Getting Ready To Retire?

Getting ready to retire from the Public Service?

A large contingent of executives plan to retire in the coming years. How prepared are they? We all have friends and colleagues who have been working on their post-retirement plans for years - they are organized and ready. Unfortunately many of us have not yet come to grips with how to prepare for life beyond the Public Service and are not even sure where to start. Here are a few tips.

APEX wishes to thank the National Association of Federal Retirees (FSNA) for permission to use its pre-retirement checklist, which is contained (in Section A) below. FSNA revised this material in September 2008. For more information on FSNA or to join their association, please visit http://www.fsna.com/.

We also thank Dr. Wayne Corneil, a past Visiting Executive at APEX, for the material he contributed (in Section B) on dealing with the intangible challenges of retirement.

SECTION A Public Service Superannuation

Get as much information as you can about the following elements of your plan, by consulting plan descriptions and your departmental compensation and benefits specialist:
  • Benefit entitlement
  • Public Service pension reduction: it applies at age 65 no matter when your CPP/QPP starts
  • However, the reduction to the public service pension applies immediately upon the commencement of a CPP/QPP disability pension (for Quebec residents, opting for the QPP early retirement pension is generally more beneficial than receiving the QPP disability pension)
  • Immediate annuity, deferred annuity or annual allowance
  • Is Supplementary Death Benefit (SDB) coverage automatic or must you apply?

Date of retirement

Choose your retirement date with the following timing factors in mind to maximize your benefits:
  • Severance pay is based on full continuous years of service. Keep interruptions in service in mind and select your last day with reference to the anniversary of your start date
  • Maximize your annual leave payout by working at least 10 days in every month
  • Maximize the amount of indexation applied in January 1 following your retirement by retiring as late as possible in the month of your choice. However, if you retire on the last working day of the month, you lose 1/12 of a year's indexing. Retiring before the 27th of the month would be suggested.

Buying back past service

  • Can include past service with the Canadian Forces, the RCMP and/or any employer with whom Treasury Board has a reciprocal agreement
  • Buy-back is normally, but not always, the best alternative. Evaluation of buy-back options can be complicated, necessitating expert advice from your compensation and benefits specialist or a financial advisor.
  • Remember that you can only buy back pensionable service while still employed in the Public Service. Once your pension commences, it is too late.
  • The portion of your severance pay relating to service before 1996 may be used in full to buy back pensionable service or RRSP

Transferring pension credits to another employer

Make sure that the benefit gained in a transfer is as large as any benefit given up. Compare pension plans regarding:
  • Normal retirement age
  • Benefit formula
  • Survivor benefit - is it included or will you have to buy it?
  • Eligibility for health care plan
  • Eligibility for a dental plan

Marital considerations

Are you living together and not married?
  • It will be easier to prove entitlement if you become legally married before retirement
  • If you don’t wish to get married, get affidavits and other pieces of evidence to prove you were living together and representing the other person as a spouse before retirement
  • File affidavits and other evidence with the pension office as soon as retired
  • A common law spouse is a partner of either sex
If you marry after retirement, it is still possible to elect to provide a survivor benefit to your spouse or partner in case of death. You must apply within 1 year of marriage to add a survivor benefit. Be aware that this survivor benefit will result in a material reduction in your retirement pension.

Canada and Quebec Pension Plans

  • You may elect to receive CPP/QPP benefits any time between age 60 and 70. You must be considered substantially retired to receive benefits under age 65.
  • Benefit will be reduced by 1/2 of 1% for every month under age 65 or increased by 1/2 of 1% for every month over age 65.
  • But remember, an offsetting superannuation reduction equivalent to the CPP/QPP benefit will occur starting at age 65.
It is possible to request to sharing of the CPP/QPP pension benefit with a spouse/partner if this is advantageous, tax-wise
  • Both spouses/partners must be over age 60 and must share both pensions, if they both receive one.
  • The pension-sharing arrangement can be reversed if both spouses request it be cancelled.

Health and Dental Care Plans

You may apply for coverage under the Public Service Health Care Plan (PSHCP) and the Pensioners' Dental Services Plan (PDSP) anytime while you are in receipt of a pension. It is recommended that pensioners do apply for PSHCP coverage within 60 days of retiring so that there is no break of coverage. A pensioner can leave the PSHCP and rejoin again and again. The only restriction is that there is a three-month waiting period when rejoining the PSHCP. For the PDSP, however, a person who has cancelled his or her coverage may not rejoin the plan at a later date.

Getting financial advice

Be clear about what you want advice on:
  • Purchase of specific class of assets, e.g. stocks; real estate; etc.?
  • Investment of specific amount?
  • How to arrange your financial affairs?
  • How to choose between specific options?
Make sure the advisor is a specialist in the kind of advice you want.

Will the advisor benefit from your decision? How is he or she paid?

Shop around. If you get different answers to the same question, ask why.

Diversify your assets - it could cost a bit more, but it may save you a lot.

Don't be afraid to put money in several financial institutions - make sure they are unrelated.

SECTION B: STAYING HAPPY AND ENGAGED


Time management

People who are used to having terribly busy schedules at work often find that in retirement, they have too much time on their hands and nothing to do.
  • Try not to replace work with TV
  • Look for an activity that gives structure to at least part of your day or week
  • Start planning activities before you retire - understand that you will have to make an adjustment and to find new uses for your time; include family members in your planning exercise
  • Find a comfortable balance between personal time / family time / social time

Interests / Pursuits

Public Service executives are used to a lot of stimulation during an average work day.
  • Balance the kind of activities you engage in - solitary & social; sedentary & active; recreational & community (an interesting site is http://www.50plus.com/)
  • Make sure you give yourself some intellectual challenges
As an executive, you are in a position of authority and influence
  • Ensure that in retirement, you have activities that contribute to your self-esteem
  • Get involved in activities that give you a sense of meaningfulness and that contribute to your community

Social Support / Network

As public servants, we are used to having contact with a wide range of people during the work day.
  • To avoid a sense of isolation, maintain social networks, but not necessarily with work colleagues
  • Start to build new networks before leaving the workplace

Career Change / Transition

When moving to a new career or type of work:
  • Make plans ahead of time and build bridges
  • Test the fit by trying trial assignments or volunteer opportunities
  • Take career counselling and/or aptitude tests
  • Be prepared for a learning curve and the extra effort that may be required

Mental State

Retirement could bring about common reactions, such as a sense of loss, sometimes depression, anxiety or lowered sense of self esteem and confidence.
  • Understand what the normal reactions are and be prepared to deal with them
  • Relationships with loved ones may also be affected because of the greater amount of time spent together - allow for space and time alone
  • If necessary, contact a physician, counsellor, or support groups
  • Anticipate reactions and have plans in place to address them.

ANNEX - List of important contacts, addresses and phone numbers

Departmental Compensation and Benefits Officer, and Financial Advisor

Superannuation Directorate
Public Works and Government Services Canada
P.O. Box 5010
Shediac, N.B.
E4P 9B4
1-800-277-9914

Treasury Board Secretariat
http://www.hrsdc.gc.ca/eng/gateways/nav/top_nav/program/isp.shtml
http://publiservice.tbs-sct.gc.ca/
http://www.tbs-sct.gc.ca/

Canada Pension Plan and Old AgeSecurity, Human Resources Development Canada
Income Security Programs
1-800-277-9914
TDD/TYY: 1-800-255-4786

Quebec Pension Plan
P.O. Box 5200
Quebec (Quebec)
G1K 7S9
1-800-463-5185
TDD/TTY: 1-800-603-3540
http://www.rrq.gouv.qc.ca/

Canada Revenue Agency
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/130/rtrng-eng.html
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/130/s-thr-eng.html