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Cover of Penad Signature newsletter
Penad Signature Newsletter


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Updates for Pensioners in Canada Pension Plan

Click the link below for updates on a number of CPP updates for pensioners, including:

  • Annual indexation
  • 2017 Tax statements
  • Do you have to pay income tax every year when you file your tax return?
  • Coordination of benefits with the Canada Pension Plan and Quebec Pension Plan
  • Marriage after retirement
  • Enrol now for direct deposit!
  • Important reminders
  • Contact information

Click here to open new tab with CPP updates …Facebooktwitterredditlinkedinmail

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Direct Deposit for Retirees Abroad

Thinking of retiring outside Canada and liking the idea of your Canada Pension Plan pension payment deposited directly into your bank account? Get it done easy! Send a written request to the Pension Centre (LINK BELOW) with a void cheque or a document with the IBAN/NUBAN/CLABE number (or bank sort code) and your bank account number. The link below will also take you to a list of participating countries.

Click HERE for link to Pension Centre …


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Marriage after retirement

If you are a retired member  of the Canada Pension Plan or Quebec Pension Plan and marry after retirement, your spouse is NOT entitled to a survivor pension in the event of your death. However, you may choose to provide your spouse with a pension at the time of your death, by having your pension reduced. You must apply for this option within one year from the date of your marriage or one year from the date your pension starts, whichever is later.Facebooktwitterredditlinkedinmail

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Indexing rate – Retired members – Pension

The indexing rate for 2018 in Canada is 1.6%.

The indexing of public service pension plan benefits is governed by two pieces of legislation; the Public Service Superannuation Act (PSSA) and the Supplementary Retirement Benefits Act (SRBA).

Pension increases for retired members and their survivors are calculated each year using Consumer Price Index (CPI) data published by Statistics Canada. In accordance with the SRBA, the increase is based on a comparison of the twelve-month average of the monthly CPI for the year just ended, to the twelve-month average of the monthly CPI for the previous year. The SRBA specifies that the twelve-month period from October 1 to September 30 is to be used to calculate the increase payable the following January. The index used for the calculation is the CPI for Canada for all items (not seasonally adjusted).

Click HERE for new window with more information …Facebooktwitterredditlinkedinmail

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When You Will Die …

Well, the problem has been solved. Canadian Business has a calculator that tells you how old you will be when you die. They ask things like height, weight, parents with heart disease, etc. For me, the answer was 79.6 years. I didn’t like that result, so I reduced my weight and got the same answer. I reduced my height and got the same answer. I changed a few other variables and got the same answer.

Hmmmmm. Something smells like Danish fish.

So I went to the Sun Life website calculator. They didn’t even bother with silly details like family members who had cardio vascular disease (as if that could matter!). I put in the same numbers as the Canadian Business calculator and got a better result! 85 years!

But I thought I could do better, so I went to a calculator offered by a medical doctor (many detailed questions) and got a much better result: 96 years!

So, I guess the moral of the story is that if you are planning for retirement, you shouldn’t really trust computer programmers. Or better yet, shop around and find a mortality calculator that you like!

Link to Canadian Business calculator …

Link to Sun Life calculator …

Link to Doctor’s calculator …


Of course, average life expectancy means that at the expected age, 50% of people with that life expectancy would be dead, and 50% would still be alive. And of course, the living 50% won’t all drop dead at that point in time. Many, in fact, will continue to live for quite some time. Actuaries tell us that a non-smoking male who reaches age 84 then has an average life expectancy of 92.5. And if he reaches 92.5, he has an average life expectancy of 96. And so on. So, maybe my plan of surfing in Hawaii during my 90’s is a good plan after all!

Here is a link for an interesting calculator that shows the average life expectancy in different decades going back nearly 200 years. Link to calculator …Facebooktwitterredditlinkedinmail

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Would You Rather Own 31% of a Success or 81% of a Flop? Bombardier’s Story

Donald Trump promised to put American workers and companies first, but now it appears he has created a monster new competitor for one of America’s leading firms — Boeing.

It was announced today that Canada’s Bombardier and Europe’s Airbus (both Boeing competitors) have agreed to join hands in a strategic alliance to manufacture, market, and support Bombardier’s C Series jets, a move the Wall Street Journal is saying “could be the biggest shake-up of the commercial jetliner business in 30 years”.

Airbus will acquire 50.1% of the C Series line, while Bombardier retains 31% and the Quebec government, which invested heavily in Bombardier, gets the rest. This is a win for Bombardier as they have been struggling to sell the C Series due to the company’s shaky financial state, and Airbus gets control of one of the most exciting new air-frames for the medium range market, which will basically blow Boeing’s 737 out of the water.

Driving the deal is the fact that Airbus has manufacturing capacity in the USA, which will allow the C Series to be manufactured in America for American clients, thereby circumventing the proposed punitive duties recently announced by the Trump administration.

Will this not create jobs in America, a prime directive of the Trump platform? Yes, but in fact something like 50% of the C Series jobs were in the USA in any event due to the transnational nature of the Bombardier supply chain (the engines for the C Series are made in USA). So, Americans may or may not gain a few jobs working for Airbus, but these will presumably be greatly offset if the C Series becomes a big success at the expense of Boeing, as seems more likely now. Boeing will sell far fewer 737s if the Airbus C Series becomes a big hit.

Will this “make America great again”? We will have to wait and see. Bombardier has 350 orders for the C Series but sales slipped in the past year due to uncertainty if the company would survive. Now that Airbus effectively owns the C Series, airlines around the world can step up and place orders, knowing the product will be supported by one of the largest aircraft manufacturers in the world. Bombardier is hoping to sell 3,500 C Series jets in the coming 20 years.

For a head-to-head comparison of the C Series and the 737, click this link from Forbes: Compare C Series and 737

Business Insider has a great overview of Boeing’s folly here: Business Insider on how Boeing Screwed Up

Bombardier has not said how this move will affect jobs or workers’ pensions in Canada, but Airbus has agreed that all C Series planes not destined for the US market will continue to be made in Canada. Presumably Bombardier stakeholders will benefit, especially if Airbus is successful in pushing C Series sales to a whole new level. Bombardier did the hard work of creating the prototype and bringing it to market; now Airbus can bring it to a full market roll out. This looks like a win/win for both companies, and a big lose/lose for Boeing. They will not only sell fewer 737s in America, they will also face a much stronger competitor worldwide.


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Penad Announces New President

News Release *** FOR IMMEDIATE RELEASE ***
Kitchener, Ontario, Canada – March 21, 2017 – Penad Pension Services Limited today announced that both Frank Price, company founder, CEO, and Chairman, and Louise Price, company President and Director, are stepping down from day-to-day activities to begin a well-deserved retirement.

Stepping up to commence ongoing leadership is Matthew Price, who assumes his new position as President and Director. Matthew has been serving in the role of VP – Global Sales, Marketing, and Business Development since 2009. Prior to that, Matthew worked for Manulife Financial and Scotiabank.

“Now in its 34th year, Penad has been a labour of love from day one,” said Frank Price. “As an insurance company executive in the early 1980’s, I saw an opportunity to launch a new company to radically streamline the pension administration process. We programmed the very earliest IBM PC computers to automate pension administration from beginning to end. The result was that hundreds of pension plan sponsors handed us their third-party administration business, and we never looked back. Soon after, we got into the software game, as larger benefit plan sponsors preferred to lease our software for their in-house administration departments.

“And as they say, ‘The rest is history’. One day I plan to write a book about all the crazy and wonderful things we have seen. There have been over a million miles travelled by our various teams. I have personally spent time in over 100 airports. Over the years, we have had venture operations in Bermuda (Penad Bermuda) and Curacao (Penad Caribbean). Today we have clients in Canada and eight other countries. Penad has representatives in the Caribbean and in the GCC region. We have also done business in Europe, Africa, the Middle East, South America, and Asia. I guess you can see how proud I am of ALL our accomplishments. Quite spectacular for our team in little Kitchener, Ontario.

“That said, it has become abundantly clear that we need new energy and new leadership to meet the many challenges facing us in the coming years. It is with great confidence that I hand off the reins to my son, Matthew F. Price. I’m confident that Matt will do an excellent job as Penad’s President. He has the vision, energy, deep technical knowledge and corporate skills to take the helm and guide Penad to further growth, sustainability and success.

“Now Louise and I are putting 7-day workweeks in the rear-view mirror and getting up to speed to fully enjoy our extracurricular interests. Louise often says that if she had to do it all over again, she would have loved to pursue a career in the international wine industry. She has built up an extensive collection of rare wines and has the expertise of a professional sommelier, so now she is looking to build on this passion and who knows where this will take her. As for me, I would be more than happy if we ended up with a pied-à-terre in Paris or a cottage in Normandy (where we have been spending a lot of time of late). Louise could get me a job picking grapes in the autumn, and when not working in the fields, I will surely be indulging my interests in art, music, and writing. If you see a happy old couple touring around the backroads of Europe in a convertible classic MG, silk scarves flying in the wind, stop and say hello – that might just be us!”

Upon assuming his new role as President, Matthew Price issued the following statement:

“I am truly excited about the days ahead. Frank and Louise built Penad into a firm that is known for its technical excellence and devotion to client service. The company has served many hundreds of thousands of pension and benefit plan members over the years, and I believe our best days are ahead of us.

“Penad’s core management and engineering team has both the youthful energy and deep benefits experience to continue to build out our product offerings and open new market opportunities. Penad now earns over 80% of its revenue from software sales and related services, and we are currently working with clients to fill market gaps where benefit plan sponsors and administrators are looking to replace legacy systems held together with proverbial band-aids and binder twine. Our job in 2017 and beyond is to help benefit plan sponsors transition to proven technology systems and thereby better meet the needs of their respective stakeholders. We have the system products, engineering staff, and customer service people in place to make this happen and grow the firm in entirely new ways in the years to come.”

Penad Pension Services Limited was founded in 1983 with the mission to help pension and benefit plan sponsors streamline administration, reduce costs, and improve plan member communications while also reducing administration turnaround times. Today, the Company continues to serve pension and benefit plan sponsors across Canada and internationally with BPO services, consulting and administration software systems. Penad’s client-base includes Fortune 500 companies as well as unions, third-party administrators, multi-employer organizations, associations, banks, insurance companies, and government organizations.
– # # # –
Contact: Mr. Matthew Price, President
Penad Pension Services Limited
194 Weber Street East,
Kitchener, Ontario, N2H 1E4, Canada
Telephone: (519) 743-9000, Ext. 224


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PRPP and ORPP: Huge Pension Developments in Canada Reflect Political Divide

***UPDATE August 12, 2015****

As an update to the article below, the Ontario Ministry of Finance announced yesterday that Defined Contribution plans that meet certain thresholds WILL be classified as “comparable plans” for the purposes of exemption from the ORPP. The full announcement is available by clicking here.

The basic threshold is that the “DC plan must:

  • Have a minimum annual contribution rate of 8 per cent
  • Require at least 50 per cent matching of the minimum rate from employers.”

In the meantime, the ORPP has become a major political football in the current federal election campaign. Prime Minister Harper has come straight out to accuse the ORPP of being nothing but a job-killing tax (despite the fact that 100% of the contributions go directly to the workers and not into government coffers like any other tax).

The Ontario government has responded by pointing out that the ORPP is designed to ensure that Ontario workers are saving sufficiently for retirement, and that they are disappointed that Ottawa was unwilling to amend the CPP to increase savings rates and thereby make the ORPP unnecessary.

Here is our full article on the ORPP and PRPP as published in June ….


PRPP and ORPP: Huge Pension Developments in Canada Reflect Political Divide

Exciting developments are underway in the Canadian pension world as governments take steps to help Canadians save for retirement, but behind all the new programs are some very strong philosophical differences.

As most readers of this magazine will be acutely aware, Defined Benefit (DB) pension plans have suffered a precipitous decline in Canada and most other countries in the past twenty years. The costs of administering plans and providing actuarial services climbed higher and higher to the point where only the larger plans with around 1,000 members and above could reasonably absorb the costs.

The other problem of course was that many pension plan members in the 1990’s wanted to opt-out of their boring old DB plans and use their pension funds to make huge gains in high flying tech stocks like Nortel … so they begged their employers to let them out of the company DB plans so they could transfer their assets to Defined Contribution (DC) plans where they could keep all the gains for themselves – which they did, until the tech bubble burst and DC funds cratered for years.

In Canada, thousands of DB plans were either frozen to new members or closed all together, especially amongst smaller businesses (DB plans are still thriving in the benefit architecture of large unions and governmental organizations.) The result was that millions of workers needed to turn to alternatives such as employer-sponsored DC plans  (if they existed at the employer), or do without employer-sponsored schemes altogether and simply try to personally save for retirement through RRSPs, TFSAs, and the vagaries of personal investments such as home equity or playing the stock market.

What a boondoggle! A primary pillar of pension savings was pulled out from under the collective feet of millions of Canadians and nothing was put in place to replace it (though Group RRSPs, a form of DC plan for small businesses, made an admirable effort). As a result, many people are now finding themselves ill-prepared for retirement and with no reasonable prospects for improving the situation anytime soon (unless they win big at the casino or work at Walmart until they are around 80 years old).

While this was going on, the governments of the country were NOT standing idly by (thank goodness!). They knew that the government has a key role to play to gently nudge or outright push people towards being able to take care of themselves in the future (otherwise the government may be expected to do it!), and so they set about thinking up initiatives that would help to prevent millions of elderly Canadians from spending their golden years pushing brooms at fast-food restaurants.

So, what “Big Idea” did the smarties in Ottawa and provincial capitals come up with?

Well, there were actually two, one which came from the right of the political spectrum, and the other from the left. In Ontario, both ideas were just passed into law (as pension programs for workers) in May of this year, but that does not mean that both will catch on in actual practice in the marketplace where small employers will need to make these savings programs a reality (you know, where the rubber hits the road).

Pooled Registered Pension Plans

The first idea, Pooled Registered Pension Plans (PRPPs) was proposed during the 2011 federal election. After the election, the government moved ahead quickly to lay the foundations for PRPPs at both the federal and provincial levels, with a number of provinces following suit and reading PRPPs into law in the past two years (Ontario being the most recent). However, there is still a ways to go as nobody except the feds has completed a regulatory framework (it takes time to create this once the legislation is passed).

In general, the idea behind the PRPP is very well thought out and creates a framework for people to really start to take care of their retirements. Under this model, an employer can contact a financial services company and have a PRPP set up for their employees. The process is supposed to be so easy that one financial services provider, Manulife, claims a pension plan can be set up in less than thirty minutes, after which the employer’s role is mostly complete (compare this simplified setup to the ghastly process of setting up a DB plan and you can see that some very clever people put a lot of thought into streamlining the process so that small employers could set up company pension plans with minimal discomfort).

Once the PRPP is created, the financial services company would then automatically enroll every employee in the company, and each employee would then begin to see deductions taken from their paystubs as a small percentage of their salary was set aside for their retirement.

To avoid any resistance from employees, they were given the option to opt out of the plan after it was set up. In addition, employers were given the option to also make matching contributions to the pension plans of the employees (but they were NOT mandated to do so).

Unlike Group RRSPs (another form of pension savings plan for small employers), contributions to a PRPP do not count as taxable income. Also, unlike Group RRSPs, if an employer decides to make contributions on the behalf of the employees, these contributions are deductible as a business expense, AND the employer does NOT have to pay CPP, QPP and other payroll taxes on the contributions.

The genius part of the equation was the “P for Pooled”, in that administration and investment management would be handled by a financial services company which would pool the millions of account holders for efficiency and economies of scale, rather than the old DB model where every small pension plan needed its own investment manager, administration contract, and actuarial services provider. The pooled approach is also expected to be much more efficient than the Group RRSP approach, where fees have typically been quite high.

Manulife got so excited at the prospect of signing up all these millions of account holders and collecting and managing all of their pension savings that they went out and purchased the web address: so that they could get ready for the wave of employers signing up for these new savings vehicles.

It has taken a few years, but finally things seemed to be falling into place for PRPPs as the provinces get closer to finalizing the rules, which would allow financial services companies to start selling PRPPs (they are already available to some federal workers).

But remember what I said about the source of this program? I.E., the federal government? Well, lo and behold, guess which party was in power when PRPPs were proposed? The Progressive Conservative party (which is centre-right, for those who are reading this article in faraway lands and might naturally be confused by the concept of a conservative who also claims to be progressive).

PRPPs met several important conservative ideological criteria, namely:

• Employers were NOT mandated to offer OR contribute to PRPPs (many small business owners would view such a mandate as a job-killing tax).
• Employees could opt out if they so desired (conservative governments are generally loathe to force people to save their money if they don’t want to).
• Administration and investment management would be handled by the private sector (because conservatives believe that the free market is the most efficient provider of any kind of services – except, of course, services provided by military, police, fire, healthcare, social security, and government itself).

Meanwhile, as the PRPP program was wending its way through the setup process, a provincial government with a different political philosophy was cooking up an alternative program to compete with PRPPs.

Ontario Retirement Pension Plan (ORPP)

While the Conservative party had ruled in Ottawa since 2006, the centre-left Liberal party had ruled in Ontario during the same time period. And while the Ontario Liberals played nice and passed the legislation to allow PRPPs to move forward, they also came up with their own program to promote pension savings, the ORPP (Ontario Retirement Pension Plan), which takes a very different approach to PRPPs.

• Unlike PRPPs, employers ARE mandated to BOTH offer AND contribute to the ORPP, unless the employer offers an approved comparable alternative such as a DB plan, DC plan, a Group RRSP, or a PRPP. This means that virtually ALL workers in Ontario will be covered by some kind of pension plan.
• Employees CANNOT opt out (the big bad government forces them to save for their retirement, just like with the Canada Pension Plan).
• Administration and investment management of this massive pension plan (it is projected to cover around 3.5 million workers) will NOT be handled by the private sector but will be managed by a corporation specifically created for that one task of managing the ORPP, with the expectation that an entity focused on providing the lowest possible cost of service rather than the highest possible profits to shareholders will do a better job of keeping administration costs down.

In addition, the ORPP is in effect a Defined Benefit plan, whereas PRPPs are DC plans. Employees who make the mandated contributions to the ORPP will receive a guaranteed pre-determined benefit for life, unlike PRPPs where the employees own their contributions, plus interest, and can use this amount to purchase an annuity at retirement or withdraw a lump-sum.

As an example of the scheduled benefit for an ORPP member, a person with a salary of $45,000 would contribute $2.16/day. At retirement, they would stand to collect $6,410/year for life. Not enough to live on, but this benefit will help fill the gaps in the Canada Pension Plan and the Old Age Security program.

Comparing the two programs, one cannot help but wonder, who in Ontario will ever use PRPPs?

At this point, it is impossible to say, but many people expect that most small employers will end up in the ORPP, while PRPPs will likely appeal to a few self-employed people and not many others. While that might happen in Ontario due to the introduction of the ORPP, in other provinces that have not set up ORPP-equivalents, PRPPs could still become a significant savings vehicle as they are a big improvement on Group RRSPs.

At public hearings about Ontario PRPPs in April of this year, Wynne Hartviksen, executive assistant to the president of CUPE Ontario (Canadian Union of Public Employees) said that CUPE was against PRPPs being offered in Ontario for a number of reasons: “We know that private investment vehicles like RRSPs and PRPPs have higher financial service costs and frankly seem designed to deliver investment returns into the hands of banks and the financial services industry rather than into workers’ pockets at retirement.”

The Liberal government of Ontario went ahead in spite of opposition from unions and passed legislation for PRPPs into law, but by also passing legislation to allow the creation of ORPPs, it is likely that the final word will be spoken by the marketplace: will small Ontario employers adopt the mandatory ORPP or will they opt for an approved alternative such as a PRPP?

Only time will tell. Whatever happens, Penad will be there to report on new developments (so stay tuned!).


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New Pension Benefits Standards Act Becomes Law in BC on Sept 30, 2015: Are You Ready?

In British Columbia, the new Pension Benefits Standards Act, SBC 2012, c.30, (the New Act), as amended by Bill 10-2014, the Pension Benefits Standards Amendment Act, will come into force on September 30, 2015. The New Act is largely based on the recommendations of the Joint Expert Panel on Pension Standards (JEPPS).

The New Act has significant changes. For example,

• the administrator of a pension plan will be responsible to develop a governance policy regarding the structures and processes for overseeing, managing and administering the plan. This governance policy will help define the responsibilities of, among others, the plan sponsor, the plan administrator, and participating employers. See Section 50 of the new regulation for details.

• any record pertaining to a pension plan, or a copy thereof, MUST be retained in Canada. See Section 34.

• the duties and obligations of the various parties involved in a pension plan, including administrators, are spelled out in detail. Section 35 addresses the responsibilities of the administrator. Sections 45-48 describe employer responsibilities, and Section 51 addresses fundholders.

Please contact your Penad administrator for more information on these changes.

Click the links below for direct access to the documents in question:

Bulletin PENS 15-002 with Summary of Act Changes

Pension Benefits Standards Act

Pension Benefits Standards Amendment Act

Joint Expert Panel on Pension Standards


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