“Cashing out” a HOOPP pension can mean two very different things. You may be able to transfer the value of your pension after leaving your HOOPP employers, but that does not normally mean receiving the money in your bank account to spend. You generally cannot withdraw money from HOOPP whenever you want. After leaving all HOOPP employers, members under age 55 may have the option to transfer the commuted value of their pension to an eligible locked-in retirement arrangement. You can also leave the pension in HOOPP and collect it later.
- You Cannot Withdraw From HOOPP Like a Savings Account
- Leaving Your HOOPP Employer Can Open Up Transfer Options
- A HOOPP Transfer Usually Does Not Give You Spendable Cash
- Age 55 Changes Your HOOPP Options
- Leaving the Pension in HOOPP Is Also an Option
- Moving to Another Employer Does Not Always Mean Taking HOOPP Out
- What You Give Up When You Transfer Your HOOPP Pension
- What to Check Before Taking Your HOOPP Pension Out
- Other Questions About Cashing Out a HOOPP Pension
You Cannot Withdraw From HOOPP Like a Savings Account
HOOPP is a defined benefit pension plan. Your contributions and your employer’s contributions help fund the plan, but they do not sit in a personal account that you can access for an emergency, major purchase or other expense.
That difference becomes clearer when you look at how HOOPP works. The retirement benefit you earn is determined under a pension formula rather than by treating your contributions as an individual investment balance. The calculation uses factors such as earnings and contributory service, which we explain separately in how your HOOPP pension is calculated.
The same principle applies to the money deducted from each paycheque. HOOPP contribution rates determine how much you and your employer contribute, but your accumulated payroll deductions are not an available withdrawal balance.
Leaving Your HOOPP Employer Can Open Up Transfer Options
Your choices change after your employment ends with all participating HOOPP employers. At that point, HOOPP provides the pension options available for your membership. One possibility is simply leaving the benefit in the plan as a deferred pension and collecting it later.
Another possibility, depending on your age and circumstances, is transferring the pension’s commuted value. The commuted value represents the lump-sum value of the future pension you earned. It should not be confused with a refund of everything you and your employer contributed.
For eligible members under age 55, the transfer destinations can include a locked-in retirement account (LIRA), an eligible defined contribution pension plan or the purchase of a deferred annuity. A transfer to another registered defined benefit pension plan can also be available when its rules permit the transfer.
HOOPP provides the applicable choices after the employment termination has been processed. The pension transfer options after leaving a HOOPP employer are therefore more useful than assuming that someone else’s departure package will match yours.
A HOOPP Transfer Usually Does Not Give You Spendable Cash
The word “transfer” matters. Moving a HOOPP commuted value into a LIRA changes where your pension money is held, but it does not normally make the money freely withdrawable.
Ontario pension law generally keeps money in a LIRA locked in for retirement. There are specific circumstances in which Ontario locked-in money can be unlocked, but those rules apply after qualifying pension money is held in a locked-in account. They are not a general right to make an early withdrawal directly from HOOPP.
The Ontario rules for unlocking locked-in pension accounts cover circumstances such as shortened life expectancy, qualifying non-resident status and certain other statutory exceptions. Financial-hardship provisions are handled separately through the financial institution holding the locked-in account.
We would therefore be careful with any description of a HOOPP transfer as a “cash out.” You may be moving the economic value of the pension out of HOOPP without gaining the ability to spend that value immediately.
Age 55 Changes Your HOOPP Options
HOOPP members can start a retirement pension as early as age 55. As a result, leaving HOOPP before 55 and leaving after reaching 55 can produce different choices.
For a member under 55 who terminates HOOPP employment, transferring the commuted value can be among the available options. Once you are 55 or older, you have reached HOOPP’s earliest retirement age and can begin receiving a monthly pension after leaving your HOOPP employers. The transfer rules also become more restrictive than the standard under-55 commuted-value options.
This is one reason age should be checked before making assumptions based on another member’s experience. Someone leaving at 45 and someone leaving at 58 may both say they “left HOOPP,” while the pension choices presented to them can be different.
Leaving the Pension in HOOPP Is Also an Option
Taking a transfer is not mandatory just because you leave your job. You can generally leave the pension you have earned in HOOPP and receive it later as a deferred pension.
That option keeps the benefit within the defined benefit plan instead of converting it into transferred retirement assets that you must manage elsewhere. Approved inflation increases can also apply to deferred pensions under HOOPP’s indexing provisions. The treatment of those increases is covered in how HOOPP COLA works.
Leaving the pension behind can also preserve plan benefits that would otherwise disappear with a commuted-value transfer. Survivor protection is one consideration because transferring the benefit means giving up the HOOPP pension associated with the amount transferred. The broader differences between pension arrangements after death are explained in workplace pension survivor benefits.
Moving to Another Employer Does Not Always Mean Taking HOOPP Out
A job change deserves its own check before requesting a transfer. Moving to another participating HOOPP employer can allow you to continue your HOOPP membership rather than treating the first employment period as a pension you need to move elsewhere.
A move to an employer with another registered pension plan can create a different route. Depending on the receiving plan and the applicable requirements, a pension transfer may be possible instead of moving the commuted value into a personally held locked-in account. The HOOPP pension transfer process sets out the destinations that may be available.
For someone moving between Ontario public-sector employers, it is also useful to understand that different plans do not automatically use identical rules. Our HOOPP versus OMERS comparison covers those plans separately without assuming that a transfer option under one plan applies to the other.
What You Give Up When You Transfer Your HOOPP Pension
A commuted-value transfer is not simply an early version of receiving your future monthly payments. Once the pension value is transferred out under the applicable option, you give up the HOOPP pension attached to the transferred benefit.
That means the decision involves more than comparing a lump sum with your past contributions. You are exchanging a defined benefit for assets held under another retirement arrangement. Features attached to the HOOPP pension, including applicable inflation protection and survivor benefits, also need to be considered.
We would compare the transfer amount with the actual pension being surrendered rather than focusing on how large the lump sum looks. A future monthly pension is designed to provide income for life, while transferred assets operate differently. Understanding whether HOOPP is an RRSP helps explain why those two values should not be treated as interchangeable.
What to Check Before Taking Your HOOPP Pension Out
Start with the termination package issued for your own membership after HOOPP receives your employment information. It identifies the options actually available to you rather than the options that might apply to a hypothetical member.
Then compare the commuted value, if offered, with the pension you can retain inside HOOPP. Your age matters, as do the retirement benefits attached to the pension. If you keep the benefit and eventually start monthly payments, you can check the timing through the HOOPP pension payment dates.
A transfer becomes especially difficult to reverse once completed because you have exchanged the corresponding HOOPP pension for the transfer. That makes the actual termination statement, rather than your contribution total or a coworker’s experience, the right starting point.
Other Questions About Cashing Out a HOOPP Pension
Can you get your HOOPP contributions refunded when you quit?
Your entitlement after leaving is not normally calculated as a simple refund of your payroll contributions. HOOPP determines your pension benefit and any available transfer value under the plan rules rather than treating the plan as an account containing your deposits.
Can you transfer HOOPP directly into a regular RRSP?
The standard commuted-value option for an eligible member under 55 uses a locked-in retirement arrangement rather than an ordinary RRSP that allows normal withdrawals.
Can you take money from HOOPP while you are still working for a HOOPP employer?
Regular members cannot use HOOPP as an account for occasional withdrawals while continuing active membership. Contributions are being made under the pension plan to provide benefits rather than accumulating as an on-demand cash balance.
What happens if you transfer HOOPP and later work for a HOOPP employer again?
Returning to a participating employer can allow you to become an active HOOPP member again, but transferring your earlier pension out means the pension associated with that transfer is no longer sitting in HOOPP. Before transferring, it is therefore worth considering whether another HOOPP-covered job is realistically part of your employment plans.
