Commuted Value (CV) vs. Copycat Pension Analyzer

Leaving a defined benefit pension? Estimate the tax-deferred transfer limit and tax on the excess, then explore whether investing the lump sum could replicate your monthly pension. Start with the figures on your official pension statement.

Example values are prefilled. Change them to reflect your own pension; results update as you type.

Transfer and immediate tax

Quoted commuted value ($)

Use the lump sum from your pension termination statement; this tool does not calculate an actuarial CV.

Age at transfer: completed years

Additional completed months

Normalized annual lifetime pension ($)

For section 8517: unreduced lifetime pension, generally normalized to age 65. Exclude temporary bridge benefits. Ask the administrator; this is not necessarily your early-retirement pension.

Net contribution account, if known ($)

Use the administrator’s net contribution account, not your total payroll deductions. Zero means unknown / not applied. The minimum applies only to full settlement, assumed here.

Administrator’s tax-deferred limit, optional ($)

Leave blank to estimate using pension × age factor (or the higher net contribution account). A statement value overrides that estimate; enter zero if the confirmed limit is zero.

Other taxable income in transfer year ($)

Before the CV excess and the RRSP deduction below; include employment and other taxable income.

Available RRSP room to use on excess ($)

Assumes you contribute and deduct up to this available room in the transfer year. The excess remains reportable income; the deduction offsets it. Confirm actual room and any pension adjustment reversal.

Province of residence for 2026 taxNormally your December 31 province, not the pension’s jurisdiction. Territorial tax is not modelled.

Copycat pension assumptions

Gross monthly lifetime pension at start ($)

Actual pension at your chosen start age, after any early-retirement reduction. Exclude temporary bridge payments.

Pension start age

Compare through age

Annual nominal return, net of fees (%)

Constant return before and after retirement; investment outcomes are not guaranteed.

Annual pension increase after start (%)

Applied once each pension anniversary to both the pension and matching withdrawals. Zero represents an unindexed pension.

Your transfer estimate

$312,000Estimated amount eligible for a direct tax-deferred locked-in transfer

Age factor 10.4000 × $30,000 normalized annual pension, or the higher entered net contribution account. The actual transfer cannot exceed the commuted value.

Section 8517 prescribed limit: $312,000
Estimated eligible locked-in transfer: $312,000
Excess included in income, before RRSP deduction: $188,000
Excess contributed and deducted using RRSP room: $0
Net additional taxable income: $188,000
Estimated additional 2026 income tax: $83,296
Excess cash retained after contribution and tax: $104,704

Tax is the difference between estimated income tax with and without the net taxable excess, not a flat marginal-rate multiplication. It is not the institution’s withholding or the amount due on payment day; withholding is only a prepayment.

Keep the pension vs. build a copycat

Keep the DB pension

$2,500 / month

Gross lifetime income from age 65, increasing 2% each year under your assumption. $1,217,042 in gross payments through age 95. Payments can continue beyond this horizon while you live, subject to plan terms.

Self-funded copycat

Shortfall around age 83.5

Attempts the same gross monthly payments. Registered capital starts at $312,000 and grows to $461,836 at pension start under the assumed 4% net annual return.

Break-even annual nominal return, net of fees

5.726385%

Funds every indexed DB-matching monthly payment through age 95, with an estimated closing balance of $0 and no payment shortfall. Annual copycat paid matches DB pension due, and total copycat paid matches total DB pension paid.

Apply to update the chart and annual breakdown using the full-precision rate. The same constant effective annual return applies from transfer through the horizon, with equivalent monthly compounding and month-end withdrawals. This is a mathematical funding threshold, not a guaranteed or forecast investment return; existing withdrawal-limit and tax caveats still apply.

Accumulated DB payments vs. remaining CV balance

Total DB payments
Remaining CV balance

DB payments are cumulative gross pension payments, including assumed pension indexing but no interest or investment returns. CV balance is the remaining registered capital after investment returns and copycat withdrawals. Cumulative income and remaining capital are different measures, not an after-tax wealth comparison. Values match the annual breakdown.

Registered balance at age 95: $0

This gross-income illustration uses only the locked-in transfer plus excess sheltered in an RRSP. The $104,704 retained as cash is excluded, not lost. Mixing after-tax cash with pre-tax withdrawals would overstate a like-for-like gross pension comparison.

Not an annuity quote or a withdrawal permission check: LIF maximums and RRIF minimums are not enforced. Matching withdrawals may not be permitted. Constant returns omit sequence-of-returns risk; the model does not value survivor pensions, guarantees, bridge benefits, pre-retirement indexing or retiree health benefits. A self-funded balance is not guaranteed lifetime income.

My Scenarios

Annual breakdown by age

Nominal, before-tax amounts from transfer to the comparison horizon. Age is the end of each period; the transfer-to-pension-start period may include a partial year. The first pension payment year ends one year after pension start.

Reinvested return is investment growth retained in the registered portfolio before withdrawals, not an additional contribution or reinvested pension payment. Negative amounts are investment losses. Closing balance equals the previous balance plus return, less copycat payments. After depletion, copycat payments show only what the portfolio can actually fund; the DB pension due continues under your assumptions.

Total DB Pension Paid is the cumulative sum of gross monthly DB pension payments, including the assumed pension indexing but excluding interest and investment returns.

Annual pension income, cumulative DB pension payments excluding interest, actual and cumulative copycat payments, reinvested investment returns and remaining registered capital.
Year-end age	DB pension due	Total DB Pension Paid	Copycat paid	Total copycat paid	Reinvested return / loss	Closing balance
56	$0	$0	$0	$0	$12,480	$324,480
57	$0	$0	$0	$0	$12,979	$337,459
58	$0	$0	$0	$0	$13,498	$350,958
59	$0	$0	$0	$0	$14,038	$364,996
60	$0	$0	$0	$0	$14,600	$379,596
61	$0	$0	$0	$0	$15,184	$394,780
62	$0	$0	$0	$0	$15,791	$410,571
63	$0	$0	$0	$0	$16,423	$426,994
64	$0	$0	$0	$0	$17,080	$444,073
65	$0	$0	$0	$0	$17,763	$461,836
66	$30,000	$30,000	$30,000	$30,000	$17,927	$449,764
67	$30,600	$60,600	$30,600	$60,600	$17,434	$436,597
68	$31,212	$91,812	$31,212	$91,812	$16,896	$422,281
69	$31,836	$123,648	$31,836	$123,648	$16,312	$406,756
70	$32,473	$156,121	$32,473	$156,121	$15,679	$389,962
71	$33,122	$189,244	$33,122	$189,244	$14,996	$371,836
72	$33,785	$223,029	$33,785	$223,029	$14,258	$352,309
73	$34,461	$257,489	$34,461	$257,489	$13,465	$331,314
74	$35,150	$292,639	$35,150	$292,639	$12,613	$308,776
75	$35,853	$328,492	$35,853	$328,492	$11,698	$284,622
76	$36,570	$365,061	$36,570	$365,061	$10,719	$258,771
77	$37,301	$402,363	$37,301	$402,363	$9,672	$231,142
78	$38,047	$440,410	$38,047	$440,410	$8,553	$201,648
79	$38,808	$479,218	$38,808	$479,218	$7,359	$170,199
80	$39,584	$518,803	$39,584	$518,803	$6,087	$136,702
81	$40,376	$559,179	$40,376	$559,179	$4,733	$101,059
82	$41,184	$600,362	$41,184	$600,362	$3,293	$63,168
83	$42,007	$642,369	$42,007	$642,369	$1,762	$22,923
84	$42,847	$685,217	$23,207	$665,576	$284	$0
85	$43,704	$728,921	$0	$665,576	$0	$0
86	$44,578	$773,500	$0	$665,576	$0	$0
87	$45,470	$818,970	$0	$665,576	$0	$0
88	$46,379	$865,349	$0	$665,576	$0	$0
89	$47,307	$912,656	$0	$665,576	$0	$0
90	$48,253	$960,909	$0	$665,576	$0	$0
91	$49,218	$1,010,127	$0	$665,576	$0	$0
92	$50,203	$1,060,330	$0	$665,576	$0	$0
93	$51,207	$1,111,536	$0	$665,576	$0	$0
94	$52,231	$1,163,767	$0	$665,576	$0	$0
95	$53,275	$1,217,042	$0	$665,576	$0	$0

Before making an irreversible pension decision

Section 8517 is a federal income-tax transfer ceiling, not permission to commute a pension or a guarantee that the whole eligible amount must be locked in. This tool assumes full settlement of ordinary DB benefits and eligible direct transfers; plan terms and pension legislation determine availability, deadlines and the receiving locked-in vehicle. The administrator’s statement controls. Special rules for underfunded plans, excess contributions, partial transfers and ancillary benefits are not calculated.

The age factor uses age at transfer, including entered months, and interpolates only where the next age factor is higher. The normalized lifetime pension excludes temporary bridges and early-retirement reductions. If unsure about the normalized pension or net contribution account, use the administrator’s confirmed limit rather than treating this estimate as authoritative.

Tax estimates use 2026 federal and provincial schedules and basic / age credits from the existing retirement model. No pension income credit is assigned to the lump sum. Other credits, deductions, pension splitting, OAS recovery tax, income-tested benefits and payroll contributions are excluded. RRSP deductions require actual available room and eligibility; do not assume a pension adjustment reversal is available immediately. A qualifying direct transfer within the prescribed limit does not use ordinary RRSP contribution room. It is tax-deferred, not tax-free: later registered withdrawals are generally taxable.

Copycat withdrawals occur at month-end, after monthly growth, and increase on each pension anniversary. Returns are nominal and net of fees. All figures are future nominal CAD, not inflation-adjusted purchasing power. The comparison excludes personal taxes during retirement and mortality probabilities, and does not recommend either option. Review your official options with a qualified pension adviser before electing.

Official section 8517 factors CRA transfer-limit guidance Disclaimer

Educational estimates. Rules reviewed October 23, 2026. Confirm current values with your administrator and tax adviser.