OPB News for Retired Members

June 2017

For many retirees, spending drops after retirement, but spending habits continue shifting depending on the stage of retirement you're at. Understanding this so you can plan properly is an important part of managing expenses in retirement.

Earlier in your retirement, your overall expenses may increase if you're travelling, investing money in your home to create your retirement oasis, dining out or upgrading your car for a new convertible.

Over time, expenses can increase due to health care costs and spending typically shifts more towards your needs versus your wants. Throughout your retirement, there are some important considerations and questions to keep in mind to help manage your expenses:

Develop and maintain a budget - Budgeting throughout retirement is essential if you want to maintain your lifestyle. Looking at your current expenses, cash flow, as well as your needs and wants, will help you stay on track and recognize early on if you need to make adjustments to live well in retirement.

Do a check-in every few years - You may have developed a strategy before retiring, but now is a good time to update it to ensure it's realistic based on your current situation. For example, are you happy balancing your time between home and hobbies? Are you spending too much or not enough time travelling? Do you have a surplus or do you need to reduce expenses? Considering everything from entertainment to prescription costs will give you a more realistic picture of your spending habits.

Plan ahead for health care costs - Thinking about what your expenses may be in three, five or even 10 years can help you plan for the expected and unexpected expenses. We know one thing for sure, personal health care costs will continue to increase - so you need to be prepared.

It's important to keep in mind that your financial needs will likely shift throughout your retirement. If you adjust your budget accordingly, it will help make your retirement far more enjoyable.

We can help you. Give us a call or drop in and meet with one of our Client Service Advisors, who are all Certified Financial Planners. They can help answer any questions you have about navigating your retirement.

If you're thinking about returning to work with a Public Service Pension Plan (PSPP) employer, read on to find out how re-employment may impact your pension.*

Returning to work with an employer that contributes to the PSPP?

If you're rejoining the PSPP, your pension will be suspended by OPB while re-employed and you will resume making contributions to the Plan. Your pension will be re-calculated when you retire again.

If you're not rejoining the pension plan, then you will be subject to a quarterly re-employment earnings limit.

If you aren't returning to work with an employer that contributes to the PSPP, then there is no impact on your PSPP pension.

What is the quarterly earnings limit?

The quarterly re-employment earnings limit is the difference between your final monthly salary before retirement and your initial monthly pension payment (without cost-of-living applied) multiplied by three. To read more about this formula, visit the 're-employment of pensioners' page in the 'Employers' section of our website.

If your gross quarterly earnings exceed your quarterly earnings limit, your pension will have been overpaid and you will have to repay the overpayment to OPB.

Want to know what your re-employment earnings limit is?

If you retired after 2011, you can find it on your Retirement Confirmation Statement. You can also find out by calling our Client Care Centre at 1-800-668-6203 or 416-364-5035 and requesting it.

Not sure if an employer contributes to the PSPP and whether you'll be subject to the re-employment rules?

You can contact our Client Care Centre for confirmation on how the rules would apply in your particular situation.

Wondering how your re-employment income could impact your Canada Pension Plan (CPP) and Old Age Security (OAS) entitlements?

Your CPP entitlement will not be affected by the salary you receive while re-employed. However, you may want to consider the impact to your CPP entitlement if you decide to contribute to CPP while re-employed.

If you are receiving an OAS entitlement, it may be affected. If your total personal income is above the OAS income threshold, then your OAS entitlement will be affected. For details on the OAS income threshold, please visit www.servicecanada.com.

Please speak to one of our Client Service Advisors to discuss the impact of re-employment to your PSPP pension, government benefits, and tax planning.

*Different rules apply to Justices of the Peace paid on a per diem basis.

Your PSPP pension comes with valuable survivor benefits to help protect your spouse after you pass away, but it's just one part of your overall estate. To protect your family, it's important to develop a holistic estate plan that deals with all of your assets.

“Having the conversation with your heirs early can help proactively mitigate any underlying issues and address any potential conflicts,” said Renée Verret, Client Service Advisor and Certified Financial Planner at OPB. “It also allows full transparency so everyone is clear on their inheritance. This can help provide you with peace of mind.”

Our Certified Financial Planners have put together this helpful checklist:

  1. Keep your estate plan updated - When was the last time you reviewed your Will and Power(s) of Attorney? It's a good idea to review these periodically to ensure they are current.
  2. Do you have a Will? Who will be the executor? If you're married or re-married, you need to consider alternative plans in the event that both you and your spouse pass away at the same time. Talk to your executor in advance to ensure they're okay with this responsibility.
  3. Revisit your Power(s) of Attorney (POA) - Do you require a POA for property or personal care? Depending on your circumstance, you may need someone to make personal care decisions on your behalf. It's important to have the conversation so they know what your wishes are. Alternatively, you may require a POA for property who can make decisions about your finances, home, and other possessions.
  4. Have the discussion - Speaking with your heirs now can help avoid unnecessary stress down the road. If a vacation property such as a condo in the U.S. or a family cottage is part of your estate, it's especially important to discuss any tax implications.
  5. Who are your beneficiaries? Designating your beneficiaries in advance is important because it ensures your assets are distributed the way you want and makes the process much smoother for your loved ones. If there is no named beneficiary, the assets will flow to your estate and your estate will go through probate. Estate fees will then be paid to the Government of Ontario for all assets included in your estate.
  6. Consider giving now - This is an option that some of our members choose which provides your child(ren) with support now. When you pass away, your RRSP proceeds will be fully taxable if your named beneficiary is an adult child, with a few exceptions. This can result in a large effective tax rate in the year of your death. So, you may want to consider giving now to prevent this outcome.

Have questions? We encourage you to speak with one of our Certified Financial Planners about your estate. To book an in-person or telephone meeting, login to our secure e-services at www.opb.ca or call our Client Care Centre at 416-364-5035 or toll-free at 1-800-668-6203.

Did you know? The Ontario Government has introduced an optional upgrade for insured benefits. It is applicable to certain individuals receiving a pension from the PSPP.

This means eligible retirees enrolled in the Legacy Plan and the Retiree-Focused Plan will have access to a bundled Optional Upgrade Package effective August 1st, 2017.

If you are enrolled in the Legacy Plan - the upgrade package includes: catastrophic drug coverage, emergency out-of-country coverage, and access to Great-West Life's global medical assistance program.

If you are enrolled in the Retiree-Focused Plan - the upgrade package includes: emergency out-of-country coverage and access to Great-West Life's global medical assistance program. Your coverage under the Retiree-Focused Plan already includes catastrophic drug coverage.

Here are a few important things you should know:

  • The following groups are not eligible for this coverage: Judges, Case Management Masters, Justices of the Peace, members of the Ontario Provincial Police Association, First Nations Constables, and their respective survivors.
  • Your upgrade coverage is tied to your base insured benefits plan coverage (i.e., Retiree-Focused Plan or Legacy Plan). Any changes to your base plan (e.g., from family to single) will automatically be applied to your upgrade coverage.
  • You can elect to terminate coverage at any time; however, a decision to terminate upgrade coverage is irrevocable.
  • Coverage and premium deductions will begin the month following the month OPB receives your completed application. If you elect this coverage, you will be responsible for paying 100 per cent of the premiums. Note that premium amounts can change at any time.

For more details on the Optional Upgrade Package, including the premiums, visit the 'Pensioner/Retired Member' section of our website at www.opb.ca.

It's a good time to review and update your contact information (address, phone, and personal email). You can do this online using OPB's secure e-services. We use your contact information to keep you updated.

If you haven't already registered for e-services, go to our website at www.opb.ca, click Login at the top-right corner of the page and follow the steps online, or call OPB's Client Care Centre at 1-800-668-6203 to register immediately over the phone.

Throughout the year we'll post important updates about the Plan and share expert articles to help you maximize the value of your pension.

To receive these updates, make sure you're registered for e-alerts.

If at any time you want to be removed from our distribution list, you can simply send an email to clientservice@opb.ca and indicate 'Unsubscribe' in the subject line.

Tuesday, June 20th marked the first day of summer and that means time to pull out the hats, SPF, sunglasses and get out there with your family to celebrate the long-awaited warm weather and sunshine.

If you're looking for fun things to do with your family in Ontario, here are a few ideas to consider:

Enjoy the outdoors - Ever been camping before? It's a great way to disconnect and spend quality time with your family in the beauty of nature. The Ontario Parks' website allows you to browse different areas to find a park you like, reserve a camp site, and lists some fun experiences. Check out www.OntarioParks.com to get your summer plans rolling. Don't forget, it's Canada's 150th anniversary this year so that means free admission for the entire year to Parks Canada from coast to coast. Check out www.pc.gc.ca to learn more.

Road trip! If you're up for an adventure, take a boat cruise of the Thousand Islands in Gananoque, enjoy some of the most beautiful sunsets in the world along the shores of Lake Huron and visit some of the quaint towns nearby.

Enjoy some live music - Summer is one of the best times to enjoy live music and there is certainly no shortage of concerts and festivals to check out.

Don't miss the Toronto Caribbean Carnival starting July 11, the Ottawa RBC BluesFest July 6-16, or the Hillside Festival near Guelph July 14-16.

Check out Ontario Travel's events calendar to see a full listing of events happening this summer at www.OntarioTravel.net.

Calling all animal-lovers - Whether you're observing butterflies at the Cambridge Butterfly Conservatory, watching the sharks swim at Ripley's Aquarium, feeding animals at the Brantford Twin Valley Zoo, or watching Er Shun and Da Mao, the giant pandas at the Toronto Zoo - this is a great opportunity to excite the animal-lovers in your family. Check out Ontario Travel's list of zoos and animal parks at www.OntarioTravel.net.

Learning can be fun - Keep the grandkids engaged during summer break by exploring the Ontario Science Centre, the dinosaurs at the Royal Ontario Museum, the Hamilton Children's Museum, the Canadian Museum of Nature in Ottawa, the Art Gallery of Ontario, or do some star-gazing at the Long Point Observatory. There's no shortage of fun things to do together! Check out Ontario Travel's list of children's museums and science centres at www.OntarioTravel.net.

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.