OPB News for Members
Tips to maximize your income and retire early
As a member of the Public Service Pension Plan (PSPP), you're already well on your way to building a solid retirement nest egg. However, there may be more you can do now to help you achieve your goals. Here are some tips from our Client Service Advisors to help you maximize your retirement income – and perhaps even retire early.
Buy back eligible service
Buying back eligible service can help you increase your pension and it may even help you qualify for an unreduced pension sooner. For example, if you took a leave of absence and didn't contribute to the PSPP, you may be eligible to buy back service. Check out the 'Buying back credit' page on our website at www.opb.ca.
Manage your debt
Most of us have some debt – whether it's school loans, a line of credit, or a mortgage. If you do have debt, look at establishing a budget and incorporate a repayment plan with a realistic timeline of when you want to have your debts fully paid. The key is not to let it get out of control.
Establish good savings habits now
No matter what career stage you're in, it's a good idea to get in the habit of setting up automatic transfers to allocate your money to specific savings accounts. It's an easy way to build your savings until you need to tap into it in retirement. By setting aside just $2/day (the cost of a coffee), you can save over $20,000 in 30 years — and that's without any interest!
Determine where to put your savings
A Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA) can help you save for retirement faster. The benefit of these savings vehicles is that you're saving for your future and you're getting a tax break. Generally speaking, your best tax break comes from contributing to your RRSP since it reduces your taxes owed now and defers it to retirement, when you'll likely be in a lower tax bracket. If you've maxed out your RRSP contribution room, or you don't expect to be in a lower tax bracket in retirement, then consider contributing to your TFSA which allows you to tax shelter your investment returns. Speak with one of our Client Service Advisors to better understand your options.
When was the last time you looked at your monthly spending? Do you really need that premium cable package? Do you actually use that gym membership? Take an inventory of your expenses and look for unnecessary costs or areas where you can cut back. This will allow you to be in a surplus cash position and help ensure you're saving enough for your future retirement. Don't forget to use our helpful retirement planning tools in e-services – such as the 'Pension Estimator' and 'My Retirement Planner'.
These tools allow you to get a good idea of what you can expect to receive in retirement, as well as helpful budgeting and expense worksheets. Simply log in to your e-services account on our website at www.opb.ca and get started!
TIP: Revisit your cash flow annually to ensure you're still aligned with your plan and you're spending at a level that's comfortable and sustainable for your desired lifestyle.
Got questions? If you're not sure where to begin, give us a call and we can advise you on areas you should be thinking about based on your personal circumstances. Book a one-on-one discussion with one of our Client Service Advisors, many of whom are Certified Financial Planners, who can help answer your retirement planning questions while taking into account how your pension fits into your larger financial planning picture. To book a session, log in to your e-services account and select 'Book my 1-on-1'.
Save, spend, pay? What to do with your tax refund
If you received a tax refund this year, what do you plan to do with it? Will you pay off your debt, spend it, save it? There are several different options available, but it ultimately depends on what your financial goals and priorities are. Here are some suggestions from our in-house Client Service Advisors.
Pay your debts first
Since most credit cards carry an interest rate of around 20%, if you have outstanding credit card debt, then you should focus on paying that off first to reduce the amount owing. This will save you money in the future because your future interest costs are lowered or eliminated. This will also help improve your credit rating.
Utilize your available savings vehicles
Depending on your savings goals, the government of Canada has three excellent savings vehicles that can help you save and reduce your tax bill. The TFSA can be used for short and long-term savings, and it allows you to withdraw your savings at any time – tax-free. Earnings on your savings and investments within your TFSA (e.g., mutual funds, Guaranteed Investment Certificates) are not taxed. Contributions made to your RRSP are tax deductible. Earnings on your savings and investments within the RRSP will be taxed when withdrawn. You can also borrow from your RRSP to help fund the purchase of your first home, or for education. Lastly, the Registered Education Savings Plan (RESP) is designed to help you save for your children's post-secondary education.
Don't forget! The penalties for exceeding your RRSP or TFSA contribution room can be quite high. Check out your personal CRA account, 'My CRA', to monitor your contribution levels. For more details, visit www.Canada.ca.
Put it towards your mortgage
If you have the ability to increase your regular monthly payment or make a lumpsum payment towards your mortgage, this is a good way to pay it down faster. Check out www.Canada.ca to read more about how to pay off your mortgage quicker and see examples of how much you can save over time.
Save for your children's future
The RESP is a great way to help save for your children's future education while paying no additional tax when the money is in the plan.
Another advantage to RESPs is that the federal government gives you 20 cents (or 20%) for every dollar you contribute up to a maximum annual contribution of $2,500. For more details, visit www.Canada.ca.
Our Client Service Advisors can help you determine which of these strategies can best meet your personal financial goals. To book a one-on-one, log in to your e-services account on our website at www.opb.ca.
Changes to LTIP for OPPA & PEGO members only
The Plan Sponsor recently amended the PSPP to make changes to Long-Term Income Protection (LTIP) rules for Professional Engineers, Government of Ontario (PEGO) and Ontario Police Association (OPPA) members. The changes were effective on May 1, 2017 for PEGO members and January 1, 2018 for OPPA members.
Who is affected?
The changes apply to individuals who are approved for LTIP and are:
- represented by PEGO,
- represented by OPPA,
- represented by the Commissioned Officers' Association (COA), or
- OPP Commissioners or Deputy Commissioners.
What is different under the new rules?
PEGO and OPPA members approved for LTIP who have earned 30 years of pension credit and have reached an early unreduced retirement date (EURD) will be required to either:
- begin making contributions to the PSPP (with the employer making matching member contributions),
- not make member contributions to the PSPP and stop earning pension credit, or
- retire and immediately begin receiving an unreduced PSPP pension.
The employer will continue to make both member and employer matching pension contributions to the PSPP for PEGO and OPPA members up until the date they have earned 30 years of pension credit and reached their EURD. For more details on the changes, please visit our website at www.opb.ca.
Upcoming feedback sessions
This year we'll be conducting sessions to gather your feedback on what you'd like to see more of, and areas you think we could improve – from client experience, to our website, and member communications. If you're interested in participating, please send an email to Feedback@opb.ca and indicate 'Interested in participating' in the subject line. We'll add you to our distribution list and we'll notify you when the next focus group is happening.
Make sure your contact information is up-to-date
Now that you've received your APS, it's a good time to review and update your contact information (address, phone, and personal email), marital status, and beneficiaries. You can do this online using e-services. We use your contact information to keep you updated.
Highlights from our 2017 client survey
At OPB, we're committed to delivering exceptional service to our members. Each month, we survey a sample of active and retired members with the help of our trusted client survey partner, Ipsos.
These telephone surveys help us understand what's important to you and how we can improve our services to ensure you're making the most informed decisions about your pension.
You're not obligated to participate in a survey with us, the choice is yours. However, we definitely appreciate your feedback if you're willing!
If you don't hear from us and you have feedback or suggestions you'd like to share, send an email to email@example.com or call us at 1-800-668-6203.
Here's a snapshot of our top survey results
- 87% of our members reported they were satisfied or extremely satisfied with the service they received
- 9/10 of our members agree that is reliable and trustworthy
- We were rated the highest in the following areas:
- providing accurate and reliable information;
- having knowledgeable staff;
- being caring and genuinely interested in helping; and,
- responding in a timely manner.
Your suggestions help us improve our services
- Quicker/more timely service
Our e-services allow you to make personal information changes and generate pension estimates quickly and easily.
- More updates
Register for e-alerts to make sure you're receiving the latest updates from us.
- Personalized services
Call our Client Care Centre. You can also book a one-on-one session with our in-house Client Service Advisors.
- Clear communication & more video
We're launching our new website, based on your feedback, later this year. It will have more helpful information and new features (including video) to serve you better!
Thinking of retiring soon?
There are a few important things you should know. On your statement, we include a pension estimate if you work until your Earliest Unreduced Retirement Date (EURD). You can choose to retire on that date, however, we recommend that you try to retire at the end of the month so there is less of a gap between your last pay cheque and your first pension payment. This will also help you to earn extra credit in the plan. Pension payments usually fall around the 22nd of each month. As a reminder, your first pension payment will be made the month following your retirement.
When you retire and if you qualify for insured benefits, it’s important to know that your dental coverage that you had with your employer will end on your retirement date and won’t continue to the end of the month, if you retire earlier that month. For other insured benefits that you qualify for, they will continue until the end of the month.
Lastly, you will receive your Great-West Life drug card (if eligible) approximately 6-8 weeks after your retirement date.
Questions? Call our Client Care Centre at 416-364-5035 or toll-free at 1-800-668-6203.
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.