Page 138 - A Canuck's Guide to Financial Literacy 2020

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inflation. The purpose of indexing is to help ensure that the member's income
increases with inflation.

Before you decide what option, you should take, make sure you speak to a financial
advisor in order to determine which choice is right for you.

Defined Benefit Options at Retirement

At retirement, plan members will be given pension documents stating the guaranteed life
income that they'll receive in retirement plus they'd have to make decisions on important
issues. Below are two common key issues that defined benefit plan members might
encounter.

Single vs Joint Pension

Under current pension legislation, your spouse has a right to your pension which as a result,
you pension will be defaulted to a "joint-pension" with survivorship. If you were to pass away
during retirement, your spouse would be entitled to a receive a certain percentage of your
pension. You would have the option to decide what percentage this would be. (100%, 75%,
60%, 50% etc). Joint pensions usually pay a lower amount than single pensions. Spouses
can waive their right to the joint pension by signing a waiver in which it will default to a
single pension with a higher amount.

Guarantee Period

In a defined benefit plan, you will have the option to select your guarantee period. The
guarantee period, 5, 10 or 15 years mean that your payments are guaranteed for at least
that long, even if you die before the guarantee period ends. The longer the guarantee
period, the lower the annual income will be. Your decision should be based on your
expected life expectancy.