Commuted Value

Compare taking the commuted value of your defined benefit pension to taking a lifetime pension.
Alberta
Taxable income (maximum value $1,000,000)
100,000
Info
Current age
55
Info
Commuted Value
Commuted value (before taxes)
A A
800,000
Info
Monthly pension amount
3,500
Info
Annual pension B B
42,000
Present value factor C C
10.4
Info
Maximum transfer value to LIF/LIRA (B times C) D D
436,800
Info
Taxable cash (A minus D) E E
363,200
Info
RRSP contribution
F F
50,000
Info
Taxable amount (E minus F) G G
313,200
Less taxes H H
158,696
After-tax amount (G minus H) I I
154,504
Commuted value (after taxes) (D plus I) J J
591,304
RRSP contribution K K
Commuted value & RRSP contribution (J plus K) L L
Lifetime Pension
Monthly pension amount
3,500
Pension received at start or end of month?
Index to inflation of (maximum value %)
2.00%
Pension paid for how many years?
25
Rate of return (maximum value %)
5.00%
Info
Rate of return
This rate is used to calculate the present value of the monthly pension payments.
Lump sum (present value) of lifetime pension
740,315
Info
Lump sum (present value)
This is the present value of the monthly pension payments.

Results
Commuted value (after taxes)
Lump sum (present value) of lifetime pension


 
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Assumptions
Calculations use marginal tax rates as of . Rates take all federal and provincial taxes and surtaxes into account and the basic personal tax credit. The present value factor is based on age and is defined by the Canadian Income Tax Act.

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