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Transfer Value... buying an annuity?

ballz

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Hello all,

Never seen this option before... I was always told that, as I am under 50 and not entitled to an immediate annuity, my pension options are:

1. Deferred annuity, starting at age 55.
2. Deferred annuity, starting at age 60.
3. Take the transfer value... inside/outside limits, all that jazz.

However, using the tools from the Pension centre's website, it appears that a sub-option of the transfer value is that you can purchase an annuity from a financial institution. Does anybody know anything about this option?

My primary question is... can I use the entire TV to buy an annuity, and then it only gets taxed as it is paid out to me? This option could change my tax planning substantially.
 

dapaterson

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From what I understand (RBC option 2 below) purchasing an annuity similar to what you'd otherwise receive as a pension can be transferred without tax implications.

However, I am unclear on what the payout rules for the annuity would be - you'd have to check with the financial institution. If it would deliver similar benefits in a similar timeframe, the additional benefits of indexing plus the ability to be covered with medical / dental insurance once you start receipt on the annuity (paid 50/50, individual and government) may make a deferred annuity worthwhile.

 

brihard

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Talk with a financial planner, and make sure you look into what happens with the annuity when you kick the bucket- consider how important it is to your estate planning to have assets for your kids. An annuity might cease to exist when you do.
 

hattrick72

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Are you releasing early? I thought all CAF pension options were immediate annuities?

IMO the lump sum buyout is far too low when you consider the current interest rates.
 

dapaterson

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Transfer value calculations include interest rates as a factor.
 
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