Planning Your Retirement Presentation to ALOC & OCAA Tuesday April 30th, 2013

Agenda What to expect Benefits Retirement timelines Planning Q & A

What to Expect: Benefits PSPP Pension - Entitlement - Formula - Survivor pension - Buyback CPP Pension - Eligibility - Maximum Benefit OAS Pension 3 3

PSPP: When Can I Retire? Unreduced Pension Reduced Pension - age 65 - 60/20 Rule - age 65 - 90 Factor Reduced Pension - starting at age 55 - 5% reduction per year from age 65 4 4

Pension Formula PSPP bridge benefit ends at age 65 0.7% x 3 year average YMPE or pensionable salary, if less credited service 2% Average of Best 60 consecutive months’ pensionable salary

Pension Formula Example: Member retiring at age 65 Basic Pension 2 % x $180,000 x 25 years = $90,000/yr PSPP Bridge Benefit (ends at age 65) 0.7% x $48,500 x 25 years = $8,488/yr Annual PSPP Pension = $81,513

PSPP: Formula Earnings Credited Service - 60 highest consecutive months - base salary Credited Service - period during which contributions are made - buy back service - transfer from another plant 7 7

PSPP: Survivor Pension After Retirement - with/without spouse - children - beneficiaries Before Retirement 8 8

PSPP: Death After Retirement With Spouse: - your choice (50% to 75%) - greater than 50% at a cost to you - documentation required Without Spouse: - eligible children - no eligible children - beneficiary/estate 9 9

PSPP: Death Before Retirement With Spouse - CV paid to spouse No health benefits No future entitlements under PSPP - CV converted to pension Paid for spouse’s life Indexing Health benefits 10 10

PSPP: Death Before Retirement Without Spouse - CV paid to beneficiary or to estate - No other benefits from PSPP 11 11

PSPP: Purchasing Credit Prior OPS Service Leaves of Absence 2-year window Actuarial Cost 12 12

PSPP: Purchasing Credit Non-OPS Service - Buy Back - Transfer Check with OPB for: - Eligibility - Cost Method 13 13

PSPP: Re-employment Working in OPS Outside OPS - rejoin PSPP - receive pension with earnings test Outside OPS - no limits 14 14

PSPP: Health Benefits Standard Insured Benefits Must be receiving pension to be eligible Spousal coverage if survivor pension paid 15 15

PSPP: Timelines Review survivor pension options a minimum of 2 – 3 years before retirement Notify OSS/OPB of your retirement plans a minimum of 6 months prior - check information - set date - complete forms 16 16

PSPP: Timelines Retirement package will arrive 2 – 3 months before retirement - information package - request for missing documents - return signed forms 17 17

Retirement Income: Other CPP – age 60 or 65 OAS – age 65 RRSP’s – you decide Savings – you decide 18 18

Retirement Income: CPP Full CPP from age 65 Maximum benefit: $1,012.15/month Reduced from age 60 Reduction depends on year of commencement 19 19

Retirement Income: OAS Eligibility based on residency in Canada OAS maximum benefit $546.07 Clawed-back based on income test 20 20

Retirement Income: Personal RRSPs - can convert to life annuity - income stream you manage - lump sum withdrawals Savings House - downsize 21 21

Planning: Online tools Pension estimator - projections based on earnings, service, date - comparisons Retirement Planner - retirement income sources - understand expenses in retirement - understand taxes in retirement - income splitting 22 22

Planning: Online tools Buyback cost calculator - return on investment Change personal information - pension estimate - understand total Initiate retirement process - inform OPB of retirement plans 23 23

Plan Benefits Inflation Protection: Health Benefits: - Guaranteed indexing in retirement Health Benefits: - Must have 10 years service in PSPP 24 24

Impact: Inflation Protection Purchasing power with annual inflation at 2.5% After 10 years $90,000 = $70,200 (22% less) After 20 years $90,000 = $54,900 (39% less) After 28 years $90,000 = $45,000 (50% less) Purchasing power with annual inflation at 3.5% After 20 years $90,000 = $45,000 (50% less) 25 25

Value of Your Plan Lump Sum worth of your pension: $$ need to = PSPP retirement benefits Benefit of forced retirement savings and impact of late start Value of 100% inflation protection Based on caution, conservative assumptions about the future 26 26

Value of Your Plan Example: Assumptions: 6% ROR (Nominal) Annual Pension: $77,500 per year to age 65 before CPP Integration Pool of Capital Needed for Annual Pension Age 65 $1,271,000 = 8.2 x best average salary Age 60 $1,491,400 = 9.6 x best average salary

Impact of Delayed Savings Pool of Capital Needed for PSPP Equivalent: $1,271,200 Start Save For Must Save Day 1 25 years $26,500 per year Year 10 15 years $62,500 per year Year 20 10 years $110,500 per year 28 28

Contact Information Client Services: 416.364.5035 or 1.800.668.6203 Website: www.opb.ca Email: clientservice@opb.ca Document Accessibility: PSPP documents are available in other formats upon request.