It's difficult to think about what will happen to your loved ones after you pass away. One thing you may want to know is what happens to your pension. We're here to make sure your wishes are carried out. In this section, we will look at what happens if you should pass away before you begin collecting your pension.
It's very important we are contacted as soon as possible after your death. Once we have the documentation we need, we can tell the people who are entitled to receive a benefit about their options.
What those options might be depends on whether or not you were vested at the time you passed away at what pension option you've chosen.
Your spouse or partner will be entitled to a refund of your LAPP pension contributions, plus interest.
If you do not have a spouse or partner (or if your spouse or partner has signed a waiver giving up the right to a benefit if you pass away before retirement), then your chosen beneficiaries will be entitled to your contributions, plus interest. Please note the waiver can be completed or revoked by your spouse or partner at any time, once again entitling them to your contributions plus interest.
If you don't have a beneficiary, your contributions and interest will be paid to your estate.
| Relationship | Entitlement |
|---|---|
| Spouse or partner (no pre-retirement death waiver) |
Refund of member contributions, plus interest |
| Beneficiary (no pension partner, or spouse/partner has waived benefit) | Refund of member contributions, plus interest |
Your spouse or partner will be entitled to a monthly pension for life or a one-time payment based on the commuted value of the pension.
The monthly pension will continue even if your pension partner is working remarries or moves outside Canada. Commuted value lump-sums are normally transferred to a Locked-In Retirement Account (LIRA). Any non-locked funds are paid as a taxable cash lump-sum payment or to a Registered Retirement Savings Plan (RRSP).
Because there are limits to the amount of funds from a pension payout that you are allowed to tax shelter, your payout may also contain some funds known as tax rule excess that you have to take as taxable cash.
LIRAs have strict rules about how and when the funds within them can be accessed. Normally, money cannot be taken from a LIRA until the owner reaches age 50, but you can get more details about converting LIRA funds from the Government of Alberta Private Sector Pensions page.
If you don't have a spouse or partner (or if your spouse or partner has signed a waiver giving up the right to a benefit if you pass away before retirement), then your chosen beneficiaries will be entitled to a one-time payment based on the commuted value of the pension.
If you don't have a beneficiary, the benefit will be paid to your estate.
| Relationship | Entitlement |
|---|---|
| Spouse or partner (no waiver) |
Pension for life or Commuted value |
| Beneficiary (no spouse or partner, or spouse or partner has waived benefit) |
Commuted value |
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