Putting Financial Advice in the Picture Leaving a Job Advisor Name: Company:

Leaving a job  Job changes are common  Can be traumatic and life-changing  View it as an opportunity, not a setback  Career and financial decisions to be made  Seek advice

Issues to consider when leaving a job  Termination and severance  Employment Insurance  Group insurance plans  Pension & other workplace savings plans  Stock options  Changing careers

Why are you leaving?  Lay off (adverse economic conditions)  Dismissal with cause  Constructive dismissal  New job

Termination - How much notice?  Standard minimum notice varies by province  One month per year of service  Employer often will offer lump sum in lieu of notice  If quitting, employee must give proper notice  We can help advise you on matters of termination, and refer to you a lawyer if necessary.

Severance – Two types of payout  Termination Pay  Lump sum in lieu of income during termination period  Based on legislated minimum period plus additional amount offered by (or negotiated with) employer

Severance – Two types of payout  Severance Pay  Separate payment based on seniority, years of service and loss of benefits  No minimum severance payment amounts except for Ontario and employers governed by federal legislation

Severance – Two types of payout  Retiring allowance  Allows money to be rolled over to an RRSP  No withholding tax payable

Severance - Tax issues  30% withholding tax payable (amounts over $15,000)  Additional tax may be payable  Find ways to defer payment

Severance – Negotiate the terms?  If amount seems low, seek expert advice  Receive payments in two different years  Stay on the payroll and continue benefits  RRSP rollover might be possible  Career transition service

Can you collect Employment Insurance?  Eligible if you lose job for no fault of your own  Ineligible if you resign  55% of average weekly salary, up to $500 a week  Maximum benefit period 19 to 50 weeks

EI – How to apply  File an application at Service Canada in person or online  Social Insurance Number  Official Record of Employment document  Personal identification

Group insurance – What’s next?  Most plans provide life insurance, disability insurance, medical/dental coverage  Benefits usually continue during statutory notice period  Ability to convert to individual coverage  Consider replacing what is not converted

Group insurance - Life  Benefit usually based on one to three times salary  You cannot increase insured amount  $200,000 maximum; term length may be limited  No medical required if you convert  Usual factors determine what it costs  Spouse but not dependents

Group insurance - Disability  Conversion may be available  It is crucial to replace this coverage  Consider critical illness insurance too

Group insurance – Medical/dental  Group insurers normally will not extend coverage, or offer conversion  Private insurance is available, but can be expensive  Three-month waiting period at new job

Pensions & other workplace savings plans  Pension plans (defined-benefit and defined contribution)  Group RRSPs  Deferred profit sharing plans  The jungle of pension rules

Registered pension plans  Defined benefit (DB) plans  Amount determined by actuarial calculation  Defined contribution (DC) plans  Value of all contributions plus income earned

RPPs – Options upon departure  New employer’s pension plan  LIRA  LIF  LRIF  Annuity  Pension payments

Vesting and Commuted value  Vesting  Waiting period to qualify for pension  Usually 2 years’ membership in plan  Commuted value  What your pension is worth at specific point in point  DB plan: actuarial calculation  DC plan: market value of employee and employer contributions combined

Group RRSPs – Options upon departure  Cash  Group RRSP at new job  Individual RRSP  RRIF  Annuity

DPSPs – Options upon departure  Cash  Another DPSP  Pension plan  RRSP  RRIF  Annuity

Employer Stock Options  Only vested options available  Deadline to exercise (e.g. 60 days)

Stock options - tax implications  Capital gains tax payable when shares sold  Tax deferral may be available  $100,000 deferral cap for publicly traded companies  Special mechanism means gains from an options- origin sale taxed like other capital gains

Stock options - What happens when you exercise  Exercised options reported on T4 slip  File deferral election form  T1212 must be filed for each tax year the deferral is maintained

Changing Careers  Financial planning  Career counselling  Government resources  Lifelong Learning Plan (  Career Counselling & Skills Assistance (  Economic Action Plan (

Summary Leaving a job is a lot of work- We can help!

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