Transition Planning

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Transition Planning
John* is 48 years old and was well on his way to meeting his retirement goals until last month, when his employer announced massive layoffs. The company is being generous with its employees but John is too young and doesn't have the resources to retire now. He knows that he will have to keep working and he has started to line up some interviews. He feels that he should have no trouble getting a new job within the next few months, but his income will fall and his future pension benefits will not amount to what he once hoped they would.

John will be receiving several lump sum payments from his employer and he is not sure how to deal with them. He heard that he may be able to roll some of this into an RRSP and would like his Investment Advisor's advice as to what his options are. John is also a member of the employer's group RRSP and deferred profit sharing plan (DPSP) and thinks he can transfer that money to a personal account.

John has group life, disability and health insurance through work that will cease after he leaves. He will need to assess whether or not his personal insurance program coverage will be adequate.

His biggest decision is with his pension plan. John can do nothing and receive a pension at age 65 or he can transfer a lump sum into a locked-in RRSP. He has no idea which option is better and he needs his Investment Advisor's help to make a decision.

The following is a summary of John's severance package:

• A Retiring Allowance representing one year's salary
• Payment in lieu of a notice period
• Pay for unused vacation days
• A group RRSP lump sum
• A DPSP lump sum
• Term life insurance and accidental death and dismemberment coverage. John can convert this to a private policy within 30 days of his termination
• His monthly long-term disability coverage that will cease on his date of termination
• Health and dental coverage that will end on his last day of work.
• John's pension options are a deferred income per year stating at age 65 or a lump sum that can be transferred into a locked-in RRSP

Addressing the Situation
You, like John , may face job transition planning issues. Let's take a look at some solutions that can help.

* Fictional characters. Any similarities between them and actual clients of BMO Nesbitt Burns Inc. are accidental.