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· Registered
11,330 Posts
Perhaps you did not understand what the complain was?
... why is that a complaint when you're in control of "when you want to retire" or "desist contributing to the pension"? I can see a complain or a valid one if you're not in control of your retirement date. See below for explanation.

Option One
Retire at normal retirement age in the private pension plan and collect pension.
... no, you can get the boot from your employer anytime so what's a "normal" retirement age? Moreover, even you do, doesn't mean you can't collect your private pension ... just that you have to follow the pension rules to collect it at age 65 at earliest say. The public sector has an even lower age of 55 + years of service (for example).

Option Two
Continue working for five more years and pay thousands a year into the private pension each year then retire five years later.
... if you choose to "work" as you enjoy it, then well, you have to pay into it if the pension plan says so. Besides, you're earning pension credits, no? I mean you can't have your icing and cake at the same time. Being employed but want to retire aka stop working at the same time so you can collect your pension early.

Regardless of the option chosen, the private pension pays $x each month. The only difference is the $x being paid cost 5 x the thousands of dollars contributions more.
...well, those are the rules. No one says you have to work that extra 5 years and contribute that extra 5 years either.

For someone funding their retirement from their RRSP, it would be like seeing all the investments bought in the five years of extra work being a total loss (i.e. RRSP value five years later is the same despite during the five years of contributions).

... you can't make a comparison between an RRSP (individual retirement plan) and a private pension (your employer's retirement plan). The former you're in control, the latter you ain't.

· Registered
4,297 Posts
The private DB pension that I belonged to paid out at age 55, albeit at a reduced amount. Full payout at 62. If you went before 62 the discount was either 5 percent/year or a reduced 3 percent/year based on service years plus age. Fully funded by the employer but only a 1 percent formula. Plus some optional employee/er matching add ons to pay for extras such as indexing, 100percent spouse, etc.

The employer changed the plan in 2000 to enhance the plan, to reflect earlier retirement, and provide optional matching for complementary enhancements.

They had to make significant additional payments to the DB during the mid 2000's to bring to plan up to a fully funded basis. Those who had the option of switching for DB to DC the the time of the 2000 plan enhancement and invested their commuted value did not do very well as I recall.

· Registered
3,988 Posts
Ya, age 65 seems "normal" for the most part.
My dad retired at age 58/59 many years ago, he actually wanted to retire around 54/55. He was told that was considered early by the financial advisor. My dad asked what was considered 'normal', and back then they said 65, because it was based on when most of your government benefits (CPP, OAS, and GIS if applicable) would kick in without penalty. He was told he wouldn't get the full amount. My dad said if that's the reason, he didn't care to retire at the normal time. He was a business owner, so had minimal CPP (I think he might get a couple hundred a month now), and he would get a reduction for the OAS anyways because he immigrated to Canada as an adult.

He pretty much said, I don't care what normal is, he just wanted to know if he had enough money to do what he wanted. He had enough at 54/55 but did not retire because I was the wild card (and wild child) and was still in high school. He wasn't fully confident that I would launch or have to relaunch based on my teenage behaviors. He retired the year I got accepted into my facility and was pretty sure that was going to study to get through.

However, it was still considered 'early'. I think normal is based on that a majority of people require full government benefits for their retirement numbers. We just got our base financial retirement plan done, and they told us not to worry about CPP, OAS as it wasn't needed in our numbers, they also said that I could retire with a reduced pension at 55 as our other savings was more than enough.

I have a lot of collegues who make more than me, and say that can't afford any reduction and will go to the end until they get their full pensions.
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