I want to retire early. What should I do with my defined benefit pension?

The investable takeaway is not the pension decision itself; it is the embedded duration swap. A non-indexed DB pension with weak survivor economics behaves like a long-duration nominal bond that silently loses real value if inflation stays sticky, while a LIRA/RRSP/RRIF stack allows active hedging, tax arbitrage, and bequest control. The spouse’s 10-year age gap materially increases the option value of portability: the probability-weighted benefit of tax-deferred compounding and survivor rollover rises over a 20- to 30-year horizon, especially if retirement starts now and the household has a long joint-life expectancy.

The biggest second-order issue is sequence-of-returns risk in the first 5 years after retirement. A commuted lump sum concentrates market timing risk at the exact moment cash flows flip from accumulation to decumulation; that argues for a bucketed reserve, not an all-equity portfolio, if they commute. Conversely, keeping the pension transfers inflation risk and balance-sheet risk to the plan sponsor, which is attractive only if the sponsor is exceptionally strong and the spouse’s survivor payout is economically meaningful after discounting.

The tax angle is where most DIY decisions break. Immediate RRSP/spousal RRSP use can convert a one-time taxable event into a multi-year deferral machine, but the real edge is shifting future income into the lower-bracket spouse and preserving TFSA room for the highest expected-return assets. The consensus mistake is treating this as a binary commute-or-keep decision; the better framing is partial immunization: extract flexibility where it exists, defer taxes where possible, and preserve the option to re-risk only after the first retirement drawdown window has passed.