Defined Benefit Pension Plans (DBPP)

You can add multiple defined benefit pension plans (DBPPs) to your projections as shown below.

In this article:

  1. Add a new DBPP on the Income page
  2. Enter contributions towards the DBPP if applicable
  3. Enter a pension adjustment if applicable

Add a new DBPP on the Income page

Select Scenario Setup -> Income.

Click Add Pension to add the first pension.

Enter the values for the first pension. Note that you can name the pension, choose to prorate the first year's amount based on the client's birth date, enter the percentage benefit allocated to a surviving spouse, and choose whether to index this pension.   The dollar amounts (before and after 65) are both assumed to be indexed at the start of the pension (i.e from the Start Age).

The Start Age will determine which amount will be used from the table. If the pension starts before age 65, the amount under the Before Age 65 section will be used.  If the pension starts after age 65, the amount under Before Age 65 will be disregarded. If the pension starts after age 65, such as at age 70, enter 70 for the Start Age and the appropriate amount under the section for Age 65 and After

If you select Yes for the Prorate column, this means that the first year of the pension will be prorated to start after the individual's birthdate. 

No Bridge Benefit

If there is no bridge benefit, you should enter the regular pension amount in both the  Before and After Age 65 columns. 

The dollar value that you enter as the amount for Age 65 and After is the value in real dollars at age 60.  Therefore, in this example, the pension starts at $60,000 and is indexed at 2% (the indexing percentage before age 65) each year. By the time the client reaches age 65, the nominal dollar amount is $66,245, which is the amount visible on the Planning page. 

With a Bridge Benefit

If there is a bridge benefit, enter the sum of the regular pension and the bridge benefit as the amount Before Age 65, and enter the regular pension as the amount at Age 65 and After.

On the Planning page, you can see the bridge benefit ends at age 64 and the pension amount displayed at age 65 is $60,000 indexed by 2% each year for 5 years.

From age 65 onwards, the indexing percentage for Age 65 and After is used in the calculation for the pension amount. The Before Age 65 indexing percentage is only used up to age 65. We don’t apply the Age 65 and After indexing rate all the way from the start.

Adding multiple pensions and using the option to edit the pension on the Planning page

To add multiple pensions, click the Add Pension button for each. The pension will be automatically saved once the fields have all been completed. 

On the Planning page, the pension has its own column with editable annual amounts. Simply click on the value in the year where you want to make a change, then use the pop-up window to make your changes. This may be helpful if the client starts their pension on a specific date, rather than on his or her birthday. Click the blue checkmark to save the edited value. Run the scenario to re-calculate the projections based on the new pension information. 

If you later edit the DBPP entries on the Income page, the updates you made on the Planning page will be reset.  Snap will take the values under the DBPP section as the correct values to use until you make further edits on the Planning page.

Note: Pension data entry was updated on October 7, 2020.

Previously, when a pension started before age 65 and there was a bridge benefit, you needed to do a future value calculation for the pension amount (without the bridge benefit) at age 65. Now, both dollar amounts (before and after 65) are assumed to be indexed at the start of the pension. No more manual future value calculations are required. 

For Projections created before October 7, 2020

We have automatically adjusted the Age 65 and After amounts for all of the existing pensions on the Income page under the DBPP table.  However, these updated values will not be applied to your projections automatically.  This enables you to choose whether or not you wish to apply the update.  If you do nothing, all pension values in your projections will remain the same.   If you wish to apply the update to existing projections, you must open the Income page and make a change to a value in the DBPP table to force a new save of the data.  For example, if you rename the DBPP from "Pension" to "Pension update" and back to "Pension", this will force Snap to re-calculate the pension values on the Planning page.  As always, if you do edit an existing pension on the Income page, its values on the Planning page will be recalculated based on the new inputs.

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Enter contributions towards the DBPP if applicable.

If you also wish to account for contributions made towards the client's DBPP you can do this as shown here.

Enter the contribution as an expense on the Planning page.  Create a new negative income column for pension contributions under Scenario Setup -> Income.

Then, on the Planning page, enter the contributions as negative amounts under this column. For example, if the client pays $10,000 per year into the DB plan, enter -$10,000 and copy it down to the age preceding their pension start date. Then Run Scenario.

You'll see a reduction in their Taxable Income by this amount, as shown under Taxable Income Details. To access this table, click the blue icon at the top of the Taxable Income column.

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Add a pension adjustment if applicable

You may wish to enter a pension adjustment so that the RRSP contribution room is also reduced due to this DBPP contribution.

Click  Scenario Setup -> Assets -> Capital Assets -> RRSP/RRIF to access this setting. 

The client's annual RRSP contribution room will be reduced by this pension adjustment amount every year. The pension adjustment is increased with inflation each year.

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