OPB News for Members
In this 2020 edition of OPB News, we want to express our gratitude to essential workers, especially all of the healthcare workers, first responders, and frontline staff who work hard to keep us safe, as well as let you know about our plan to protect the pension promise during COVID-19. Read more about the recent changes to beneficiary types in the PSPP, learn about the future of the paperless Annual Pension Statement that we’ll be providing starting next year, and hear from one of our Certified Financial Planners on the benefits of a Tax-Free Savings Account (TFSA) versus a Registered Retirement Savings Plan (RRSP).
Amidst the global COVID-19 (coronavirus) pandemic, we want to provide you with an update to reassure you that your pension remains secure and that we are here for you.
Your pension remains secure
As a member of a defined benefit plan, like the PSPP, it’s important to remember that although we continue to see volatility in the markets, pension plans are designed for the long-term. Your pension is based on a pre-set formula and will provide you with a reliable stream of income for your lifetime. It’s not based on how much you contribute or what the markets are doing when you retire. It is also backed by the Ontario government.
We have a strong track record
The PSPP has been paying pensions for 100 years and has a strong long-term rate of return. We have successfully navigated through a number of challenging market periods in the past, like the 2008 global recession. IMCO is actively monitoring the market conditions so we can minimize losses and maximize our ability to take advantage of market opportunities that are aligned with our long-term strategy.
We are here to help you
While we’ve shifted to working from home to help keep our employees and members safe, we are here to help you by email at email@example.com or over the phone at 1-800-668-6203 (Canada & USA). Our Client Care Associates are available Monday through Friday from 8:00 a.m. to 5:00 p.m. (EDT).
We encourage you to visit both the new COVID-19 section on our website to stay informed about any important updates or service announcements, and also our e-services website where you can maintain your personal information, access valuable pension tools, and send us confidential documents securely.
We know this has been a particularly challenging period and we want you to know that we remain committed to serving you and ensuring your pension remains secure.
Mark Fuller, President & CEO
The COVID-19 (coronavirus) pandemic has affected our local, national, and global community in an unprecedented manner. While this has been a challenging time for everyone, it’s been particularly so for all the frontline workers, including many of our members, who have been tasked with the important responsibility of ensuring the continuity of our collective essential services. Every day, courageous and diligent essential workers leave their homes to protect us all.
From healthcare professionals, to first responders and law enforcement, and all workers on the front lines, we cannot thank you enough for your dedication.
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.
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.
Staying cyber safe is always important, but right now it’s important to be even more vigilant. Unfortunately, reports of fraud and cyber scams designed to take advantage of Canadians’ COVID-19 concerns are on the rise. We wanted to take this opportunity to remind our members about best practices and how you can protect yourself from cyber and phone scams designed to trick you into providing personal information they can then use.
Right now, caution is your best defense. If you aren’t sure if something is legitimate, it’s safest to assume that it isn’t. Be particularly wary of any calls or emails pressing you to take action or provide personal information.
Here are some tips to help you protect yourself from cyber and phone scams.
When browsing for COVID-19 information online
With COVID-19 news being top of mind for many Canadians, some cyber scammers have created malicious sites posing as COVID-19 information sites. This is why it’s important to only visit sites from known sources, such as government sites and health authorities or reputable news sites.
Tip: Never click on links from unknown sources, and only use your search browser to search for the information you are looking for.
When using personal or work email accounts, shopping, or communicating online
If an email seems suspicious or doesn’t feel right, err on the side of caution. Here are some clues that may indicate a scam:
- Emails creating a tremendous sense of urgency (i.e., emails trying to get you to act NOW).
- Someone asking for information they should already know, such as bank account, SIN number, or your birthday.
- Requests for your password.
- Something that seems too good to be true (such as randomly winning a prize or giveaway or incredible deals on household supplies).
- An email from a friend, family member, or acquaintance that doesn’t seem right, because of words or phrases that they wouldn’t normally use.
- If the email from a close acquaintance seems legitimate, verify it by calling, texting, or emailing them at a different email address if you have one. Using a different channel to authenticate the email will establish whether it is legitimate or if their email account may be compromised.
Here are some helpful tips when you’re online:
- Avoid clicking on links or opening attachments in suspicious emails. If you receive an email from a sender that appears to be less than reputable, delete the email immediately.
- Don’t use the same password for multiple online accounts. Using different passwords that are sufficiently robust is the best way to ensure all of your accounts are safe.
- Only connect to trusted sources of internet or Wi-Fi that are protected with a password you know to be secure.
Always remember to fully logout of sites with sensitive personal information, like email and personal banking sites.
Phone and cell phone scams are also on the rise, so it’s important to be particularly cautious right now. One of the best things you can do to protect yourself is to only answer calls from people you know. However, in this day and age some fraudsters are able to clone numbers to make it look like it’s coming from a person or organization you trust. Your best course of action, particularly for organizations, is to let the call go to voicemail.
If an organization leaves you a voicemail asking you to call back with personal information or threatens to cut off services, it’s likely a scam. Your best bet is to contact the organization directly through their customer service number to inquire about the message you received. This is especially important for anyone close to you that is applying for financial assistance from the government due to COVID-19.
If you do answer the call, it’s best not to provide any personal information on the call. Even if you believe the call is legitimate, your best bet at protecting yourself is to call the company back directly through their customer service number (do not call a number the individual provides to you).
For more information about cyber security and to stay updated on the latest news, check out Public Safety Canada’s website. To report a scam or fraud, visit Consumer Protection Ontario, or the Canadian Anti-Fraud Centre.
At OPB, we’re committed to delivering exceptional service to our members.
We’ve enlisted the support of Ipsos, a trusted global leader in market and opinion research, to help us get your feedback on how we’re doing.
Each month, Ipsos acts on our behalf to contact randomly selected members who have recently been in touch with OPB for a telephone survey. These telephone surveys help us understand what’s important to you and how we can improve our services.
OPB does not share any confidential information, or any details of your interaction with us, with Ipsos.
If you are selected to participate, you will receive a call from 416-847-9020 and the caller will identify themselves as Ipsos, calling on behalf of OPB, to request feedback on your recent service experience.
You’re not obligated to participate in a survey for us — you can decline participation at the beginning of any call from Ipsos — however, we definitely appreciate your feedback if you’re willing.
If you prefer to not be contacted by Ipsos for our survey, call our Client Care Centre at 1-800-668-6203 or send an email to firstname.lastname@example.org, and we will ensure you aren’t included in the survey calls.
You can also contact us if you have any feedback or suggestions you’d like to share — we would love to hear from you.
We appreciate your input on how we can continue to provide the best service to you. We’ve heard your feedback, and we’re excited to announce that starting next year, OPB will be moving to digital delivery and providing you with your Annual Pension Statement (APS) through e-services.
We are only providing the APS through e-services so this would be a good time to open an account if you haven’t already.
We’re excited about this change because we not only believe it is the most environmentally-friendly choice, but because we keep up to three years of previous statements online, you will never need to worry about misplacing them!
Most importantly, it will be easy. To make sure you can view your digital statement next year, you’ll need to ensure that we have your email address (Tip: a personal email address is preferred over a work email address) and that you are registered for e-services. If you’re not already registered, you can access e-services by visiting our website at OPB.ca and clicking the ‘Login’ link in the top, upper right corner of the screen, then follow the on screen instructions.
Just so we’re sure we have it right, this summer, we will mail you a notice confirming the email address we have on file for you and requesting that if it is not your current primary personal email address that you please log into e-services and update your email address.
If a paper copy of the APS is your preference, stay tuned — we will provide you with further instructions in our summer communication on how you can confirm your preference to receive a paper copy.
Choosing to still receive a paper copy will not affect your ability to view your APS in e-services — it will just ensure that you also receive a copy in the mail as you do today. If you have any questions, please reach out to us toll-free at 1-800-668-6203 or at 416-364-5035 or email us at email@example.com.
RRSPs vs TFSA: Which is more effective in enhancing my retirement income?5 minute read
As you plan for your retirement, you may be wondering about the best way to make your money work for you. You’re making great headway with your pension, but may be curious as to whether other personal savings options like Tax Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) could help add to your retirement income. The quick answer is yes —but there are important factors to consider when deciding between the two.
Are your savings goals long-term or short-term? When will you want to withdraw funds? What are your current and projected retirement income and tax levels? If your PSPP pension is the anchor of your retirement income, RRSPs and TFSAs are savings vehicles that can provide additional retirement income depending on your retirement goals. Our Client Service Advisors are Certified Financial Planners®, and are able to help you navigate key decisions that affect your pension and overall financial health. If you’re considering a TFSA or an RRSP, let Renée Verret — one of our Advisors — give you some helpful information.
Key differences and similarities
There are notable differences and similarities between TSFAs and RRSPs. “The goal of an RRSP is long- term, generally used to provide supplemental retirement income,” says Verret. “A TFSA can be used for short, medium, or long-term goals as the account is multi- purpose.”
Also important to note is that for 2020, the annual limit for RRSP contributions is 18% of your previous year’s annual income, to a maximum limit of $27,230, minus your pension adjustment (PA), where the annual limit for TFSA contributions is set each year by the Federal government. For 2020, the TFSA contribution limit is $6,000.
There are some similarities. Both:
- Can be used as forced savings plans that can be set up with automatic contributions
- Can hold investment products such as equities, bonds, exchange traded funds (ETFs), or mutual funds
- Allow you to carry forward previously unused contribution room
Contributions to your RRSP may generate a tax refund or lower the amount you pay because these contributions are tax deductible. With a TFSA on the other hand, while your contributions are not tax deductible, your investment income is not taxed. The higher your income the more attractive the RRSP is, as you contribute at a higher marginal tax rate while working and you —likely — withdraw at a lower marginal tax rate when retired. This is when the product works best.
Conversely, if your tax rate while working will be similar to when you are retired, the RRSP won’t be as beneficial to you. In that case, a TFSA would work well. To help you figure out which savings solution best supports your long-term financial planning strategies, you can contact one of our Advisors to discuss your options.
Withdrawing from your RRSP before retirement is a decision that shouldn’t be taken lightly, as RRSPs should be considered a longer-term strategy aimed at helping you save and grow your retirement savings. “Withdrawing income from your RRSP before retirement is not recommended as it always attracts tax,” advises Verret. Investments may have to be sold, which could result in fees — and you’ll lose that RRSP contribution room permanently.
Withholding tax rates for RRSP withdrawals are:
- up to $5,000: 10% tax,
- between $5001 and $15,000: 20% tax, and
- greater than $15,001: 30% tax
“Any RRSP withdrawals are added to your income in the year received,” adds Verret. “If you are a high income earner, such as with a salary of $100,000, you will owe more tax on the RRSP withdrawal when you file your taxes, as your marginal tax rate on the next dollar earned at that income level is 43.41%.”
“There are no penalties for withdrawing funds from your TFSA. There are no taxes to pay, nothing is withheld at source, and you do not lose the contribution room — in fact, you regain that contribution room the following year. This is why the TFSA is a great account for short term goals.”
As members of a Defined Benefit (DB) pension plan, you will receive a pension adjustment (PA) on your annual T4 that reduces your RRSP contribution room for the following year. This limits the amount of RRSP contributions DB plan members can make over and above their pension contributions.
For TFSAs, there is no reduction to your annual limit neither pension contributions nor RRSP contributions affect TFSA contribution room. If you will be opening a TFSA for the first time in 2020 and you turned 18 in 2009 or earlier, you will have the maximum $69,500 in contribution room.
Which is best for you?
There’s a lot to consider when deciding whether an RRSP or TFSA is best for your scenario.
Personal tax rates are important both while working and in retirement. If you’re in a high marginal tax rate with a spouse in a lower tax bracket and you anticipate a large pension, making your annual RRSP contribution to a spousal plan will allow you to receive the tax deduction while your spouse can draw the income in retirement. Alternatively, you can maximize your TFSA and draw supplemental income in retirement that attracts no tax.
Your goals also play an important role in which product you choose and, usually, a mix of both TFSAs and RRSPs is ideal. Here are some common savings goals and which product is the best option:
- Home renovations — TFSA
- Vacation — TFSA
- Supplemental retirement income — either one, depending on the annual target and duration of income stream
- Down payment on a home — either one, but the RRSP will allow you to use the Home Buyer’s Plan
Understanding the benefits and limitations of RRSPs and TFSAs is crucial for a solid savings plan, no matter which one you choose. Seek out resources, ask questions, and make informed decisions — and remember, our Client Service Advisors are available to help you! Advisory services are offered at no cost to PSPP members over the phone or via a video call. 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’.
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.