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HOOPP

Leaving your HOOPP employer: example

Meet Joanne

Image of HOOPP member Joanne

Joanne knows she wants to retire at age 60. She has an important decision to make: should she keep her pension with HOOPP or transfer the commuted value of her pension to a locked-in account?

Age: 45 
Left HOOPP employer: March 31, 2023
Years of service: 12 
Average salary: $65,000

Let’s take a closer look at Joanne’s options:


Should Joanne remain a HOOPP member?

If Joanne keeps her pension with HOOPP, she is eligible to receive a monthly lifetime pension of $1,245 along with a bridge benefit of $55 per month that will be paid until she turns 65.

These amounts could grow with any approved cost of living adjustment (COLA) both before and after retirement. If COLA was provided at an average of 2.0% per year over 15 years, this could increase her lifetime pension to $1,665 per month and her bridge benefit to $75 per month by the time she retires at age 60.

She won’t be able to make any more contributions, but she knows her pension will be a secure source of income when she retires. In this scenario, Joanne would receive approximately $645,400 from her HOOPP pension over her lifetime, if she lives to age 85.

Could Joanne transfer the lump sum value of her HOOPP pension into a personal locked-in retirement account (LIRA) and still receive the same monthly income when she retires? It isn’t impossible, but it would be very difficult.

Should Joanne transfer to a locked-in account?

To receive a similar monthly income in retirement, Joanne would have to invest the funds in a LIRA, and save enough to purchase an indexed lifetime annuity for approximately $576,400 when she retires at age 60. The commuted value of Joanne’s HOOPP pension would be a starting point, but it wouldn’t be enough. To build her savings, Joanne would have to take on the responsibilities and risks that come with investing these funds until she retires. There are no guarantees she would be able to save enough or find an annuity that offers everything her HOOPP pension would.

Joanne's transfer value and savings gap

Joanne's challenges:

  • Being responsible for investment decisions
  • Paying commissions and fees
  • Finding an annuity with HOOPP-like benefits
  • Navigating volatile markets

If Joanne saves less than planned, or if she can’t find an annuity that offers equivalent benefits, her retirement will be impacted and she has increased the risk of outliving her savings.

* This represents Joanne’s total HOOPP transfer value of $130,800, where the full amount was locked in. Joanne would need to invest this amount over 15 years in preparation for retirement.

Joanne's decision

After reviewing her options, Joanne decides to keep her pension with HOOPP. She knows that her pension is secure and she will collect it for life. She also knows it could continue to grow through COLA, and survivor benefits are provided at no additional cost. She may also be able to combine her deferred pension with any new benefit if she returns to work for another HOOPP employer.

With all of the peace of mind her HOOPP pension offers, Joanne’s choice is clear.

  • Option 1: Remain a HOOPP member

    Should Joanne remain a HOOPP member?

    If Joanne keeps her pension with HOOPP, she is eligible to receive a monthly lifetime pension of $1,245 along with a bridge benefit of $55 per month that will be paid until she turns 65.

    These amounts could grow with any approved cost of living adjustment (COLA) both before and after retirement. If COLA was provided at an average of 2.0% per year over 15 years, this could increase her lifetime pension to $1,665 per month and her bridge benefit to $75 per month by the time she retires at age 60.

    She won’t be able to make any more contributions, but she knows her pension will be a secure source of income when she retires. In this scenario, Joanne would receive approximately $645,400 from her HOOPP pension over her lifetime, if she lives to age 85.

    Could Joanne transfer the lump sum value of her HOOPP pension into a personal locked-in retirement account (LIRA) and still receive the same monthly income when she retires? It isn’t impossible, but it would be very difficult.

  • Option 2: Transfer to a locked-in account

    Should Joanne transfer to a locked-in account?

    To receive a similar monthly income in retirement, Joanne would have to invest the funds in a LIRA, and save enough to purchase an indexed lifetime annuity for approximately $576,400 when she retires at age 60. The commuted value of Joanne’s HOOPP pension would be a starting point, but it wouldn’t be enough. To build her savings, Joanne would have to take on the responsibilities and risks that come with investing these funds until she retires. There are no guarantees she would be able to save enough or find an annuity that offers everything her HOOPP pension would.

    Joanne's transfer value and savings gap

    Joanne's challenges:

    • Being responsible for investment decisions
    • Paying commissions and fees
    • Finding an annuity with HOOPP-like benefits
    • Navigating volatile markets

    If Joanne saves less than planned, or if she can’t find an annuity that offers equivalent benefits, her retirement will be impacted and she has increased the risk of outliving her savings.

    * This represents Joanne’s total HOOPP transfer value of $130,800, where the full amount was locked in. Joanne would need to invest this amount over 15 years in preparation for retirement.

  • Joanne's decision

    Joanne's decision

    After reviewing her options, Joanne decides to keep her pension with HOOPP. She knows that her pension is secure and she will collect it for life. She also knows it could continue to grow through COLA, and survivor benefits are provided at no additional cost. She may also be able to combine her deferred pension with any new benefit if she returns to work for another HOOPP employer.

    With all of the peace of mind her HOOPP pension offers, Joanne’s choice is clear.

Joanne was developed as an example by HOOPP for illustrative purposes only. This example is based on the following main assumptions: 

  • In order to calculate a member’s commuted value, actuarial assumptions are used to estimate factors such as future interest and inflation rates, age at retirement, and life expectancy. HOOPP calculates commuted values in accordance with the HOOPP Plan Text, applicable legislation, and the Canadian Institute of Actuaries’ Standards of Practice for Pension Commuted Values.
  • Joanne’s termination date is March 31, 2023. Commuted value rates and calculation methods applied on this date of termination are in accordance with the Canadian Institute of Actuaries’ Standards of Practice for Pension Commuted Values.
  • Joanne’s pension (and any pension that is paid to her surviving spouse), is assumed to grow at a rate of 2% per year from her date of termination.
  • The discount rate used to price an annuity that is fully indexed to the year-over-year increase in the consumer price index (Canada) is assumed to be 0.99%. This discount rate is based on the CANSIM series V39057 as of December 31 2022 and the Canadian Institute of Actuaries’ Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Effective December 31, 2022, and Applicable to Valuations with Effective Dates on or after December 31, 2022, and no later than December 30, 2023.
  • It is assumed that Joanne is married at her date of retirement and the annuity she purchases provides a 66 2/3% survivor benefit to her spouse, similar to HOOPP. Joanne and her spouse are assumed to be the same age, and both have passed once she reaches age 85.
This document provides a simplified overview of HOOPP's benefits based on the terms of the HOOPP Plan Text at the time of publication. From time to time, HOOPP may amend the HOOPP Plan Text. In cases where the information provided in this document differs from that contained in the HOOPP Plan Text, the HOOPP Plan Text will govern. More details, including the full HOOPP Plan Text and a complete description of the Plan and its benefits, can be found on hoopp.com.