3% of your assets.
The Company provided DB retirees with Medical, Extended Health and Life Insurance benefits.Under the buy-out option, the right to such benefits is lost.This leaves the pensioner open to significant risks of covering the cost of long-term care.During the advanced ages of retirees and spouses, you are likely to require more medical attention and your health costs are likely to keep on rising and become an important part of your cost of living.Those costs of about $2000 a year are expected to rise ..
There are some cases where the buy-out option may be recommended.For example, someone in poor health and expecting a short life expectancy.Under the DB plan, the surviving spouse will receive only 60% of the pension income.Under the buy-out, all the assets in the LIRA, RRIF and RRSP are transferred to the surviving spouse tax exempt.It’s common knowledge among pension experts that unless you don’t expect to survive to age 55, you are probably better off leaving your pension in the DB plan.
Selecting your pension plan is a complex and critical decision to make.It may be the most expensive decision that will affect you and your spouse for the rest of your life.The majority of people are unaware of the risk and pitfalls that lay ahead of them during the 30 - 40 years of their retirement where more than half of their income will depend on the decision they make today.Many important issues need to be addressed: retirement objectives, financial and personal circumstances, etc.A careful look at your risk management and tax planning options should be considered in this decision ...
A study done by a U.S. firm ... indicates that people are not doing a good job managing their own investments in a pension plan. ... and confirms that buy-out pensions provide the retiree with only 25 - 30% of their pre-retirement salaries compared with the 60 - 70% income replacement enjoyed by those enrolled in a DB plan.
Pension income from the DB plan can be split up to 50% with your spouse.Pension income received from the buy-out plan can only be split after you have reached age 65.Being able to split your pension with a lower income spouse can lower your income taxes.Also, the DB plan allows you to claim the pension tax credit which totals about $700 a year for the couple.Under the buy-out plan, you have to wait until age 65 before you can make the same claim.
The decision to convert your pension is a call to make only with a qualified financial advisor.It is recommended that you consult with at lease three professional financial advisors to ensure an unbiased recommendation free of any conflicts of interest..”
Please let me know if you want full copy of this report.
Newspaper 
