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

2. Agenda
What to expect
Benefits
Retirement timelines
Planning
Q & A

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

4. 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

5. 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

6. 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

7. 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

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

9. 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

10. 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

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

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

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

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

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

16. 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

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

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

19. 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

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

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

22. 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

23. 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

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

25. 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

26. 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

27. 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 $1,271,000 = 8.2 x best average salary
Age $1,491,400 = 9.6 x best average salary

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

29. Contact Information
Client Services: or
Website:
Document Accessibility: PSPP documents are available in other formats upon request.