Lump-sum pension payments
You may be able to receive a lump-sum payment in lieu of a monthly pension. Here's what you need to know about eligibility, tax considerations and more.
If you leave your job at WorkSafeBC before you turn 55, you have several options for the contributions you’ve already made to the plan.
One option is to transfer your pension’s commuted value (a lump-sum payment that equals the current value of your future pension at retirement) to a registered retirement savings vehicle, such as a LIRA (locked-in retirement account) or another eligible retirement plan.
If you choose this option, the Income Tax Act limits the amount that you can transfer to a registered retirement vehicle. This amount may be locked in. Any amount over this limit is paid to you in cash with tax withheld.
The value of these amounts is shown on your Termination selection statement, which you will receive when you end your job at WorkSafeBC. The amount of the commuted value is guaranteed for a limited time period. If, after the guarantee date, you are still eligible to receive a commuted value, you must re-apply and we will recalculate the commuted value for you. It may be lower or higher than the original commuted value, depending on changes in interest rates since the original calculation.
Transferring the locked-in payment
You can only transfer your commuted value of the deferred pension benefit to one financial institution. This financial institution must complete and sign a section of the Termination selection statement. You must submit the completed statement to the pension plan so that we can transfer the locked-in portion of your pension benefit.
Income tax deducted from cash payment
We will deduct income tax from the cash payment portion of the commuted value that is not transferred to a registered retirement savings vehicle. If this applies to you, we will deduct tax at the following rates for Canadian residents:
- 10 per cent for payments of $5,000 or less
- 20 per cent for payments of $5,000.01 to $15,000
- 30 per cent for payments of $15,000.01 or more
If you are not a Canadian resident, the amount of tax we deduct is based on your country of residency (25 per cent is common). Contact the plan for more information.
We will send you a cheque for the cash payment portion of the commuted value of your monthly pension once we receive all required documentation.