Death Before Retirement

It is 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 are here to make sure your wishes are carried out. In this section we will look at what happens if you lose your life before you begin collecting your pension.

It is 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.

If You Were Not Vested (Fewer Than Two Years of Membership or Service)

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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.

If you do not 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 spouse or partner, or spouse or partner has waived benefit) Refund of member contributions, plus interest
 

If You Were Vested (Two Years or More of Membership or Service)

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Your spouse or partner will be entitled to a monthly pension for life which would start immediately 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, re-marries 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). 

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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 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 a one-time payment based on the commuted value of the pension.  

If you do not have a beneficiary, the benefit will be paid to your estate.

Relationship Entitlement
Spouse or partner
(no pre-retirement death waiver) 
Pension for life OR Commuted value
Beneficiary
(no spouse or partner, or spouse or partner has waived benefit)
Commuted value