How is LTD affected by resigning and taking Transfer Value?

Disability Insurance
1

Hi everyone!

This forum seems to seem to have very valuable information which I was happy to have found through Google. It cleared up CPP stuff I did not know I needed to know until yesterday when I was told I needed to apply. :grinning:

Here’s my problem now. I cannot get a straight answer from anyone to my question and I am being forced by my employer to make a decision before Dec. 31st.

Option 1 is clear but for Option 2 I have received several different answers.

Basically I have to options:

OPTION 1) Medically Retire —> I still received LTD -less a retirement pension (only if Health Canada approves it) -less CPP that they just told me to apply for.
End result is that I know I will be worse off after paying all the deficiencies I owe and Phoenix issues with this option. This is why I am even considering option 2 at all.

OPTION 2) Resign -----> I’m under 50 so I can take the Transfer Value of the pension.

I am just not sure how LTD will see this or treat this value and I have been told so many different things that no one can confirm.

OPTION 2) is what I am trying to understand is what happens with LTD if I Resign and how transfer value is treated.

Here’s what I have been told:

LTD with Sulife is a separate contract.
If I resign or am terminated or retire it still continues as is until 65 or if I recover.
I cannot double dip.

Then the rest is unclear…

A) The pension centre lady said if I resign and take the transfer value my LTD is immediately cutoff!! AND I owe the past 3 years of benefits to pay back. :open_mouth:

B) The union pension expert says LTD will NOT cut me off. They will subtract that same medical retirement pension annuity (same amount as if I medically retired) and just pay me less each month until I am 65. [I cannot even get an answer if the amount clawed back is high pension estimate amount or lower amount without the bridge benefit.]

C) LTD cuts me off completely from LTD but I owe nothing else to them.

D) I asked my lawyer how these options affect a lawsuit (for the accident that caused the ‘reason for forced early medical retirement’) and My lawyer will not answer this and says they cannot help me… but I need a financial advisor but financial advisor says they need to know how my LTD works to calculate anything with a transfer value lump sum or commuted value.

My concerns:

  1. I’m worried that if LTD cuts me off before 65 if I improve in any capacity (do to definition of ANY job) and I will only have a pension that I cannot live off of and I cannot work…
  2. I might not even get approved by Health Canada for medical retirement then transfer value money is stuck in a pension till 65.

It seems like no one in the public service has even been disabled on LTD and taken a transfer value AND everyone says do not do that but have no idea why?

If I cannot live on LTD now and owe so much for Phoenix overpayments and resulting debt for non-payment etc. taking money now to solve all that makes sense to me. Heck all this stress of not enough money and insurance companies might kill me way before 65.

I just want to know of anyone can confirm treatment of taking the LTD or point me in the right direction please as I have been asking questions over and over getting nowhere.

Thanks in advance. :grinning:

2

I am a little bit confused as you are but I cannot see how you would be worse off with option 1 unless you expect to not be disabled for much longer or will be 65 very soon. Option 2 seems to be fixing your short term problem by creating a much worse long term problem. If you take option 2 what will you live off from now until retirement age, and what will you live off after you retire if you already spent your pension money on settling your current debts?

3

Hi Caro,

Thanks for your reply. The deficiencies aka money I lose every month for 8-10years is $500-$600 per month plus what I owe upon retiring due to Phoenix pay system issues is close to $10K, so that’s why medical retirement is worse than just LTD now. And they will want the $10k payed upon employment ending. So if I owe the employer like $60-70K a lump sum means I can pay them and no go bankrupt and lose what I have left from this mess.

4

I am so sorry that you were affected so badly by the Phoenix s**tshow. Wouldn’t you lose even more each month by not getting your LTD any more? Is there any way you can get your LTD insurer, HR from your employer and a union rep (if you’re unionized) in a call together? Is there a government ombudsman’s office that you can bring in?

5

Thanks Caro. I would still get LTD with option 1 they just subtract anything else like pension & CPP from it. So basically retiring like that is getting LTD till 65 (unless they cut you off)

Are you saying option 2 I can’t get LTD and the transfer value of the pension at the same time??

That is what I am trying to figure out.

6

Since you haven’t been able to confirm it and they seem to be suggesting that everyone takes option 1, that is my concern. I can’t speak to the specifics of your situation but usually people are better off staying under the disability umbrella than resigning. I am concerned that the Phoenix issue is pushing you towards a less financially favourable option due to the stress, and that taking the immediate monkey off your back now will result in picking up a bigger monkey later when you have spent your retirement savings on fixing the Phoenix issue. The unfortunate reality is that you will owe the Phoenix repayment either way. I would focus on what solution will leave you better off financially over the long term. Is there any flexibility in the monthly amount of the Phoenix repayment now that you are off on disability?

7

No they said what ever I owe to ‘crown’ is payable immediately before they will even process the paperwork for medical retirement when I have it. You must settle all ‘crown’ debts. If I do not pay or include the deficiencies the difference in the pension is $1000 per month less (which is way worse) if LTD gets cut-off at any point before 65. I will never trust an insurance company which is why I do not trust I will get LTD till 65. They have cut me off in the past and I have to keep fighting. I am so tired of fighting… 5 years of this hell is too much… I cannot imagine doing this till I am 65.