Buyback myth busters

March 21, 2013

Buying back credit is a big decision to make, but one that if carefully planned and executed, can bring big benefits.

Here are three reasons members give us when they are on the fence as to whether or not they should buy back, and our responses.

1. It's too expensive.

Yes, buying back credit is a financial commitment. But remember, you don't need to pay for your buyback all at once. Log in to iAccess Web, and use the payment planner in the Buyback Centre to explore your different payment options.

Create and compare different payment scenarios. You can spread payments out over five years, or if you would rather try to pay it off sooner, lower the time frame to one year, two, years, or three years. If you have the money, you can even pay it off in one lump sum.  Use the Payment Planner to create an unlimited number of scenarios until you find the payment plan that fits your personal situation.

Haven't started your leave yet but curious to know how much a buyback might cost? Try the "What If?" calculator, also found in iAccess Web's Buyback Centre.

2. I'll just work for an extra year instead of buying back now.

Adding an extra year to your career may not seem like a big deal now, but as you approach retirement, you may have a different view. Remember, when you buy back you bring yourself closer to collecting an unreduced pension, and you collect that pension for longer (instead of working and paying contributions for an extra year).

3. I'll invest the money into RRSPs instead.

Contributions to your pension plan, including buybacks are matched by your employer. Essentially, this means you are paying for 50% of your retirement.  Also, your Teachers' pension is not dependent upon the performance of personal investments. The security of a defined benefit pension plan is hard to beat.