Retirement Seminar

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Retirement Seminar
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Agenda

• Administration
• Basics of the Public Service Pension Plan
• Pension formula
• Pension options
• Other factors that affect your pension
• Increasing pensionable service
• Retirement process
• After retirement

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Public Service Pension Plan

• Governed by
• Public Service Pension Plan Joint Trust Agreement
• Public Service Pension Plan Rules
• Public Service Pension Board of Trustees,
  composed of employer and employee representatives
• Administered by
• The BC Pension Corporation

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Web Services

• Visit our website for plan information
• pspp.pensionsbc.ca
• Access My Account for
• a copy of your Members Benefit Statement
• online pension estimator
• online purchase cost estimator
• view your account information

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Basics

• PSPP is a defined benefit plan
• Your personal contributions do not affect your
  final benefit
• A formula determines your pension benefit
• Age
• Salary
• Pensionable service

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Basics

• Age
• Normal retirement age 65
• Earliest retirement age 55
• Ages 60 and 50 for correctional facility
  employees
• Salary
• Highest Average Salary (HAS)
• Service
• Contributory service determines eligibility and
  reductions
• Pensionable service determines benefits ()

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Unreduced Pension

• Age 55 to 60 and your age plus contributory
  service totals 85 or more
• Age 60 or older with two years or more of
  contributory service

Reduced Pension

• Pension is subject to a reduction if either of
  the above tests are not met

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Example of Rule of 85

• Example
• Age 56 years 2 months
• Contributory service 28 years 10 months
• Total 84 years 12 months
• 85
• Unreduced Pension

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3 Reduction Factor

• 10 years or more of contributory service, and
  terminate at age 50 and before age 60
• Calculated from lesser of 85 or age 60
• Maximum reduction is 15

Otherwise, the reduction is 5 to a maximum of 25
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Example of a Reduced Pension

• Example
• Terminated employment May 31, 2007 at age 55with
  28 years of contributory service
• Immediate pension
• Reduction in pension

28 55 83 85 - 83 2 60 - 55 5
Lesser is 2 Reduction is 3 x 2 6
A 2,000 pension is reduced to 1,880
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Age and Service Affect Your Pension
85 ? 70
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Pension Formula
A. Pension Formula to age 65




B. Minus Bridge Benefit at age 65
Your monthly unreduced lifetime pension (A - B)
from age 65


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Pension Formula
Your basic monthly pension is calculated in two
steps
A. Pension Formula
5-year Highest Average Salary (monthly)
Years of Pensionable Service
2(0.02)
x
x


Minus ...
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Pension Formula
B. The Bridge Benefit
Lesser of 5-year Highest Average Salary or
YMPE (monthly)
Years of Pensionable Service
0.65(0.0065)
x
x


YMPE Years Maximum Pensionable Earnings. Used
in the determination of your Canada Pension Plan,
and is updated annually to reflect the national
average industrial wage. The YMPE for 2007 is
43,700 (3,642 monthly)
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Calculating Highest Average Salary
Pensionable Service 4.00 12.00 12.00 12.00 1
2.00 8.00 60.00 months
Avg. Salary 4,375 4,333 4,250 4,167 4,058 3,
853 4,167

• Year
• 2008
• 2007
• 2006
• 2005
• 2004
• 2003

Salary 17,500 52,000 51,000 50,000 48,700 30
,820 250,020
HAS 250,020 / 60 4,167 per month
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Pension Formula Example

• Retirement date July 31
• Pension effective date August 1
• Plan members age 58
• Spouses age 56 years, 2 months
• Pensionable service 28 years
• Contributory service 28 years
• HAS 4,167

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Pension Formula Example

• Basic monthly pension to age 65
• 2 x 4,167 x 28 2,334
• Minus the bridge benefit
• 0.65 x 3,642 (YMPE) x 28 663
• For a lifetime pension after age 65 of 1,671
• Age 58 Contributory service 28 582886
• No Reduction Applied

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Pension Options

• Single life guaranteed 5, 10 or 15 years
• 100 joint life
• 60 joint life guaranteed 5, 10 or 15 years
• Temporary annuity (qualifies for indexing)

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Sample Pension Options
Bridge Benefit
Basic Pension
Option
Survivors Pension
Temp. Annuity
Pension after 65
Pension to age 65
Monthly Pension Option
Single life pension guaranteed 5 years
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2,352
663
1,689
1,689
Single life pension guaranteed 10 years
2,334
1,671
1,671
663
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Single life pension guaranteed 15 years
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2,298
663
1,635
1,635
Single guaranteed 5 yrs. Temp Annuity
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1,503
2,656
490
663
1,503
100 joint life pension
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2,085
1,422
663
1,422
1,422
100 joint life temporary annuity
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2,419
663
1,266
490
1,266
1,266
60 joint life guaranteed 10 years
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2,174
663
907
1,511
1,511
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Gross Retirement Income by Age
65
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Retirement
Canada Pension Plan
Canada Pension Plan
Bridge Benefit
Old Age Security
Lifetime Pension
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What should I think about when selecting my
Pension Option?
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Life Tables
PSPP Life
BC Life
Canadian Life
Age 55 60 65
Male 83.16 83.81 84.67
Female 86.66 87.05 87.60
Male 79.89 80.75 81.88
Female 84.14 84.77 85.54
Male 78.91 79.81 81.04
Female 83.40 84.06 84.90
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Other Factors That Affect Your Pension

• Whether you have a spouse and/or a former spouse
  with an entitlement to part of your pension
• When you elect to commence your pension
• Increasing pensionable service by purchasing
  service

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Definition of Spouse

• The person you are legally married to and, for
  the two-year period immediately before the
  relevant time (e.g., retirement or death), were
  not living separate from or, if this does not
  apply,
• The person, of the same or opposite sex, who has
  lived with you in a marriage-like relationship
  for the two-year period immediately before the
  relevant time.

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Marital Breakdown

• We administer a pension in accordance with any
  separation agreement, court order or application
  for division of pension
• We can split the pension benefits at the source

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Deferred Pension

• Vested plan members can leave work before age 55
  and defer their pensions to age 55 or older
• Seek professional advice if you plan to defer
  your pension beyond earliest eligibility
• Your highest average salary is indexed at the
  same rate as the indexing granted to pensioners
  each January

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Your Pension Take It At 55 or Defer to 60?
If you terminate employment at age 55 Monthly
pension income at 55 2,040 Total payments from
age 55 to 60 122,400 Unreduced pension deferred
to 60 2,400 Increase to pension 360 Make-up
time (122,400 360) 340 months, or
28.33 years Age at break-even point 88
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Death Before Retirement

• Vested with no spouse commuted value (CV)
  payment to nominated beneficiary or estate
• Vested with spouse
• If member dies before 55, immediate pension or CV
  
• If member dies at 55 or older, immediate pension
  paid
• Not vested contributions plus interest paid to
  spouse, nominated beneficiary or estate

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Purchasing Service

• The Public Service Pension Plan has adopted
  simple rules for calculating most purchases

• Online purchase estimator available at
  pspp.pensionsbc.ca
• Your employer must complete your purchase
  application

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Purchasing Service

• Purchasing service increases your pension benefit
  and may reduce any early retirement reduction
• It may increase the subsidy for health benefits
• You can pay by cheque or RRSP transfer, as
  determined by CRA
• Purchases must be made within the applicable
  timelines

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Purchasing Service Types

• Arrears should have contributed, but did not
• Leave of absence partial or unpaid leave
• Non-contributory did not contribute
• Reinstate a refund repay funds withdrawn from
  the plan, plus interest

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Purchasing Service Cost

• For most purchases (arrears, leaves,
  non-contributory service), the costing method is
  the same. See theonline estimator for
  calculations

CurrentMonthly Full-time Salary
Current Employer and Employee Contribution Rates
Number of Months to be Purchased
x
x
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Purchasing Service Deadlines

• You must be an active Public Service Pension Plan
  member to purchase service
• There is a five year window of opportunity to
  purchase service

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Is It Worth Purchasing Service?

• Cost-benefit analysis
• Divide cost by increase to pension to get number
  of months to break even
• Tools
• Purchase estimator
• Pension estimator

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Portability

• Portability means carrying certain pension rights
  from one pension plan to another. May include
• Public Sector Transfer Agreement
• Reciprocal agreements with some Canadian plans
• You must have left your contributions on deposit
  with the prior plan, or reinstated service. Some
  agreements have application deadlines. Shortfalls
  in service are common with many reciprocal
  agreements.

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Planning For Retirement

• Estimate your pension online at
  pspp.pensionsbc.ca, or
• Request a Retirement Planning Package from us
  (also available online at pspp.pensionsbc.ca)

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Preparing To Retire

• When actually retiring
• Complete an Estimate Request form (available
  online) and return it to us
• Request a Pension Estimate by telephone
• We will send you a Retirement Application Package

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Applying To Retire

• Complete and return the Retirement Application
  Package
• Enclose clear copies of proof of age documents

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Pension Effective Date

• Your pension is effective the latest of
• first day of the month following eligibility
• first day of the month following your final paid
  day
• first day of the month of application

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Finalize Your Pension

• You will receive a letter stating the exact
  amount of your monthly pension
• You have 60 days to change your pension option
  (you must notify us in writing) otherwise, it
  cannot be changed
• We will notify you when your pension amount
  changes (income tax changes, indexing, etc.)
• Notify Public Service Pension Services in writing
  if you move

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After Retirement

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Indexing

• Effective January 1 following start of the
  pension
• Pro-rated for pensions in effect less than one
  year
• Indexing is not guaranteed

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Medical, Extended Health and Dental Benefits

• BC Medical Services Plan (MSP)
• Basic medical insurance
• Pacific Blue Cross
• Extended health benefits (EHB) plan
• Dental benefits plan

Group benefit coverage is not guaranteed
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Medical, Extended Health and Dental Benefits

• You must be a Canadian resident
• Coverage can include spouse and dependants
• BC residents may enrol in MSP at any time
• You may enrol in the EHB/dental plan(s) at
  retirement or later, if you can prove continuous,
  comparable coverage
• Premiums are normally deducted from your pension

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Group Life Insurance

• Administered by BC Public Service Agency
• In effect to age 65
• Coverage
• Premiums
• Conversion options

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Re-employment of a Retired Member
Contact us if you become re-employed with a PSPP
employer. You can

• Continue to receive your pension, in which case
  you are not eligible to contribute, or
• Stop receiving your pension, repay your pension
  plus interest, and begin accruing service

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Federal Pension Plans

• Canada Pension Plan
• Old Age Security
• Apply six months before you want to start
  collecting either of these benefits by calling
• 1 800 277-9914
• or visit
• www.servicecanada.gc.ca

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Canada Pension Plan

• Contributions paid by employees and employers
• Normal age for retirement benefits is 65, even if
  you are still at work
• Reduced benefits available as early as age 60,
  subject to the criteria being met
• Reduction 6 a year to a maximum of 30

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Canada Pension Plan Take It or Leave It?
Age when CPP payments begin 60 years of CPP at
age 65 (863.75) 70 Monthly CPP
income 605 Reduction 259 Total payments
from age 60 to 65 36,300 Make-up time (36,300
259) 140 months, or 11.7 years Age at
break-even point 77 years
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Old Age Security

• Residency requirements must be satisfied
• Payable at age 65
• Taxed back if income exceeds a certain amount

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BC Government Retired Employees Association
(BCGREA)
An association for retired public service
employees and their spouses to

• voice concerns to the Public Service Pension
  Board on behalf of retirees
• belong to a support group
• share your skills, knowledge and experience
• stay in touch with colleagues
• make new friends

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BCGREA

• Complete the application enclosed with the
  retirement confirmation letter, or
• Contact a local branch of the BCGREA, or
• E-mail bcgrea_at_telus.net
• Membership fees can be deducted from your pension
  payment

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• Thank you for attending
• Please complete the evaluation form because your
  feedback is important to us

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Contact Information
Public Service Pension PlanPO Box 9460Victoria
BC V8W 9V8 Victoria 250 953-3033 Lower Mainland
604 660-5299 Toll-free in BC 1 800
665-3554 Fax [phone] Website pspp.pensionsbc
.ca E-mail PSPP_at_pensionsbc.ca

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