OPB News for Retired Members

As we start a new year, we at OPB are looking ahead to the future – to 2035, in fact. Our new Strategic Plan is here, and we’re excited to share it with you.

Client Focused. Future Ready. Our Path to 2035.

In developing our Strategic Plan, we carefully considered the needs of our members, employers, employees and stakeholders to ensure it supports us in delivering on what matters most.

The Strategic Plan is our guide to the next nine years and will enable us to deliver the results we need in the short term while also positioning us to meet the opportunities of the future.

The plan is divided into three horizons to help us manage our aspirational goals, so they’re actionable and achievable.

Horizon 1 has begun and will take us to 2028. It prioritizes advancing pension plan sustainability, laying the foundation for modernizing our systems and providing excellent client service.

In Horizon 2 from 2029-2031, we’ll build on that strong foundation and continue to advance pension plan sustainability, make our operations more efficient, improve digital service delivery for clients, and use data to foster innovation.

In Horizon 3, through strong financial resilience, continuous improvements, and strategic partnerships, we will seek to grow our membership as a pension organization of choice. By the end of this horizon, we want OPB to be positioned for an even brighter future beyond 2035.

Through feedback from members, we understand that having a strong, sustainable plan, efficient and personalized services, and improved digital offerings, while maintaining easy access to our staff for service and support are all extremely important. To learn more about these horizons, the objectives that we’ll be focusing on over the next few years, and the development of the Strategic Plan, please read Client Focused. Future Ready. Our Path to 2035.

Did you know…

The PSPP provides a bridge benefit to all members who begin collecting a pension prior to reaching age 65. The bridge benefit supplements your income until you can begin collecting your Canada Pension Plan (CPP) at an unreduced rate at age 65.

Here are some important facts about the bridge benefit:

• If you choose to retire before age 65, you will receive a PSPP bridge benefit that ends when you reach age 65.
• Your PSPP early retirement bridge benefit and your CPP pension are not the same amount. Your PSPP bridge benefit is calculated based on your credited service in the PSPP (up to a maximum of 35 years), while your CPP benefit reflects the amount earned during your entire working career.
  
  PSPP bridge benefit formula:
  (0.7% × the average YMPE* or your average annual salary, whichever is less) × your years of pension credit.
• You will notice a change in the total amount you receive from your PSPP pension when you turn 65. This is because your early retirement bridge benefit stops at age 65. However, you may also choose to start your CPP pension at that time.

*YMPE (Year’s Maximum Pensionable Earnings) is an annual limit set by the Government of Canada that determines the maximum earnings on which you contribute to CPP. The YMPE for 2026 is $74,600.

When should you take CPP? Key tips for PSPP members

Although age 65 is the standard start age for Canada Pension Plan (CPP) benefits, you may choose to begin as early as age 60 or as late as age 70. PSPP members should consider the following:

• Start Early (Age 60): You can begin CPP at age 60, but your benefit will be reduced by 36% (0.6% per month before age 65).
• Wait Longer (Age 70): Deferring CPP until age 70 increases your payments by 42% (0.7% per month after 65). At age 70, the maximum monthly CPP can reach $1,937.73 compared to $1,364.60 at age 65 (based on 2024 figures).

Why delay CPP?

• Higher Lifetime Income: CPP provides larger, inflation-protected payments for life.
• Tax Planning: Drawing down RRSPs earlier can reduce taxes and help avoid OAS clawbacks.
• Longevity Protection: Combined with your PSPP pension, CPP offers reliable lifetime income.

Potential downsides

• Cash Flow Needs: If you need income before age 65, delaying CPP may not be feasible.
• Breakeven Age: The value of deferral depends on your life expectancy.
• Tax Impact: Higher CPP income could move you into a higher tax bracket.

To learn more about CPP integration and how it works with your PSPP pension, visit OPB.ca.

If you’re collecting a pension from the Public Service Pension Plan (PSPP) and considering continuing or returning to work for a PSPP employer, it’s important to understand how your earnings might affect your pension.

What Is the Re-employment Earnings Limit?

When you commence a PSPP pension and continue or return to work with a PSPP employer and don’t rejoin the PSPP, you have a limit to how much you can earn in a calendar quarter (referred to as the quarterly earnings limit, over three‑month periods).

How Is the Limit Calculated?

Formula:

Example:

• Final monthly salary: $5,000
• Monthly pension: $3,000
• Difference: $2,000
• Quarterly limit: $2,000 × 3 = $6,000

If you earn more than your quarterly earnings limit in a quarter from a PSPP employer, you will be required to repay the amount of the overpayment to OPB. Using the example above: if your quarterly limit is $6,000, and during any three‑month quarter of the year you earn $7,000, you will be contacted by the Ontario Pension Board with a request for repayment of the amount of $1,000 for the overpayment.

For more information on the re-employment earnings limit overpayment process speak with your employer’s human resources representative.

Note: Special rules apply to those above the maximum pension age.

What You Need to Do

• If you work for any PSPP employer and do not rejoin the PSPP, you must ensure that your employer is aware that you are receiving a PSPP pension, and that they report your earnings promptly to OPB.
• If you’re paid through invoices or contracts, you will need to submit proof of payment.
• No reporting is necessary for the period after July 1, 2025, if you are over maximum pension age (please see below).
• Remember to track your reemployment earnings each quarter to avoid going over your limit.

Special Update for Members Over the Maximum Pension Age (Age 71+)

Starting July 1, 2025, the earnings limit no longer applies to members who have reached the maximum age for contributing to a pension plan at the end of the year they turn 71:

• If you turned or will turn 71 in 2025 or later, the earnings limit no longer applies as of December 1 of that year, when you are required to start your pension.
• If you turned 71 before January 1, 2025, and had to start your pension in a previous year, the earnings limit stopped applying on July 1, 2025.

What this means:

You can work for a PSPP employer after reaching age 71 without worrying about your quarterly limit or overpayments.

Quarterly Re-employment Earnings Tracker Checklist:

• Make sure you report your quarterly earnings!
• Mark your calendar: Set a reminder to review your earnings at the end of each quarter.
• Know your limit: Review your quarterly earnings limit so you know what to stay under. If you’re not sure, contact OPB’s Client Care Centre.
• Ensure your employer is aware of your PSPP pension and is reporting your earnings promptly.
• Keep your pay stubs: Save copies or screenshots of your earnings for easy reference.
• Use a simple spreadsheet or app: Track your hours and pay to avoid surprises.
• Reach out if unsure: Your employer’s HR representative and OPB’s Client Care Centre can help.

Need Help?

If you’re unsure how these rules apply to your situation, contact us at:

Phone: 416‑364‑5035 or 1‑800‑668‑6203 (toll‑free) | Email: clientservice@opb.ca

Tips from Frank Post, OPB’s Corporate Information Security Officer

Artificial Intelligence (AI) tools are changing the way we live and work, and staying safe while using them is key. Here’s what you need to know to use AI wisely and confidently.

1. Think before you share

AI learns from data. Before entering personal information like your SIN, birth date, or banking details, ask yourself: Would I share this in a public space? If not, keep it private.

2. Choose trusted tools

Before using an AI app or website:

• Check who created it and whether they have a clear privacy policy.
• See if they explain how your data is used or stored.

3. Ask smart questions

• What’s the benefit of using AI here?
• Can I use it without sharing sensitive info?
• Who owns the data I provide?
• Has this company built other reliable tools?

Example: AI can help plan a trip, but don’t give it your credit card to book flights.

4. AI is already around you and you may be using it every day:

• Banks use it for fraud alerts.
• Smartwatches detect falls and ask if you need help.
• Cars offer crash response and stolen vehicle assistance.
• Ads respond to voice searches near smart speakers.

5. Stay cyber‑savvy — good habits still matter:

• Use strong, unique passwords.
• Keep your software updated.
• Adjust privacy settings.
• Do a quick background check before using any AI tool.

A little caution goes a long way in keeping your data safe while enjoying the benefits of AI.

This article is for informational purposes only and does not constitute legal or financial advice.

What is estate planning?

Estate planning is about making sure your money, property, and personal wishes (including your PSPP pension) are handled the way you want during your lifetime and after you pass away. It is important to develop a comprehensive estate plan that deals with all of your assets, for peace of mind and to make things easier for your loved ones.

Key documents you’ll need

1. Will
   • Names the recipient(s) who will inherit your assets after you pass away.
   • Names an executor to carry out your wishes.
   • Helps avoid delays and confusion on how your assets should be divided.
   • Identifies an estate trustee if you and your spouse pass away at the same time.
   • Names a legal guardian for any minor dependent children.
2. Living Will
   • Provides a written statement outlining the medical care you want if you become incapacitated and are unable to act for yourself.
3. Power of Attorney for Property (POA)
   • Allows someone you trust to make decisions on your behalf while you’re alive but unable to make decisions for yourself.
   • Tip: Send a copy of this document to OPB to keep on file if it is ever needed. Only a properly signed, witnessed, and complete POA for Property document is acceptable for a representative to communicate with OPB. (The POA for Personal Care is not required.)
4. Power of Attorney for Personal Care
   • Outlines your wishes for medical care if you’re unable to make decisions for yourself.
   • Helps guide doctors and family during tough decisions.

What about your pension and benefits?

• Your Public Service Pension Plan (PSPP) pension: The PSPP provides survivor benefits and lump-sum payments to your estate.
• Canada Pension Plan (CPP) and Old Age Security (OAS): These may offer death benefits or survivor pensions, so make sure your spouse or estate knows how to apply.
• RRSPs/RRIFs: You can name a beneficiary to avoid court processes and simplify asset division.
• Make a list of your accounts, insurance policies, and important contacts.
• Store your documents in a safe place—and let someone know where they are.
• Review your plan every few years or after major life changes.

Need help?

Consider speaking with:

• A lawyer for legal advice.
• Your financial advisor for investment-specific advice.
• A certified tax specialist for tax planning.
• OPB’s Client Care Centre and Client Service Advisors for support regarding your pension.

What is income splitting?

Income splitting is a tax strategy that allows eligible Canadian couples to reduce their overall tax burden by shifting income from the higher-earning spouse to the lower-earning spouse. This helps both spouses end up with similar income levels for tax purposes. It can be especially beneficial in retirement when one spouse receives a larger pension or other taxable income.

Who can use income splitting?

To qualify, you must:

• Be married or in a common-law relationship
• Be living together at the end of the tax year
• Have eligible pension income (such as income from a Defined Benefit Pension Plan, RRIF, or annuity)

How it works for Public Service Pension Plan (PSPP) members

You can allocate up to 50% of the income from a Defined Benefit pension plan to your spouse for tax purposes. This doesn’t mean transferring actual money—it's a paper transaction made when filing your annual tax return.

Example:

If you receive $40,000 annually from your PSPP pension and your spouse has little or no income, you could split up to $20,000 with them. This may lower your tax bracket and reduce the amount of tax you owe. Canada uses a progressive tax system where individuals with higher incomes pay a higher percentage of taxes—income splitting helps lower your effective tax rate.

Benefits of income splitting

• Helps smooth marginal tax rates, often lowering overall taxes for the household.
• Reduces exposure to Old Age Security (OAS) clawback (the OAS clawback begins when an individual’s annual income exceeds $93,454*).
• Encourages household-level retirement adequacy, not just individual outcomes.
• May increase eligibility for income‑tested benefits (for example, the Guaranteed Income Supplement (GIS)).
  For 2025, the Old Age Security (OAS) clawback (Recovery Tax) starts when your 2024 net income exceeds $93,454. Income thresholds change annually to adjust for inflation.

How to claim it

Income splitting is claimed on your annual tax return using Form T1032 – Joint Election to Split Pension Income. Both spouses must agree and sign the form.

Things to keep in mind

• Only eligible pension income qualifies (DB pensions, Retirement Compensation Arrangements (RCA), RRIFs after age 65, etc.).
• Canada Pension Plan (CPP) and OAS cannot be split using Form T1032, although CPP sharing is a separate option.
• Income splitting may affect tax credits and benefits, so review your full financial picture.
• Consider speaking with one of OPB’s Client Service Advisors to explore how it fits into your retirement strategy, or consult a certified tax specialist for tax‑related questions.