Pension Transfer Options in Canada 2025

Updated March 2025 · 9 min read

When you leave a pension plan — whether by changing jobs, moving provinces, or transitioning from the public to private sector — you face decisions about what happens to your pension credits. Canada has several mechanisms for transferring pension entitlements, each with different rules and implications. This guide covers the main options.

Option 1: Deferred Pension (Leave It Where It Is)

If you leave an employer and are vested (typically 2+ years of membership), you can leave your pension entitlement with the original plan. It's called a "deferred vested pension" and will be paid starting at the plan's normal retirement age (usually 65, or earlier with reductions).

Advantages:

• No immediate action required
• Preserves indexation benefits (for indexed plans)
• Plan manages the investment risk

Disadvantages:

• No further accrual of service
• Must track multiple pensions at retirement
• Early retirement options may be limited for deferred members

Option 2: Commuted Value Transfer to LIRA

Transfer the present value of your deferred pension to a Locked-In Retirement Account (LIRA). The funds are locked in under pension legislation until you reach the minimum unlocking age (typically 55) and must eventually provide retirement income.

Advantages: Investment control, portability, potential estate value
Disadvantages: Gives up plan's indexation, investment risk falls on you, locked in until 55

Option 3: Transfer to the New Employer's Plan

If your new employer has a pension plan with a reciprocal transfer agreement, you may be able to transfer your pension credits directly to the new plan. This is sometimes called a "portability transfer" or "reciprocal agreement transfer."

Reciprocal agreements exist between:

• Many Canadian public sector plans (federal PSPP ↔ some provincial plans)
• OTPP ↔ other Ontario education-related plans
• Some provincial plans with cross-provincial agreements

Under a reciprocal transfer, the commuted value of your credits in Plan A is transferred to Plan B, and converted to credited service in Plan B using Plan B's actuarial factors. The service credits you receive in the new plan may be less than the years you had in the old plan (because the new plan may be more valuable per year of service).

Option 4: Portability Credits Without Full Transfer

Some plans have "portability" provisions where accumulated pension credits are recognized in the new plan without a full financial transfer. This is less common and typically exists within the same sector (e.g., moving between Ontario school boards — OTPP credits follow you automatically).

Cross-Provincial Pension Transfers

Moving from one province to another doesn't automatically transfer pension rights. The pension legislation of the original jurisdiction continues to govern your LIRA or deferred pension even after you move. If you have an Ontario LIRA and move to BC, Ontario rules still apply to that LIRA.

However, some provinces have entered reciprocal agreements for specific plans. The Multilateral Agreement Respecting Pension Plans (MAPP) allows some portability between participating plans. Always check with both the original plan and the new plan before assuming transfers are possible.

Federal to Provincial (or Vice Versa) Transfers

Transfers between federally regulated pension plans (e.g., federal PSPP) and provincially regulated plans require care. The pension legislation that governs the funds changes with the transfer. Ensure the new plan specifically accepts such transfers and understand how your service will be credited.

Timing Considerations for Transfers

• Interest rates affect the commuted value — higher rates mean lower CV and potentially less service credit in the new plan
• There are typically time limits for requesting transfers (often 6–24 months after leaving the plan)
• Transfers to a new employer's plan may require you to still meet vesting requirements in the new plan

When to Choose Each Option

• Deferred pension: Best for indexed plans with strong security, especially if you're within 10–15 years of retirement
• LIRA transfer: Best when you're young, plan is not indexed, or you want investment control
• Plan-to-plan transfer: Best when reciprocal agreement exists and new plan is comparable in quality

Professional Advice

Pension transfer decisions are complex and often irreversible. A fee-only financial planner with pension expertise should analyze your specific situation before you elect any transfer. The decision involves pension plan terms, interest rates, health, tax, and long-term income projections.