Nala, 63, is a member of a public-sector defined benefit pension plan, partly indexed to inflation, and could retire now with an unreduced pension.LEAH HENNEL/The Globe and Mail
After a long career in the health care sector, Nala is planning to retire next spring, but she is concerned that talk of Alberta separation could affect the value of her Calgary house and even her pension.
She is a member of a public-sector defined benefit pension plan, partly indexed to inflation, and could retire now with an unreduced pension.
Nala is 63 years old and single with no dependants. Once she retires, she plans to “stay put for a year, then relocate to Vancouver Island in 2028 to be closer to family,” she writes in an e-mail.
“The separation nonsense currently happening in Alberta, should it succeed, would put things into a tailspin for everyone,” she said. “Some argue that the uncertainty is already having a negative impact on all things economic.”
Nala is concerned about the future security of her pension and “whatever portion of the Canada Pension Plan that would go to Alberta.” She’s also concerned about the resale value of her house.
She asks if she should take the cash value of her pension and possibly even commute her CPP, if possible. Her retirement spending goal is $90,000 a year after tax. “Do I stay on-plan or do I hand in my retirement notice now to accelerate things?”
We asked Barbara Knoblach, a certified financial planner at Money Coaches Canada in Edmonton, to look at Nala’s situation.
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What the expert says
Nala is a member of the Local Authorities Pension Plan, a public-sector, multiemployer Alberta pension plan.
As of Dec. 31, 2025, she was eligible to retire with an annual before-tax pension of $64,788, Ms. Knoblach says. This amount has been used in the projections.
She will be entitled to CPP retirement benefits of $1,508 a month at the age of 65. She plans to defer CPP to 70, which is projected to increase her entitlement to $2,141 a month.
Her personal investments total about $700,000 across her registered retirement savings plan, tax-free savings account and a non-registered investment account. She also has about $80,000 in a high-interest savings account.
Nala estimates that her Calgary house could sell for about $650,000. She hopes to buy a smaller property on Vancouver Island in a similar price range. When she first moves to the island, she expects to rent a small apartment for about $1,700 a month before deciding on a permanent property purchase.
“Before addressing whether Nala can commute any of her pension entitlements, it is important to confirm whether she is financially ready to retire,” Ms. Knoblach says. She reviewed three possible retirement scenarios.
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In the first scenario, Nala retires as planned on April 1, 2027. She continues contributing to her retirement savings until that date, begins collecting her pension, defers CPP to the age of 70 and starts Old Age Security at 65. She sells her Calgary home for $650,000 and purchases a property on Vancouver Island in a similar price range within about a year.
Nala estimates her base retirement spending at about $80,000 a year after tax. She would like to spend an additional $10,000 a year on travel, bringing her total target spending to $90,000 a year. “Under this scenario, she could support inflation-adjusted, after-tax spending of about $97,900 a year starting in April, 2027,” the planner says. “This exceeds her target and confirms that she is financially ready for her planned retirement date.”
This level of spending is projected to draw down her liquid capital over time. If Nala spends at the sustainable level of $97,900 a year throughout retirement, her investable assets are projected to be depleted around 95, but her home equity would remain intact. The house could be sold later if needed, or it could be left to beneficiaries.
In the second scenario, Nala sells her Calgary home but does not buy a property. Instead, she invests the proceeds from the sale in a balanced portfolio and continues renting. This would increase her projected after-tax, inflation-adjusted retirement spending power to about $127,000 a year, well above her target. “The trade-off is that she would have a more affluent retirement lifestyle but would not have a home as a fallback asset in later life,” Ms. Knoblach says.
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In the third scenario, Nala decides to retire immediately because of the separation debate in Alberta. She begins collecting her pension now, sells her Calgary home as soon as possible, and relocates to Vancouver Island this year. She would stop making further contributions to her personal retirement accounts. “Even with this accelerated retirement date, her projected after-tax, inflation-adjusted spending power would be about $95,400 a year,” the planner says. This is still above her target.
The planner assumes an inflation rate of 2.1 per cent, a rate of return on investments of 5 per cent and that Nala lives to 95.
Note that Nala has maxed out her pension plan contributions after 35 years, and is no longer contributing to her work pension. This gives her RRSP room and explains why her RRSP contributions are so high.
Now the commuted value question. For members who leave the Local Authorities Pension Plan before age 55, it provides the option to transfer the pension as a lump sum into a locked-in retirement account, with any non-locked portion transferred to an RRSP or paid as taxable cash.
The options are different for members who leave the plan at 55 or later. At that point, the options are to start the LAPP pension immediately or defer it, with the pension required to begin no later than the end of the year in which the member turns 71, Ms. Knoblach says.
“In practical terms, Nala should expect to receive her LAPP pension in its regular form: a defined benefit, lifetime pension,” she says. “A hypothetical Alberta separation would not automatically eliminate her pension entitlement, although it could create broader legal, administrative, or tax uncertainty.”
Nala also asked whether she could take a commuted value from CPP. “This is not an available option. She can start CPP early, start it at 65, or defer it to age 70, but she cannot convert her future CPP entitlement into a lump sum.”
Nala’s practical control lies mainly with her personal assets and timing decisions, the planner says.
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The most obvious asset to consider is her Calgary home. “If political uncertainty in Alberta persists, it could weigh on business confidence, migration patterns and real estate sentiment. That outcome is not certain, but it is a risk Nala has already identified,” Ms. Knoblach says. “Since she has reached financial independence and does not plan to remain in Alberta long term, she may consider selling her Calgary home before the next major political inflection point. This would help her lock in the current value of the property without necessarily requiring her to leave the province immediately.”
A second retirement planning step is to prepare her investment portfolio for drawdown. “So far, Nala has been in accumulation mode, regularly setting money aside. In retirement, the direction of cash flow will reverse. She will need a plan for which accounts to draw from, in what order, and how to manage taxes over time.”
Her RRSP is invested aggressively, consisting almost entirely of stocks and equity funds. That may have been appropriate during the accumulation phase, but she should avoid being forced to draw from volatile assets during a falling market, the planner says. She suggests setting aside the funds needed for the near term in cash or lower-risk fixed income. “This cash wedge would reduce the risk that short-term market volatility disrupts her retirement income plan.”
Relocating to Vancouver Island will place Nala closer to family. “That social support may become increasingly valuable as she moves through retirement, and it is a legitimate part of retirement security.”
Client situation
(Income, expenses, assets and liabilities are provided by the applicants.)
The person: Nala, 63.
The problem: Should she retire immediately, sell her house and move to Vancouver Island? Can she cash in her work pension and CPP?
The plan: Focus on what she can control. Take steps to lower her investment risk, setting aside some cash reserves. Develop a plan to “decumulate” her savings in a tax-efficient way. Sell her house now if she thinks real estate values will fall.
The payoff: The ability to get on with her life without having to worry too much about politics.
Monthly after-tax income (current): $6,920.
Assets: Bank accounts $80,000; non-registered investments $245,000; TFSA $149,000; RRSP $314,000; residence $650,000. Total: $1,438,000.
Estimated present value of her defined benefit pension: $1,200,000. That is what someone with no pension would have to save to generate the same retirement income.
Monthly outlays: Property tax $360; utilities $355; home insurance $440; garden $15; transportation $230; groceries $530; clothing $50; charity $135; vacation, travel $835; personal care $100; club membership $50; dining, drinks, entertainment $105; pets $250; sports, hobbies $150; subscriptions $100; health care through work; communications $255; RRSP $1,900; TFSA $650. Total: $6,510.
Liabilities: None.
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Some details may be changed to protect the privacy of the people profiled.
