The federal government established the Registered Retirement Savings Plan (RRSP) to encourage Canadians to put aside personal savings for their future retirement. The main incentive to set up an RRSP account is that contributions are tax deductible. Canadians don’t pay taxes on their RRSPs until the money is withdrawn. Personal retirement savings plans like RRSPs are one of the so-called “three pillars” needed for a financially secure retirement – the other two pillars being benefits provided by the federal government, such as the Canada Pension Plan and Old Age Security, and a workplace pension like the OPSEU Pension Plan or OPTrust Select.
Most workers employed by an employer in Ontario contributes to the Canada Pension Plan (CPP). Contributions are based on income and employers pay half the required contributions. Retirement age to collect the CPP is 65, although you can choose to receive a reduced pension as early as age 60. Conversely, if you choose to wait until after age 65 to collect your CPP, your pension payments will be higher. The CPP is one of the “three pillars” of responsible retirement planning. The other two pillars are personal savings and a workplace pension like the OPSEU Pension Plan or OPTrust Select.
The OPSEU Pension Plan, like many DB pension plans, is integrated with CPP. This means members make lower contributions to the Plan up to the CPP limits (YMPE) and the pension they receive at age 65 is adjusted to reflect the fact that members are entitled to receive unreduced CPP benefits at that age. If you retire before age 65, you will notice the pension amount you receive after age 65 is lower than before age 65. That is because at age 65 you are eligible to start your CPP pension on an unreduced basis.
For more information about the CPP, click here