Why Retirement Income Planning with Public Pensions is a Valuable Service

Tax, accounting and financial advisors who have deep and broad knowledge about tax efficient retirement income planning, starting with the options available to defer the OAS and CPP pension can provide a valuable added service to a broad base of clients in all three stages of retirement:  pre-retirement, the “in-retirement” period and post-retirement, when survivors seek clarity about survivor benefits.  And there is a wide knowledge gap, as discussed below. For these reasons receiving a professional certificate on the completion of the Knowledge Bureau’s Tax Efficient Retirement Income Planning course is an important investment. 

The Backdrop.  Canadian governments are invested with Canadians in their future retirement savings with two public pension programs; one is based on mandatory contributions by workers and their employers (the Canada Pension Plan).  The other is paid on a universal basis when Canadians reach age 65 (the Old Age Security).

In this program, students learn how tax planning with the OAS and CPP funds can cause them to rethink savings priorities both pre-retirement and in retirement, and ultimately, significantly grow and preserve overall wealth for post-retirement concerns, by generating tax in the right order of efficiency with the options to accelerate or defer certain income sources.   

Why is this important in your role?  Because your clients don’t understand the flexibility they have to increase their CPP (and OAS) and as important how to average down the amount of taxes they pay on their public pensions as a part of their overall retirement income mix.

This was statistically shown in a survey conducted on the Canada.ca website in the summer of 2018,  close to 4000 participants, aged 40 to 64, were asked whether they thought it was possible to delay the start of their CPP.  They found that only 36% of the respondents were aware this was possible. Worse, only  17% of all respondents were aware of the deferral option for the OAS.

It was also found that men were more aware of deferral opportunities than women, awareness did increase with age, income and education.

In short, there is a great opportunity to add value with a detailed knowledge of public pension income planning.

For additional educational resources, check out the options in our retirement planning bootcamp!