# Pension commuted value

> A pension's commuted value is the lump sum a defined benefit pension plan calculates as worth the same, today, as the monthly pension you would otherwise receive in retirement.

Canonical page: https://find.wellspent.co/glossary/pension-commuted-value/
Also called: commuted value, CV, pension lump sum, pension buyout

You're usually offered it when you leave an employer before retirement. The plan calculates it under actuarial standards set by the Canadian Institute of Actuaries, so it moves with interest rates: higher rates generally mean a smaller lump sum for the same pension.

Taking it means giving up a lifetime pension, and any inflation protection that came with it, for money you invest yourself. The decision can't be reversed. The money normally goes to a LIRA, another employer's plan or an insurance annuity, and stays locked in.

Tax law caps how much can move tax-free. The rest is paid to you in cash and taxed as income, though you can deduct it against unused RRSP room. A one-time plan from a fee-only planner, a median C$1,900 in Canada among planners who publish prices, gets the decision checked by someone who isn't paid on the money you move.

## How to check

Your plan's termination statement shows the commuted value, your options and the deadline to choose. Ask any advisor who recommends a transfer how they'd be paid if you took it.

## Sources

- [FSRA, Member guide: You terminated employment. What is a commuted value?](https://www.fsrao.ca/consumers/pensions/member-guide-you-terminated-employment-what-commuted-value)
- [Canada Revenue Agency, Registered pension plan (RPP) lump-sum payments (page modified January 29, 2026)](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/transferring/registered-pension-plan-rpp-lump-payments.html)
- [Wellspent, What fee-only financial advisors charge (2026), Canadian figures](https://find.wellspent.co/reports/fee-only-advisor-fees/)

## Related terms

- [LIRA and LIF (locked-in accounts)](https://find.wellspent.co/glossary/lira-and-lif.md)
- [Registered Retirement Savings Plan (RRSP)](https://find.wellspent.co/glossary/rrsp.md)
- [Fee-only financial advisor](https://find.wellspent.co/glossary/fee-only.md)
- [Advice-only financial planning](https://find.wellspent.co/glossary/advice-only.md)