OPB News for Retired Members

In an effort to keep our members updated on relevant Plan changes, please note that effective April 1, 2020, the beneficiary categories of “refund recipient” and “payment recipient” have been consolidated into one category: designated beneficiary.

This change is part of an effort to streamline and simplify the beneficiary designation process. There will be no changes to the process related to benefits payable to an eligible spouse or eligible children.

The amount and type of the benefits payable at your death is not changing — we’re simply reducing the number of designations you need to make.

If you have designated a refund recipient or payment recipient, you will see them listed on your 2020 Annual Pension Statement in the “Your beneficiaries on file” section.

As of April 1, 2020, all refund recipient and payment recipient designations have been removed and all death benefits (other than those payable to an eligible spouse or eligible children) will be paid to your designated beneficiary(ies) or your estate, if you do not name a designated beneficiary.

To learn more about the PSPP’s death benefits, visit the 'Designating or changing beneficiaries' page on our website, and get even more detailed information in our "Planning Today for Tomorrow" booklet.

Please ensure that you log into your e-services account to update your beneficiaries. For questions or concerns, please reach out to our Client Care Centre.

The turn of a fresh new calendar page on the 1st of January often inspires us to set resolutions to make the new year our best one yet. How can you make resolutions that you’ll actually stick to, and what personal finance goals should be on your resolution list? We’ve got you covered.

Making resolutions you can keep

It turns out there’s some science behind creating resolutions that stick. How many times have you declared that you would finally become a regular at the gym, going strong for a few weeks then slowing to a halt by the end of February? It turns out that you may be choosing goals that aren’t truly meaningful to you.

Noted life coach and Harvard-educated sociologist Martha Beck says that we have “an essential self, the real genuine you, and the social self, the one worried about external validation.” If the gym isn’t an authentic goal in this situation, think about your personal values and your essential self, and base your resolutions on what truly matters to you.

The question you need to ask yourself

The most important question to ask yourself when setting new year’s resolutions is simply “Why?” Why do you want to accomplish the goal you’ve set for yourself? Is it because of external validation, or is it because it’s something truly important to you — whether anyone else knows or not?

Another key to resolution success is to pick goals that you can break down into bite-sized steps. Don’t get overwhelmed by focusing on one grand goal — if you want to save for a trip to Europe in the summer, break that goal down into smaller savings milestones so that you can feel accomplished along the journey, not just once you reach your destination. Consider plotting check-in dates in your calendar over the next few months to check your progress — celebrate each time you hit a notable savings amount or book your flight and accommodations. Making goals measurable is a great way to stay accountable, and it helps you to stay motivated to keep going.

Financial goals for 2020

What are some financial goals you would like to work towards in 2020? Again, as you determine these, be sure that these goals are important to you —here are some ideas to get you started:

• Reassess your living situation — can you downsize from your house to a condo, allowing you to free up more money in retirement? Do you have clothing that you could donate or sell to a consignment store? Or maybe you’ve accumulated a number of random things taking up space in your home that could go up for sale on Kijiji? Whatever it is, make a goal of looking around your home to see what you can change to save money or uncover hidden treasures.
• Consider appointing a financial power of attorney — should there be a time where you won’t be able to make decisions about your money, a power of attorney can make financial decisions on your behalf. Set a goal to start with doing some research, and see if this option makes sense for you.
• Review your budget – Planning for your day-to-day finances is hard enough when you’re working, but it can be even trickier in retirement. OPB’s Client Service Advisors are also Certified Financial Planners®, so accessing these knowledgeable professionals could be your first step at setting up a financial plan for 2020. Contact our Client Care Centre to discuss if this option is right for you at 1-800-668-6203 or 416-364-5035 or email us at clientservice@opb.ca

Whatever financial goals you choose, make sure they’re meaningful and achievable to start 2020 off right.

A Message from Mark Fuller President & CEO

This year we celebrate important milestones for both the Public Service Pension Plan (PSPP) and Ontario Pension Board (OPB). 2020 marks the 100th anniversary of the PSPP and the 30th anniversary of the founding of OPB.

The PSPP was established in 1920 and for 100 years has been providing retirement security for Ontario’s Public Service employees as well as for employees of Agencies, Boards and Commissions of the Province of Ontario. In 1990, OPB was established to take over the administration of the PSPP and to invest the funds in a manner that secures the long-term sustainability of the PSPP.

We’ve come a long way since OPB was established. Today, the PSPP has grown to over $28 billion in assets, with over 90,000 active, retired and deferred members. We provide online services as well as access to our Certified Financial Planners® to support our active and retired members in making informed and excellent decisions about their pensions. Online services and easy access to information on our website is important, as our members live and work in communities all over Ontario. They are also critical to our retired members. While many have retired and live in Ontario, others choose to live their retirement abroad. In fact, we have retired members living in over 50 countries.

As OPB’s President and CEO, I’m very proud of the work we’ve done to ensure that our members’ retirement remains secure, and that, as a retired member, you can continue to count on us to deliver a high level of service to you.

Our commitment to excellence extends well beyond the services we offer our clients. It encompasses the prudent management of our investments, ensuring that we are investing in a way that supports the promised benefits and the long-term sustainability of the PSPP.

We remain committed to continuing to seek out ways to provide you with innovative cost-effective services, including expanding our commitment to improving the financial and retirement literacy of our members, retired members, and other stakeholders.

We believe this is critically important to us all as we enter the next era of our stewardship of the PSPP, and we could not do it without the support and trust of our active members, retired members, and other stakeholders, including the Plan Sponsor – the Government of Ontario.

We are honoured to be part of delivering pensions to Ontario’s Public Servants and look forward to continuing to deliver the pension promise in the years to come.

This article highlights some of the most common questions and issues that retired members discuss with our Advisors.

“Some of the most common topics raised by our members are with regards to tax planning, or when to start their CPP, and some even ask us for help on when to start drawing on other investments they have,” shares Anthony D’Amico one of our Client Service Advisors.

Pension income splitting, returning to work, and estate planning are notable topics where members in retirement look to us to help them better understand their unique situation. Read on to learn about how our Advisors can assist you. Learn more below, including how to contact our Advisors.

Pension income splitting

Pension income splitting is an important topic for our members, one that our Advisors are often asked about, as it is part of a retirement strategy that can help optimize personal income tax planning. “The important information for our members to know is that the pension they receive from the PSPP is eligible for pension income splitting,” says D’Amico.

“We talk to members about things they need to consider so they are well informed of their options. When it comes to the actual tax reporting and final decisions on income splitting, we encourage them to speak with their accountant or tax advisor because it is important to know their entire financial picture.” OPB Advisors can provide the necessary information to members about pension income splitting, and can also guide members through using our online Retirement Planner’s pension income splitting tool to determine the most beneficial split for the member and their spouse. There is important information about the PSPP and tax rules that we can help our retired members understand – this is why it is important to contact our Advisors before you make any final decisions about your PSPP benefit.

Receiving your PSPP benefit while still working

There are members who would like to continue working after they retire, either in their current role or with a different employer. If you decide to continue working and receive your PSPP pension at the same time, and you are working for an employer who contributes to the PSPP – then there are a number of options available to you that an OPB Advisor can help you navigate. This information is important to know and understand in advance of making your decision, because it can impact your pension income.

“Returning to work, or continuing to work, comes up as a question in pre-retirement planning, as well as in post-retirement sessions,” adds D’Amico. “This is an area where it’s important to speak with us as we are well-versed in interpreting provisions of the PSPP, and therefore are in the best position to help members and retired members understand how this decision may impact their pension. There are a variety of scenarios related to working after retirement that have different outcomes, for example, does the new position require you to contribute to the PSPP? what earnings level is the threshold so the pension isn’t impacted? should I stop my pension and continue contributing? These are all the points we can help you with. If retirees return to work with a non-PSPP employer, there would be no impact on the PSPP pension.

Estate planning

While estate planning is a popular topic of discussion for retirees, D’Amico notes that the Client Service Advisors can only assist members by sharing information about the pension entitlements and how pension funds may be distributed to beneficiaries and/or their estate, and the implications of various alternatives. While we can help our members understand the options and how each can impact various decisions, before proceeding with the creation of an estate plan, clients are always encouraged to seek out legal advice and direction from a trusted tax advisor for more detailed guidance.

Contacting OPB Advisors

Our Advisors are available to help you either in- person or over the phone. To book a one-on-one session, log in to your e-services account at the top-right corner of our website and select ‘Book My 1-on-1’.

Your pension is an incredibly important piece of the retirement equation, but if you’ve taken the time and effort to build other personal investments like RRSPs and TFSAs, you may be wondering when is the best time to start drawing income from other sources.

Depending on what savings vehicles you have accumulated other assets and when you choose to access these funds, you can maximize your savings to add to your retirement income.

Read on to learn more about your options, with information from Client Service Advisor, Michael Trklja one of OPB’s in-house Certified Financial Planners®.

When you should start your CPP and OAS benefits

“When to start these payments will be dependent on your personal financial circumstances. It’s really income-dependent,” shares Trklja. “It depends on how much income you need and when you need it.” Another determining factor is that income sources like workplace pensions, Canadian Pension Plan (CPP) and Old Age Security (OAS) are taxed as regular income, so Trklja advises retired members to look carefully at when they’re going to start receiving these payments.

Deciding on when to start your CPP and OAS is similar to the thought process you go through when deciding on when to retire and start your PSPP. “You can start collecting a reduced CPP at age 60 — but the question is, does that make sense for you, or does it make more sense to wait until age 65 or 71? With OAS, 65 is the minimum age [to start collecting], but when to start these payments will really depend on your personal circumstances – but we can help you understand you options and the possible tax implications of your available choices.”

One strategy you will need to consider is income splitting with your spouse or partner. Read on to understand whether this is an option for you.

Pension income splitting*

As a retired member, splitting your pension income with your spouse or partner is one tax strategy you can employ to help optimize your income. This simply means that your PSPP pension income can be split with your spouse or partner by making an election on your T1032 – Joint Election to Split Pension Income Tax form. You can also apply to share your CPP pension with your spouse using the Pension Sharing form (ISP1002) on the Government of Canada's website.

There are other income splitting options available but these will depend on other sources of retirement savings you have. For example, if you have a Registered Retirement Income Fund (RRIF) you can gain tax credits and reduce your marginal tax rate by splitting this income as of age 65.

These are a couple of options that we can help you understand and pursue with your accountant or when you file your taxes.

*Please note that this section of the article has been corrected since the January 2020 newsletter was mailed. The previous version incorrectly stated that you could split OAS pension, and had listed the incorrect form for pension income splitting.

Other investments and savings

When it comes to other personal investments and saving you may have, there is a lot to consider when determining the best time to draw down these sources of income. Your personal circumstances will ultimately help inform what the best time to access these savings is. Each retired member’s situation will be unique to them and require a deeper look at their individual needs. OPB Advisors can help you determine how your pension income fits within your overall financial plan, and suggest where you might involve an external financial planner to help set you up for a successful retirement.

The most important thing for retired members to do

One piece of advice that applies across the board, Trklja says: “don’t be afraid to ask us for help!”

“A lot of this is new to most people, and the more potential sources of income you have, the more complicated it could be,” he adds. “And sometimes small changes lead to big savings on taxes.” Reaching out to one of OPB’s Advisors can help you understand your financial plan, any decisions you need to consider that affects your finances and how your pension fits within it, and potentially provide a better outcome for retirement.

In addition to this, Trklja also advises retired members to reduce or eliminate debt and give themselves options for flexibility. “Things will happen in retirement that you didn’t foresee, and you’ll need access to capital.”