Pension buybacks allow eligible Canadians to purchase years of service for periods when they were not participating in their employer’s pension plan. 

Advantages and disadvantages of a pension buyback

There are some things to consider when deciding if participating in a pension buyback service is right for you.

Potential advantages: 

• The opportunity for increased pension income at retirement, or the potential to retire earlier.
• A fixed income stream during retirement, with less longevity risk.
• The potential for increased creditor protection if you have a registered pension plan (RPP)
• The potential opportunity for a tax deduction depends on how the buyback is funded.

Potential disadvantages:

• May reduce your RRSP contribution room.
• Limited access to the pension funds in case of an emergency (compared to RRSP funds that are eligible for withdrawal).
• Limited estate planning options.
• The contributed capital may perform differently within the pension fund compared to the increased income stream from the pension buyback.

Since the cost of a pension buyback is specific to each person, it is best to contact your pension provider directly. They will also be able to provide specifics regarding tax implications.

Request a pension buyback with Wealthsimple

To request a pension buyback, contact our support team. They will need the following to assist with your request:

• A T2033 form that has been filled out and signed by you and your pension provider.
  In some cases, your pension provider will provide you with a pension buyback invoice that contains the same information as a T2033.

• A locked-in agreement from your pension provider
  This is only if the funds are coming from a LIRA account.

Once the paperwork has been received by our support team, our back office will review the documents and issue a cheque to your pension provider.