­­­­In our latest episode of the Millennial Money Canada Podcast, Sam and I tackled an important question:

👉 What are your options for your company pension plan when you leave your job or retire?

Whether you have a Defined Contribution (DC) Plan, or a Defined Benefit (DB) Plan, making the right decision can save you thousands in taxes and optimize your retirement income.

Here’s a breakdown of the key topics we covered:

1. Understanding Your Pension Plan & Your Options When You Leave

When you leave an employer—whether for a new job, self-employment, or retirement—you typically have three choices:

1. Leave it with your employer’s pension provider – Your funds will continue to be invested, and you can start withdrawals at retirement.
2. Transfer to a LIRA (Locked-In Retirement Account) – This gives you investment control but has withdrawal restrictions until retirement.
3. Transfer to your new employer’s pension plan – If your new job offers a pension, you may be able to roll over your old plan.

2. Retirement Income Planning: How to Withdraw Your Savings Tax-Efficiently

Once you reach retirement, your LIRA and RRSP must be converted into income-generating accounts:

LIRA → Life Income Fund (LIF) – Minimum and maximum annual withdrawals apply.
RRSP → Registered Retirement Income Fund (RRIF) – Minimum withdrawals required but no upper limit.

Key Strategies to Optimize Withdrawals:

1. Deferring CPP & OAS: Waiting until 70 can increase your CPP pension payouts by up to 42% and 36% respectively.
2. Pension Income Splitting: If you're married, you can shift up to 50% of your pension income to your spouse to reduce taxes.
3. Strategic Withdrawals: Consider withdrawing from registered accounts first (RRSP, LIF) before touching your TFSA and non-registered investments to optimize taxes.
4. Managing Your Tax Brackets: Avoid pushing yourself into a higher tax bracket with large withdrawals if possible.

3. Avoiding the Massive Tax Hit at Death

One of the biggest mistakes people make is deferring RRSP withdrawals too long. If you pass away with a large RRSP balance and there is no spousal rollover available, your entire account becomes taxable potentially at the highest marginal tax rate.

How to avoid this:
Start withdrawing RRSPs earlier, even if you don’t need the income, to spread out the tax hit.
Use a life insurance policy to cover potential estate taxes.
Preserve TFSAs and non-registered accounts for inheritance, as they are more tax-efficient.

Final Takeaway: Retirement Planning is About More Than Just Saving

Knowing how to withdraw your money tax-efficiently can add years to your retirement savings and reduce your tax bill significantly

🎙️ Listen to the full episode here:

­Listen to the episode!­

📖 If you’re approaching retirement or just want to ensure you’re on track, let’s chat!

­Book a free consultation­

Enjoy your week!‍

Guillaume Girard, CFA CFP | Sam Lichtman, CFP

‍Millen Wealth Advisors

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