OPB News for Members

When you became a member of the Public Service Pension Plan (PSPP) you gained a valuable benefit that ensures you’ll receive pension income payable for your lifetime, so you’ll never need to worry about outliving your money.

One of the great benefits of the PSPP is that it’s designed to help you avoid worrying about managing every aspect of your retirement savings. One of the benefits of being a member of the PSPP is that the investing is done on your behalf. The PSPP Fund is managed by a team of highly skilled investment specialists who make strategic investment decisions to help generate the returns needed to fund your pension. At the same time, maximizing your PSPP pension may require your input, especially when you experience a life event.

A life event can commonly be described as an important event that changes the circumstances of someone’s life. Examples include getting married, separating, having children, and deciding to take a leave of absence from work. Here are some examples of how these life events can impact your pension.

New Job

Now that Jane has become a new member of the PSPP, they have a great opportunity to increase the amount of pension they’ll receive by purchasing additional pension credit from their past eligible service in another pension plan. This is known as a ‘buyback.’

Jane may also be eligible to apply to transfer their pension in another plan to the PSPP under a reciprocal transfer agreement (RTA). It’s important that Jane applies to transfer or buy back any eligible service as soon as possible. RTA transfers have strict application deadlines. For buybacks, the cost generally increases over time, especially after the 24-month costing window ends. Once the window ends, the cost of the buy back is subject to an actuarial costing which will likely be much more expensive.

Marriage or Common Law Relationship

Pensions are an important family asset. If Jane enters into a spousal relationship, they should update their spousal details through their e-services(opens in a new tab) account.

Prior to retirement, they can research what type of survivor benefit would be the best for them and their family if Jane was to pass away.

Having Children

When Jane decides to expand their family, it’s an important time to not only update their beneficiaries, but also to revisit their financial planning priorities including re-evaluating how much money they may require before and after retirement.

Leave of Absence

When Jane takes a leave of absence from work, there are important pension-related decisions to make. Depending on the type of leave and whether it is paid or unpaid, Jane’s PSPP contributions may continue, with or without employer matching. For example, for any unpaid leave longer than 30 days, Jane will need to decide whether they would like to continue contributing while on their leave, or buy back their credit upon their return to work. For paid leaves of any duration, the contributions will continue.

Did you know?

A leave of absence can include parental leave, family medical leave, or educational leave.

Separation or Divorce

If Jane and their spouse end their spousal relationship, there are important considerations regarding Jane’s pension. While Jane is not obligated to divide their pension, they may need to apply to OPB for a Family Law Value. They may also need to provide OPB with a Settlement Instrument that deals with pension division. Finally, Jane should make sure that they update their spousal status, and make any necessary changes to their beneficiary designations, on e-services.

While the list above is not meant to be exhaustive, as we all have various challenges to deal with in our own lives, it is important to understand from the above graphic that there are many different life events that can impact your pension. On OPB.ca, we provide web pages, articles, and other resources to help guide you once you experience a life event.

Change in Employment

If Jane leaves their job, their choice will have an impact on their pension. If Jane moves to a non-PSPP employer, they will be provided with termination options, one of which might be to defer their pension where it will remain protected until they are ready to begin collecting it. If Jane’s new employer has a workplace pension plan, they may also be able to transfer their credit to their current plan under an RTA. If Jane is under 55 years of age, she may also transfer the commuted value of her PSPP pension to another pension plan or retirement savings vehicle.

Don’t let retirement planning get you down. We’re here to help take the stress out of retirement planning so that you can start retirement dreaming.

OPB has the tools and resources available to members to help with the financial part of retirement planning. Our comprehensive and enhanced Retirement Planner builds on pension estimates from your Annual Pension Statement (APS) or our online Pension Estimator in e-services. Together with your other sources of income, investments and savings, the planner provides you with a detailed year-by-year projection of your total estimated retirement income both before and after tax.

Our Retirement Planner is an incredibly useful tool that can help you picture exactly how to achieve the retirement life you want and deserve. Log in to e-services(opens in a new tab) to create your plan.

Before you start

To create your retirement plan, you’ll need to consider your expected retirement date and the province you plan to live in during retirement. For an efficient planning experience, we also recommend that you collect the information below for you and your spouse (if applicable) before you start.

Income – Your current gross income (before tax) and net income (after tax).

Savings – Statements or estimates from your financial institution(s), including OPB. Include your PSPP estimate, any other Defined Benefit pension you may have, government pensions, such as Canada Pension Plan (CPP), Registered Retirement Savings Plan (RRSP), Locked-In Retirement Account (LIRA), Tax Free Savings Account (TFSA) and general personal savings or investment accounts that you plan to use for retirement income.

Expenses – Once you’ve collected that information, you will need to provide an estimate of your expenses in retirement which the Planner will use to calculate how much income you’ll need. While you don’t require an in-depth breakdown of your current expenses, an overall estimate of what you expect to incur once you commence your pension will help the Planner illustrate how much you will need to meet your retirement goals.

We are pleased to introduce our inaugural Environmental, Social and Governance (ESG) Report(opens in a new tab).

We believe that effectively addressing ESG within our operations and our investment portfolio is critically important. It ensures our long-term success as an organization and is more likely to improve returns over the long term – which is good for Plan members.

What’s included

In 2022, we invited our members to complete our ESG survey to help us better understand what ESG-related topics mattered most. This helped inform the approach we took when developing the report. The report discusses our progress on ESG including Diversity, Equity and Inclusion (DEI), as well as how we worked with our investment manager, the Investment Management Corporation of Ontario, to advance ESG within our investment portfolio for 2022 and part of 2023.

The report shares educational content about our ESG progress, policies, and commitments. It also includes engaging video content on key ESG concepts to help explain how sustainably managing the Plan will reduce our exposure to risk and help us identify investment opportunities, so we can continue protecting the pension promise.

Learn more

Explore our ESG Report website(opens in a new tab), watch the educational videos, read, and download the report.

Have feedback?

We want to hear from you! Complete a short survey on the ESG Report website(opens in a new tab) to let us know what you thought was effective in the report and if you have suggestions for how we can improve future reports.

Planning how you want your loved ones to be taken care of after you pass away can be uncomfortable, especially when you are young and may not feel like a top priority. However, it is undeniably important to ensure that our loved ones are fully supported when we are no longer here. And the stark reality is that regardless of your age, it is never too soon to plan for the unexpected, which means that it’s never too soon to name designated beneficiaries and ensure they’re updated throughout your life pre- and post- retirement.

Under the PSPP, your designated beneficiaries receive a benefit on your death in certain circumstances, including if you die prior to retirement without an eligible spouse or children. You may have other retirement savings vehicles (e.g., an RRSP) that also provide for payment to a beneficiary in certain circumstances. Here are some important considerations regarding naming beneficiaries:

Designating your beneficiaries matters

We identify and pay the survivor and/or death benefits from the PSPP to your designated beneficiaries based on what we have on file. You can easily update your PSPP pension beneficiaries by logging into our secure e-services.opb.ca selecting beneficiaries on the e-services home page, and typing in their name (or viewing the names to confirm they’re up to date).

If you are naming beneficiaries under another plan such as an RRSP, you should consult the administrator or financial institution as to how to designate beneficiaries under that plan.

Avoiding conflicting documents

If a member has designated beneficiaries within a registered plan (such as an RRSP) they will override designations made in that person’s will. This means, if both documents are not updated and aligned correctly, you run the risk not only that benefits won’t be paid out in accordance with your most recent wishes, but also of conflict among your beneficiaries.

Ensuring all your assets have a beneficiary

Like your PSPP pension, you can also designate beneficiaries directly within other registered plans or accounts including:

• First Home Savings Account (FHSA)
• Registered retirement savings plan (RRSP)
• Registered retirement income fund (RRIF)
• Registered education savings plan (RESP)
• Tax-free savings account (TFSA)
• Locked-In plans
• Other pension plans

Understanding the limits of designating a beneficiary

Remember that under the PSPP, your designated beneficiary will not receive any benefit on your death in certain circumstances (e.g., when there is no residual benefit in post-retirement death).

Other types of plans also have rules limiting the ability to pay a benefit to a designated beneficiary. For example, depending on the jurisdiction, some locked-in plans such as a Locked-In retirement Account (LIRA) and Life Income Fund (LIF) may have restrictions on designating the beneficiary and its transfer option (e.g. remaining locked-in or unlocked) upon your death. Please check with your financial institution.

Understanding the tax benefits and liabilities

To benefit from the deferral of taxes when you die, the designated beneficiary of your RRSP must either be your spouse or common-law partner, a financially dependent child or grandchild under 18, or a financially dependent disabled child (or grandchild) of any age. Your RRIF specifically allows you the option of naming your spouse or a common-law partner as a ’successor annuitant‘ who inherits your RRIF without transferring funds out of the account, while your TFSA allows you to name your spouse or a common-law partner as a ’successor holder‘ ensuring that even income earned after death is tax-free.

While this may seem complex, the first step you can take is speaking with your tax advisor, financial planner, and/or estate planner to understand your specific investment and tax implications (the information provided above isn’t legal, personal financial or tax advice, but rather for general purposes only). Consulting a professional and having open discussions with your loved ones is important to ensure your assets are distributed according to your wishes in a manner that reduces taxes and minimizes costs.

When planning for your retirement, ensuring you have adequate income to cover your expenses is important. Although it may be easy to focus all your attention on the financial side of retirement, it is also important to ask: what does retirement really mean to you?

For some, work is not only their career but also a part of their identity. It’s a place where we can cultivate lifelong relationships that extend beyond the workplace. It’s also somewhere we can feel needed, productive, useful and experience some of our most fulfilling life accomplishments.

While many of us can imagine our future retired selves spending a beautiful day on a white sandy beach, what may be harder is dealing with the transition from our work lives after the initial honeymoon period of retirement is over. Visualizing what a gratifying day-to-day retirement will look like is not easy, but the road to envisioning and creating a successful retirement plan begins today, regardless of what career stage you’re currently in.

Steps to assist with enhancing your retirement planning:

Write down your retirement lifestyle goals and plans

If you want to start a business in retirement, research what you need to do for a seamless transition. If you plan on staying in your backyard in your hammock, write this down too so you can work toward making sure your backyard is as serene or as engaging as you need it to be. Getting your thoughts onto paper can help make retirement planning feel more real.

Embrace flexibility

Today, your ideal post-retirement plan may be establishing your own dream entrepreneurial endeavour. However, two years from now, you may prefer a life of leisure. In fact, your retirement may end up being a combination of both. Retiring is a great time to leave rigid schedules behind.

Ask questions

Even though there is no ‘one size fits all’ retirement plan, knowing what your peers are doing in retirement may provide inspiration. There is never too much you can learn from retirees as well as family, friends, peers, or neighbours planning their own retirements. Seeing how other people plan to fulfill their lives in retirement can provide inspiration for your own ideas. Retirement isn’t always smooth sailing, particularly if you haven’t prepared for it.

Examples include the immediate change in routine and the loss of social connections from work you don’t see any more, among other things. Consulting with a licensed professional can help you prepare mentally and emotionally for the transition to retirement and help you to understand your specific retirement needs.

At OPB, we offer tools and resources, such as our Advisory Services, a team of Certified Financial Planners, to assist in evaluating what you will need to ensure you reach your retirement lifestyle goals. A well-funded retirement is the first step to a successful retirement. Ensuring it’s been well planned and thought out will help you create a future that will be fulfilling and secure.