The Pension Blueprint podcast video transcript

Episode 9: Questions from our members

Jackie DeSouza: Hello, everyone. Jackie DeSouza here with you again for another episode of season two of The Pension Blueprint from OMERS. We've got a fun episode for you this week. We're going to be speaking with Alessandra Casciato from our Pension Education and Relationship Management Team about some of the most burning questions she hears from OMERS members when she's on the road. And to help her out, we've brought in two OMERS members, Bill Winegard and Lisa Lovery. Bill is an OMERS member who retired in 2003. He was an urban planner by trade and worked for the towns of Gravenhurst and Caledon. After retiring, he got involved with MROO, the Municipal Retirees Organization of Ontario. Lisa is an engineer and has been an active member of OMERS for over 20 years. She's a director at the Regional Municipality of Durham in the Rapid Transit and Transit-Oriented Development Office. Okay, so let's hear what our members are asking. Okay, so we've got some wonderful guests here today, and I'm going to go to each one of you and ask you a little bit about what you do right now, and what are some of your interests. Bill, we'll start with you.  

Bill Winegard: All right, thank you. Keep this short. I worked for the province for a number of years, and then for a couple of municipalities for a number of years, in management primarily. The last 20, I've been an OMERS pensioner now for 20 years, I'm proud to say, and thank heavens for it. I've do a variety of things. I've done part-time work consistently over that period of time. Maybe we can talk a little bit later about the Municipal Retirees Organization of Ontario. Where I've worked, done some work with. I volunteer in a few different ways. I play hockey three times a week, and generally speaking, I'm in a very fortunate stage of my life.  

Jackie DeSouza: That's wonderful. And I know you're an avid cyclist as well.  

Bill Winegard: In the summertime. Yeah, fair weather cyclist!  

Jackie DeSouza: That's good, that's wonderful. And then, Lisa, what about you? What do you do for a living, and what are some of your interests?  

Lisa Lovery: Well, thanks for asking. I am probably about mid-way through my career now. I've worked primarily in municipal government. I was most recently at an agency of the province. I've just returned back, actually, to an OMERS employer. I'm at the Region of Durham. And I'm a parent of a 14-year-old, going on 40! I'm a die-hard volleyball parent. And yeah, I'm a professional engineer by profession, and I've had a... Looking forward to sort of the next half of my career.  

Jackie DeSouza: Oh, that's wonderful. With a teenager at home.  

Lisa Lovery: Keeps us busy. I'm an Uber parent.  

Jackie DeSouza: Yeah, yeah. As have been many of us over our lives. And Alessandra, you know, you're a member of the Pension Education and Relationship Management Team. So tell us a little bit about what you do on the road to support our members, as well as some maybe outside interests that you have.  

Alessandra Casciato: Thank you, Jackie. I do work on the Education and Relationship Management Team at OMERS, which really means that I feel like I have the best job at OMERS. And that's because I get to engage with members, and I do a lot of traveling across this beautiful province. And we have a simple job, rather simple, where we are pension translators. So we are there, we go across the province because we want members to be able to make the most of what OMERS can offer them through the knowledge that they'll gain over their career. And it's amazing work. We're really passionate about the work that we do at OMERS. Outside of OMERS, I would say I have a big travel bug in me, so I try to jump on every opportunity possible to see the world. I'm also a dog mom. I have a little dog at home. And I like to continue my studies. So I'm currently in school trying to upgrade my learning and continue my development.  

Jackie DeSouza: Okay, so Bill, today we're looking at burning questions from some of our members. You're the only retiree at the table. So when is the right time to retire? And when did you decide was the right time to retire for you?  

Bill Winegard: I guess I'm kind of the poster boy for kind of not knowing when the right time was. My municipal job, honestly, had gone kind of sour. And my wife said, "You know, there's an ugly rumor that you only live once. And maybe there's something else you can find to do."  

Jackie DeSouza: You did mention MROO, the Municipal Retirees Organization of Ontario.  

Bill Winegard: There, got that done now. 

Jackie DeSouza: Yeah, no, we're very happy to hear more about that if you want to tell us a little bit about that organization.  

Bill Winegard: Okay, it's the nonprofit organization that represents all OMERS pensioners. We have about 35,000 members across the province. Not just municipal, the name is municipal, but it's anybody who's an OMERS pensioner is eligible to join. I think maybe the most important thing we do is we have a retirement planning seminar program hosted by OMERS employers. But over the last, well, since 2009, we've probably done about 400 of them, probably spoken to about 6,000.  

Jackie DeSouza: Wow. 

Bill Winegard: You know, mostly municipal employees of a certain age that, you know, are getting serious about retirement.  

Jackie DeSouza: Right. No, thank you, that's great. And it's important to know, and we partner with you as well on some of these seminars.  

Bill Winegard: Couldn't do it without you. 

Jackie DeSouza: Right. So Alessandra, when you're on the road and members are asking you, "When is the right time to retire?" Are those the types of conversations that you're having? Some of the things that Bill spoke about?  

Alessandra Casciato: They absolutely are, yes. It's a very common question that we're receiving on the road. As a member of the Pension Education and Relationship Management Team, I think all of us do our best to help educate members about their pension. We often work with them reviewing their estimates, and then we talk a lot about the psychological element of retiring and what that looks like for each person. So there are a lot of different moving parts. It's a very, very personal question to answer, but we do our best to support members through that. And there's a lot of resources that are also available to help members make that decision. And the Retirement Income Estimator online being a big one. We partner a lot with MROO, and they do a really great job at doing exercises where people plan out what their retirement looks like. And we see a lot of people within the first six months, maybe you have a lot of goals that you want to achieve, then narrowing it down to a month, a lot of those goals or dreams sort of overlap one another. And then when you sit there and you plan out your month, it gets a little bit more difficult. So those are the types of things that we try to support members with. And ultimately, we rely on a lot of different resources and institutions to all work together to help our members. And really, I think ultimately the myOMERS platform is also really great because members can estimate their retirement income and they can get a sense as to where they'd like to be in retirement, remembering OMERS is one piece, but not the only piece. So a lot of moving parts that need to come together for someone, I think, to feel ready to retire. 

Jackie DeSouza: Well, that's great. Thank you. And now, Lisa, like me, you are not retired, or getting closer I guess, a little bit. But do you think about when you will retire and how you're going to make that decision?  

Lisa Lovery: Before today, truthfully, I hadn't really thought about it. But that's not actually factually correct because I have, I think from an 80,000-feet level, thought about it, which is why I tend to look for OMERS employers when I'm looking for places of employment. When I was very young, I realized one parent was in a government organization and the other parent worked in a private sector. And I realized through their retirement that, you know, the income sources were very different. And I found a better balance with the parent who worked in public sector. So that sort of mindset and that lesson followed me. So I think that is what precipitated or precipitates my choice to seek OMERS employers. 

Jackie DeSouza: Well, that's great. And I know you recently returned to an OMERS employer after being away for a little while. Why don't you tell us a little bit about your career and how you decided to go back to that OMERS employer?  

Lisa Lovery: So I joined an OMERS employer about 20 years ago now, and on and off I worked. And I recently joined back to an OMERS employer, correct. And I'm looking actually to speak with someone like Alessandra to figure out what I can do with the pension earnings that I was gathering while I worked at my non-OMERS employer. So this is something that is top of mind for me that I need to do on the many to-do things. But, yeah.  

Jackie DeSouza: Well, you know what? We actually have a great opportunity here because Alessandra is right here. So maybe we can talk about that a little bit. So if somebody worked for a previous employer that was a non-OMERS employer, and then they come back into an OMERS employer, can they buy back that time? Or what options do they have?  

Alessandra Casciato: They absolutely have options. So like Lisa, someone who worked for a non-OMERS employer, and you were paying into a registered pension plan here in Canada, now that you've come back to OMERS, you can account for that service in the OMERS plan. The way in which you would do it would depend on sort of where the funds are. If the service is still with that previous pension plan, then it can be considered a transfer-in. And that's an amalgamation of the two pension plans together. If service was refunded to you, and that may have been paid to you in cash less taxes, could have been put into an RRSP, maybe sitting in a LIRA too, once it's refunded, you can still account for it. But that would traditionally be done through a buyback at OMERS. And that's where we would do an actuarial cost to determine how much the plan needs in today's dollars to establish that service for you on your record. You would have a six-month period for that cost to be completely locked in. And you'd have the opportunity to make your decision. Of course, we would support you there and we would give you pension estimates to show you the difference in pension amount that you'd receive if you decided to make the purchase or not make the purchase. But in your case, it would potentially be very valuable for the reason that it might move up your retirement dates a little bit sooner. Not to say that you would retire sooner, Lisa, but having the option would be a nice option.  

Lisa Lovery: Oh, thank you. 

Jackie DeSouza: So let's go to another question now that I know that we hear quite often from our members. How do I know when I can afford to retire? So, Alessandra, we'll go to you first and of course Bill, and you can jump in as well.  

Alessandra Casciato: OMERS is a defined benefit pension plan. So ultimately a member's benefit is based on that set formula. And one of the key factors that would drive a member's pension is their years of service in which they spent working and they were contributing to the plan.  

Jackie DeSouza: Right. 

Alessandra Casciato: So for each year that they continue working their years of service increase. For that reason, the benefit would grow. A member can contribute until the very latest November 30th, the year they turned 71. And I know previously in the plan we did have a cap, members could only earn 35 years prior to 2021. But for each year that they continue to work, their benefit would increase. Now if it's worth that increase, that's a personal question. But that's where our online portal, myOMERS, that's a really great resource available to members because it allows you to enter your milestone dates. And we'll project what your retirement income is going to be.  

Jackie DeSouza: Okay, and then Lisa, let's get you jumping in here as well. So when you think about, you know, the affordability, when can I afford to retire? You know, at the point you're at in your life right now, you know, mortgage payments and, you know, children and all of that sort of thing. What goes through your mind when you're thinking through those types of scenarios?  

Lisa Lovery: Yeah, it's daunting actually thinking about, you know, when, you know, when would it? When does it make sense to retire? I mean, I do have, you said all the right things. I have a mortgage, I have a, you know, a teenage son. And when I think of, you know, paying for universities and, you know, then what happens after that, you know, graduate studies, God willing. And, you know, thereafter, marriage, helping with down-payments for houses and things like that. It's daunting thinking about, you know, when is the right time? So I don't have answers to those things. So it would be good to go on the myOMERS portal and try and plug in some information just to get some forecasts and just- become aware, I think. 

Jackie DeSouza: Yeah, and I think that's our point of doing this podcast and all the other information that we put out is just helping members become more aware of, you know, what they have in their hands with this Pension Plan and the different options that they have, and to try to get as much information as possible, which I think is really important. So we'll move on to another question, and I think this one comes up quite a bit as well, which is around how can I maximize my pension? How can I get the most amount of money, you know, out of my working career? So, we'll start again with you, Alessandra. What do you answer when members ask you that when you're on the road?  

Alessandra Casciato: That's an excellent question. I think one of the big topics about maximizing a pension comes back to eligible service. Eligible service is any time that a member may have spent working with an OMERS employer in their career, but time that, did they not pay into the pension plan? And it happens for many different reasons, but we do recognize that time in OMERS. And it's free to add on, and it does help our members satisfy their retirement milestones quicker. So someone who might not necessarily meet their 30 years before they turn 65 as an example, they could potentially retire with an unreduced pension. Another way of course is... Or another example here we have is Lisa. Lisa who did spend time working for another employer has the opportunity to buy back those years or transfer in service. That's another way that you can increase your pension because what you're doing there is you're increasing your credited service. And you know that that's one of the key factors driving your pension. So those are, I think, really great methods for members to explore. It can make a big difference to your pension benefit.  

Bill Winegard: Can I pitch in on that as well? I just, I know that then you probably, there'll be people in the 30s and 40s that listen to us and don't think about their pension much. I know I didn't when I was in my 30s and 40s. But please now think about this buyback option because number one, as Alessandra said, it, you know, can let you retire earlier, or, you know, have a better pension when you do retire. But it's costs more. The earlier you get at it, the less it costs. And so I know when I was looking at buying back some pension near the end of my career, we're talking the tens of thousands of dollars. But, you know, had I thought about that, you know, been a little more attentive to that, you know, 10 or 20 years earlier, it would've been much less. And so I know that it's tough to focus on these kind of things at some point in your early career, but if you can buy back, do buy back. It's an excellent investment, and get at it early.  

Lisa Lovery: That's a good point.  

Alessandra Casciato: But in addition to that, OMERS does offer the Additional Voluntary Contribution program. Those are AVCs for short. And that function's quite similar to how an RRSP would, but the OMERS version of it. And it allows our members to invest their personal money and grow it based on the OMERS return each and every year. It is separate to your pension, so a member contributing wouldn't necessarily increase what your pension is going to be, but it's another source of income that you have and that you're able to draw on once you eventually transition to your retirement.  

Jackie DeSouza: Right, so it's a separate account with that AVC account, but it's invested in the same OMERS fund that your pension comes out of. So if there's extra money that you have that you want to invest in that, it makes sense. And I know the fees are much lower to invest in that, in that account as well. So thank you for that, Alessandra. So another one of the questions that I hear from people is, you know, will I outlive my savings? Will my pension keep up with inflation? And I know we're a defined benefit pension plan. That is indexed to inflation. So Alessandra, how would you answer that question? 

Alessandra Casciato: Yes, that is a great question that we receive from our members often. I think a lot of people have concerns about their inflation protection, given the high cost of living that we are all experiencing here in Toronto. That being said, the Plan, good news, it is inflation protected, which means that your pension will never decrease, it'll just increase year after year. And it's based on the Consumer Price Index. So that's a benefit that's really built into the plan and it protects the purchasing power of what OMERS offers our retirees. And it's a great benefit that's embedded.  

Jackie DeSouza: So Bill, I guess you've been collecting your pension now for, you said, 20 years? 

Bill Winegard: Quite some while. 

Jackie DeSouza: Wow, okay. So you've seen the benefits of this inflation protection over the years and those increases to the pension.  

Bill Winegard: And for many of those years, inflation was low across the country and therefore, the OMERS inflation indexing was corresponding low. But that was great. But in the last few years, as everyone knows, the inflation has been not low. And OMERS has chipped in with a higher inflation index to match the inflation rates. And over the last, well I'm going to say three, four years, that would've made an enormous difference to how much, you know, buying power you have with your pension. So yeah, I've been fortunate to have it. You know, it might not have mattered so much, you know, 10, 15, 20 years ago, but it matters now.  

Jackie DeSouza: Bill, in addition to the OMERS pension, there are other government benefits that people can get, right, when they reach a certain age. So can you tell us a little bit about those and when would be the right time to take them?  

Bill Winegard: Yeah, this occurred to me when Alessandra was talking about inflation protection, that there are two other inflation protected pensions that we get. One is the Old Age Security, OAS, and there's Canada Pension Plan, CPP. And typically the... You can't take CPP before age 60. And a lot of people think, well, you know, that's maybe the time to, “bird in the hand” sort of thing. And many people, and including again, you know, non-thinking selves, my wife and I, she said, "Well, everybody takes it at 65, so I guess we'll take it at 65." OAS is at 65, but you can also... In both cases, since I think 2012, you've been able to extend that to age 70. And the return on doing that in terms of the pension you get for the rest of your life, in both cases, is quite significant. If you wait between 60 and 70, it basically doubles the amount of pension you get from Canada Pension Plan, CPP, after age 70. Now you have to have something to bridge you over if you like, from 60 to 70. But frankly, if you're still working, or if you have an OMERS pension, you're one of the lucky ones that have an OMERS pension, it's well worth thinking about, or Additional Voluntary Contributions, the savings, other kinds of savings. Recent studies have been showing that we kind of just reflexively go to maybe 60 or 65 because, well, kind of, we always did it, our folks did it. But there's a lot to be said about saying, well, if you have some of the advantages that we as OMERS pensioners have, you might want us to wait until you're 70 for both Old Age Security and CPP because just say, that at 6.5 percent a year, roughly speaking, is what you're accumulating. And the other thing about retirement, I would like to remind people, is that we're living a long time. If you are already 65, the stats are, this is 2017 stats, so it's probably more now, is that you're likely to live until you're 86.  

Lisa Lovery: Wow. 

Bill Winegard: And so that means a while. And so if you can have another, two other, inflation protected, you know, pensions like that, guaranteed, you know, it's worth thinking about not just kind of reflexively like we did, you know, take it at 65 or 60, but seeing if you can't wait till 70. And again, a study recently by an outfit called the National Institute on Ageing, which does excellent studies with all aspects of retirement and aging has demonstrated that recently that over half the people in Canada could have done that. And we in OMERS frankly, have much better opportunity to do that than most.  

Jackie DeSouza: Yeah, that's really important, Bill. We're actually talking to someone from the National Institute on Ageing in one of our podcast episodes, Dr. Bonnie-Jeanne MacDonald.  

Bill Winegard: That's the author, the very one I'm talking about. 

Jackie DeSouza: Right. So we're very interested and we partner with them quite a bit as well. So excellent information. And Lisa, do you think about these things like CPP, you know, Canada Pension Plan and Old Age Security benefits and your pension? Like, tell us about how, you know, whether these come into your consciousness as well or whether you're just too busy working and taking care of your family to think about that now.  

Lisa Lovery: Too busy thinking about mortgage payments- 

Jackie DeSouza: Right. 

Lisa Lovery: And shrinkflation! and all of those things that, you know... Knowing that I've been contributing to OMERS, I really don't, you know, I don't contribute to RRSPs or anything like that. I sort of leave everything up to OMERS. And I guess I'm fortunate. My spouse is also in the OMERS, he's an OMERS contributor. So I guess both of us are contributing. So we're looking forward to that benefit into retirement.  

Jackie DeSouza: Oh, that's wonderful. And I'm happy to hear your spouse is an OMERS member as well.  

Lisa Lovery: I am too! 

Jackie DeSouza: Yeah, well. And, you know, we hear that from members a lot, especially, you know, they're in very busy jobs. You know, we have police, fire, who just have to deal with the day-to-day every day. And we've heard that before where people say, you know, "Thank goodness you're taking care of my pension because I don't have time to think about investing. I don't have time to do all that." And you know, we've got professional investment teams around the world who are making those investments, right, and earning those returns for OMERS members. It would be virtually impossible for a single person to be able to do that ourselves, right, to earn those types of returns.  

Bill Winegard: You know, one of the potential temptations, I guess, because, you know, we're so fortunate to have a defined benefit pension is to consider taking the commuted value of your pension out and saying, "Well, I'd like to have my," whatever it is, you know, the actual sort of present value of the pension you might ultimately get till you're 86. And that's exactly the risk. They say, you know, unless you're Warren Buffett, you know, some big time investor like that- You probably can't match the guaranteed returns that OMERS pensions provide. And so, you know, I think it seems like... I know I have talked to members who have said they're awfully tempted to do that, but I think for most ordinary people, and certainly people like Lisa and me, who never really give it much thought, you know, it would not be a wise decision because, you know, we're just not the investing capability that OMERS has.  

Jackie DeSouza: Right, exactly. So you're talking about sort of cash value, right, of the OMERS pension. There's so many other benefits that I'm sure Alessandra can speak to, like survivor benefits, right? If you have a... If you keep your money in the OMERS Pension Plan. Maybe talk a little bit about that.  

Alessandra Casciato: Yes. There are actually several benefits that are embedded in the OMERS Plan and a benefit of having a defined benefit pension plan. One of them that comes to mind would even be disability benefits. So if members are off of work because they have become ill or injured, their pension can potentially be protected where they will earn a disability waiver ensuring that their plan continues to grow as if they were at work and they were paying for the contributions, but OMERS would cover on their behalf. So that is a very great benefit that's provided to members. Because life, no one can predict or project what their life is going to look like. And to add onto Jackie, is survivor benefits. Once an OMERS member passes away, their pension doesn't stop. A member cannot outlive their pension. Upon the member's passing, we do work through a legal order to determine who's going to be entitled to receive it. And if you have a surviving spouse, or you have eligible children that are dependents, they will be taken care of. And it's a guarantee that they'll receive a pension benefit. So a lot of great benefits embedded in a defined benefit pension plans. To add to your point about we're very lucky to have this pension.  

Lisa Lovery: I didn't know any of that, interesting. 

Jackie DeSouza: Okay, we are going to have a longer conversation after this, Lisa, for sure. So Lisa, when you think about retirement, and I know it's still some years away, what is your vision? Like, what do you hope to be able to achieve when you stop full-time work?  

Lisa Lovery: Well, I hope not to have a mortgage. I hope my son is well out of the house by then.  

And gainfully employed! 

Lisa Lovery: Yes, yes, gainfully employed. I hope to be able to travel too. I'd like to do some volunteering, I'm passionate about giving back to the community and things like that. But yeah, nothing crazy. I mean, I'd like to stay in my home if I could, so hopefully without a mortgage, you know, just paying property taxes and bills. So, you know, kind of just living an average life. I don't see, you know, I'm not going to be jet-setting to Monaco or anything like that. So, yeah, like I said, I don't really have a vision yet of what it looks like, but, you know, top of mind, that would be my expectation. 

Jackie DeSouza: Yeah, I mean, that sounds really wonderful, actually. Just kind of calm and peaceful, which is lovely. And I think the theme that we're hearing through most of the episodes is that everyone's living... We're living longer, right? And let's make the most it. And we're all individuals. We're all going to do something different. Some people they want to retire at 55 or 60 and that's it. They don't want to work anymore. They want to ride off into the sunset. And that's wonderful. That's one option, right? And there's so many other options for people to continue working if they want to, work part-time, volunteer, as you said, Lisa, spend time with their children, grandchildren.  

Bill Winegard: I was going to say, how many times do we hear that at the seminars? "I get to be a full-time grandmother, grandfather." 

Jackie DeSouza: Right. And for some they don't want to do that, and that's okay too. Maybe just a little visit and then, "Okay, bye-bye, crying baby." You know? As parents, we didn't have that option. So anyway, it's been a wonderful conversation. Thank you everyone for being here today.  

Alessandra Casciato: Thank you all. 

Lisa Lovery: Thank you for having us.