We have previously blogged about Why you should join SPP and 10 things you need to know about SPP. But joining a pension plan is a serious decision so before you make a commitment, you need answers to as many questions as possible.

Therefore this week we present a series of SPP FAQs (frequently asked questions) that will clarify a number of nuances about the program you may not yet be aware of.

Q: What is the difference between SPP and an RRSP?
A: SPP follows the same income tax rules as an RRSP except that SPP is locked in. Under tax rules contributions to SPP can be used as repayments to the Home Buyers Plan (HBP) and the Lifelong Learning Plan (LLP). However withdrawals are not permitted for this purpose.

Q: How much money can I contribute each year?
A: SPP regulations limit contributions to $6,000/year. Even though the SPP limit is $6,000, there is the potential to have tax receipts totaling greater than $12,000 for a tax year. For example, if you make two $6,000 contributions in the first 60 days of the year, one for 2017 and one for 2018, you will receive tax receipts totaling $12,000 to report on your 2017 tax return.

Q: How do I allow my tax program to accept more than $6,000 in SPP contributions?
A: All tax receipts received for the remainder of 2017 and first 60 days of 2018 must be entered for the 2017 tax year. Some tax programs will not allow more than $6,000 of Saskatchewan Pension Plan (SPP) contributions to be claimed even though members are eligible to claim the full amount made.

Therefore, it is important to always review your income tax return before filing, specifically line 208 of the T1 General, to ensure the full deduction expected is being made. If the full deduction required is not shown on line 208 you will need to make sure that you record your SPP contribution tax receipts the same way you would record a regular RRSP contribution tax receipt. In most programs this means you need to designate your SPP contribution as an RRSP; in other words, do not indicate you have made an SPP contribution.

Q: How much can I transfer in from another registered plan?
A: You can transfer up to $10,000 in cash per calendar year into your SPP account from existing RRSPs, RRIFs and unlocked RPPs. Funds transferred to SPP are subject to all SPP rules including the locking in provision. This means your transferred funds become part of your SPP account and can only be accessed when you choose a retirement option. Since these are direct transfers between plans, there are no tax implications.

Q: How can I convert my SPP savings into retirement income?
A: If having a stable income for the rest of your life is important to you then an annuity from SPP may be an appropriate choice. If maintaining control of investment decisions is important, then a Prescribed Registered Retirement Income Fund (PRRIF) or a Locked-in Retirement Account with another financial institution could be an appropriate alternative for you.

You also have the option to choose a combination of the annuity and PRRIF option.  At retirement time, if you have a pension benefit of $23.29 or less per month, you may choose to take your money out in cash less a 10% withholding tax (sent to Canada Revenue Agency) or transfer your account into an RRSP.

Q: Who will invest my money?
A: SPP has independent, professional money managers. The funds are invested in a diversified portfolio of high quality investments to ensure a competitive rate of return. Your investments are monitored regularly. Leith Wheeler Investment Counsel Inc. and Greystone Managed Investments Inc. are the Plan investment managers.

Further FAQs can be found here.  Additional information is available from the SPP website  or by contacting SPP at in**@sa*********.com, 1-306-463-5410 (call collect) or 1-800-667-7153 (out of province, in Canada).

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Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

By Sheryl Smolkin

It’s tough to come up with ideas year after year for memorable holiday gifts, particularly for young adults. One gift that will stand the test of time is contributions to a retirement savings account with the Saskatchewan Pension Plan.

Anyone age 18 to 71 can join SPP. Participation is not restricted by where they live or membership in other plans. However, in order to contribute members must have available RRSP room. The member application form is available online and must be submitted with a photocopy of the prospective member’s birth certificate, driver’s license or passport.

Maximum annual contributions (which become locked in until retirement) are $2,500/year but up to $10,000 per year can be transferred in from another RRSP. SPP is designed to be very flexible and to accommodate individual financial circumstances. There is no minimum contribution. Even contributing $10 per month will build an SPP account and provide a plan member with additional pension at retirement.

Contributions can be made in a number of ways: directly from a bank account using the PAC system on the 1st or 15th of the month; at a financial institution using a contribution form; using a VISA or MasterCard; through online banking; or by mail to the Plan office in Kindersley. SPP also provides the option to make contribution online using your VISA or MasterCard.

This means you can make an SPP contribution as a one-time gift this Christmas or make recurrent gifts at regular or irregular intervals for future occasions. One way to encourage your friend or relative to continue contributing to SPP is to offer to match contributions up to a specified amount – much like employers do in company plans.

The Plan’s average return to members since inception (1986 – 2015) is 8.10%. The five year average is 7.57% and the ten year average is 5.25%.  SPP has independent, professional money managers. The funds are invested in a diversified portfolio of high quality investments to ensure a competitive rate of return.

Chances are that 20-somethings entering the work force today will have precarious work for at least the first few years of their career with organizations that do not offer a retirement savings plan. Once they are married and have children, retirement savings may take a back seat to mortgage payments and daycare costs.

Helping a friend or relative to develop the retirement savings habit and topping up their savings is an invaluable gift. Savings of just $2,500/year earning interest at 5% will result in a retirement savings balance of $237,672.11.

So make gift giving this year easy by putting  SPP under the Christmas tree!