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Facing a shortened life expectancy

If you face a shortened life expectancy, you may be able to receive a lump-sum benefit in lieu of further pension payments. The benefit is the present value of four months' pension, plus the value of any death benefit that may be payable.

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Overview

To qualify for a shortened life expectancy benefit, you need to verify a life expectancy of less than two years. If you have an eligible spouse, he or she must consent to the withdrawal because a spouse forfeits the right to survivor benefits if you take a shortened life expectancy benefit. The value of the survivor pension is included in the benefit you receive.

Once you receive the benefit, no further entitlements are provided under the plan, even if you live longer than expected. If you die before you receive a shortened life benefit, the plan's usual post-retirement death benefits will be paid instead.

If someone is contacting us on your behalf, you'll need to provide one of these two documents:

  • Power of Attorney for Property (if you cannot personally sign the application)
  • Written authorization (to release your personal information to a third party assisting with the application process)

How to qualify and apply for benefits 

To qualify for shortened life expectancy benefits, you must provide complete medical evidence, from a doctor licensed in Canada, of a life expectancy of less than two years. Spousal permission is also needed because a spouse forfeits the right to survivor benefits if you choose this option.

To apply for shortened life expectancy benefits, you must complete and return the forms provided in the: 

Before you apply

Contact us for an estimate of the payment you'll receive and the monthly survivor pension your eligible spouse or dependent children will forfeit if you take a shortened life expectancy benefit.

Disabled children

If an eligible child is disabled, let us know as soon as possible as it may increase the value of your shortened life expectancy benefit.

Payment options and tax implications

Shortened life expectancy benefits can be:

  • Taken in cash (payable in the form of a cheque or direct deposit to your bank account)
  • Transferred to an RRSP, up until the end of the calendar year in which you turn age 71
  • Transferred to a Registered Retirement Income Fund (RRIF)
  • A combination of these options

Cash payments are subject to withholding tax and may require additional tax payments when you file your income tax return.

If you choose to transfer funds to an RRSP or RRIF, it's important to understand that the Income Tax Act limits the amount that can be transferred on a tax-sheltered basis. Any excess amounts are paid in cash and subject to withholding tax.