OPB News for Members
Not planning today will cost you tomorrow: Debunking popular pension myths4 minute read
A recent poll conducted by CIBC revealed that more than a quarter of Canadians (27%) regretted retiring and half needed to go back to work because of financial needs.
This is why it’s so important for you to plan how you want to spend your time and understand what your financial picture will look like in retirement.
Myth #1: You don’t need to think about retirement planning until your late 40s or 50s
Reality: If you push your retirement plan to the side for too long, it’s going to be much harder, if not impossible, to make up any savings gap in time. That means you’ll either need to work longer or scale back your expectations to compensate.
That’s why it’s important to start working on a retirement plan now. We know that you’ve got a lot of other competing priorities and expenses, but ignoring the issue could affect you and your loved ones down the road.
If you have a buy back opportunity (such as a leave of absence, or fixed-term employment with a PSPP employer, or credit earned in another registered plan) the best time to buy it may be right now.
If you think you might have eligible service, give us a call and we can confirm if you can purchase it. When it comes to savings, the earlier you start, the better off you are.
Myth #2: You have a pension, so there isn’t much else you need to do
Reality: While it’s true that you’re off to a great start, that doesn’t mean you can forget about retirement planning. It’s important to understand your opportunities so you can maximize your pension and set your retirement goals. That way you know if you’re saving enough or if you have a gap. Depending on your goals and how much credit you expect to have in the PSPP when you retire, you may need to put extra money into other retirement vehicles.
Myth #3: You have your financial plan in order, so you’re ready to retire
Reality: Even if your finances are in order, the transition can be incredibly emotional. Work is not only a big part of our lives but, for many of us, it’s also a large part of who we are. So, it’s really important to start planning what you’ll do after you retire and how you want to spend your time. This can include creating a new daily schedule and weekly, monthly, or yearly goals.
On average, PSPP retirees are collecting their pensions in excess of 26 years. The time to start thinking about how you want to spend all that time is now.
We’re here to help!
Check out My Retirement Planner – our free, online tool available through your e-services account to find out if you’re saving enough for your future. This planning tool helps you understand and forecast your complete financial retirement picture, including your projected income from all sources and your projected expenses in retirement.
You can also book a one-on-one session with one of our Client Service Advisors, who are all Certified Financial Planners®, to discuss any questions you have about your retirement and pension. Our Advisory Services are available to you at no cost and are offered either in-person or over the phone. To book a one-on-one session, log in to your e-services account and select ‘Book My 1-on-1’.
We also have Client Relations & Education Officers who will visit your workplace to conduct in-person information sessions on the PSPP. We can present general topics including an overview of the PSPP and we can also conduct customized presentations. To arrange a presentation please contact your employer.
Our new website is another great resource
At OPB, we believe that understanding how your pension fits into your overall financial and life circumstances is critical to making informed decisions. We’re committed to providing the resources you need to achieve a secure retirement.
If you’re getting ready to retire, it’s important that you understand how the process works.
Best time to retire
We recommend you retire closer to the end of the month to reduce the gap between your last pay from your employer and your first pension payment. Your first pension will be paid on the 22nd of the month after your retirement. In other words:
- if you retire from your employer on June 1st, your first pension payment would be July 22nd (6 weeks)
- if you retire June 25th, your first pension payment would be July 22nd (4 weeks)
When to apply — It’s a good idea to apply for your pension at least 3 months ahead of time. This ensures you have time to collect any documents we may need and to make your elections.
Initiate your retirement online
Don’t forget! Log into your e-services and provide us with your personal email address before you retire and sign up to receive e-alerts so we can continue providing you with important updates.
The fastest way to get the process moving is to initiate your retirement in e-services (after you’ve told your employer you want to retire). This lets you monitor the status of your application and upload any required documents online.
Log in to your e-services account and under ‘My planning’ select ‘Initiate and Track Retirement’. Not only is it easy to use, paperless, and convenient, but it’s also secure.
If you have an eligible spouse, you and your spouse will need to decide which joint and survivor pension works best for you (50%, 60% (the default), 65%, 70%, or 75%). Your Retirement Information & Elections Package will give you a personalized view of what your spouse would receive under each option and the cost of each. If you want to provide a survivor pension above the 60% default, and you’re within two years of retirement, you’ll need to have a medical assessment to confirm you’re in good health for your age.
After you’ve completed the necessary forms and elections, we’ll send you a statement confirming your elections.
Have questions? Call us toll-free at 1-800-668-6203 or 416-364-5035, or email us at email@example.com. We’re open Monday through Friday, 8:00 a.m. to 5:00 p.m.
Last year, we let you know that we would be phasing in a 1% contribution rate increase starting in April 2018 (0.5%) as the cost of providing pensions has gone up.
We want to remind you that Phase 2 takes effect on your first full pay this month (0.5%).
This is the first pay where the pay period start and end dates are both in April. You will notice a slightly higher deduction going forward. Your contributions will continue to be matched by your employer and they are tax deductible up to the Income Tax Act limit.
Even with this increase, our contribution rates remain among the lowest of the public sector plans in Ontario and continue to provide excellent value for members and employers. All the PSPP’s pension benefits remain intact.
If you are an Ontario Provincial Police officer, you won’t see an impact because your additional 50/30 contribution is decreasing by the same amount (0.5%).
Note: The contribution rate increase does not apply to Case Management Masters
The new rates
This change will be phased-in over a 2-year period.
|As of January 2018||As of April 2018||As of April 2019|
|6.4% of your salary up to the YMPE ($55,900)
9.5% of your salary above the YMPE
|6.9% of your salary up to the YMPE ($55,900)
10% of your salary above the YMPE
|7.4% of your salary up to the YMPE ($57,400)
10.5% of your salary above the YMPE
Calculating your contribution increase
Once the full increase is implemented, members will contribute on average 8.5% of their pensionable salary (up from 7.5% currently). We’ve put together a chart to help you understand what the increase will mean to you next year and after the ﬁnal phase-in in April 2019. Again, your employer will match these amounts.
Keep in mind contributions are tax deductible up to the Income Tax Act maximum ($19,641 in 2019).
|Pensionable salary||Annual contributions as of April 2019||Difference once fully implemented|
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Cyber safety is an issue that affects everyone. Since it’s important to be able to identify and respond to potential cyber threats, we all need be conscious about it, regardless of how technologically fluent or advanced we may be.
Did you know? While some people often assume that older relatives are more vulnerable to online attacks, a recent news report revealed that it’s actually adults under 40 who are most likely to fall victim to online scams. Although members of all ages use the internet differently, everyone is vulnerable to attacks on their personal information, especially if they’re not being attentive.
Here are some tips to help you stay cyber safe:
- Never click on any links or open any attachments in suspicious emails. If you receive an email from a sender that appears to be less than reputable, back out of the email immediately and do not click on or download anything in it.
- Be careful when using public Wi-Fi. While it can be tempting to save data by using public Wi-Fi when you’re out, public networks are generally unencrypted. This means anyone in range can see which web pages you’re visiting and what you’re typing into web forms. It’s also incredibly difficult to tell if the public Wi-Fi network is legitimate or a malicious hotspot used to trick people. If you must use public Wi-Fi, try to avoid accessing your personal data like logging into your bank’s website.
- Don’t use the same password for all of your online accounts. Using different passwords that are sufficiently robust is the best way to ensure all of your accounts are safe.
OPB News provides general information relevant to PSPP members. This publication is not to be relied on as legal, financial or tax advice. Please note that if there is any conflict between the contents of OPB News and the legal documents governing the PSPP, the legal documents governing the PSPP will prevail. For detailed and personalized advice about the PSPP, or retirement planning more generally, please contact one of OPB's Client Service Advisors. You can do this by logging into e-services and using the Book my 1-on-1 feature.