Canadians are blessed with a host of social programs. While often taken for granted, the Canadian social safety net is how we keep a rough break from turning into abject misery. Canada’s web of social benefits, that we can access when we really need them, is a true cornerstone of our society.

Employment insurance, welfare, public housing, universal health care and public pensions were all just dreams a couple of generations ago. One only needs to read a Charles Dickens novel to get a depiction of what used to happen when illness, old age or poverty knocked at the door.

In spite of the dramatic progress of our social programs, a lot of people have taken the view that their public pensions are not really worth investigating. Some believe that the pensions will not be there for them when they get old enough to collect; others have become convinced that their public pensions will all be clawed away by some form of taxation.

There is some truth in the worry. It is a significant and growing challenge to fund public pensions and there is, at a certain income level, a clawback of old age security. But funding challenges aside, the public pensions exist and they are certainly worth some investigation.

Consider a retiring couple who are both entitled to the full pension benefit under Canada Pension Plan (CPP) and the full benefit under Old Age Security (OAS). These folks would be entitled, at age 65, to a combined monthly benefit of $2849.92. This annual $34,199.04 benefit is indexed to inflation.

While there is a good chance that both these people are not entitled to the maximum CPP benefit; and that OAS will be clawed back when individual income exceeds $66,335, both will be entitled to some form of benefits. It’s worth finding out what part your public pension will play in your retirement planning.

If still not convinced that CPP and OAS will be very important, you might consider how much capital you would need to generate the equivalent of your public pension entitlement. A couple entitled to $34,199 of CPP and OAS would need to set aside at least $900,000 to create a similar indexed income stream. Certainly there are very few of us who would ignore $900,000 of savings yet there are many of us, when it comes to retirement planning, that seem determined to ignore public pensions.

The clawback of OAS is a big reason why many people have been paying less attention. The clawback encourages the view that you will just lose OAS to tax so why bother. It is true that if you are one of the retirees with a large pension, there is very little you can do about losing your OAS. The rest of us, however, have an opportunity to plan around, and possibly avoid, the OAS clawback.

If you are interested in finding out more about integrating your public pension benefits into your retirement planning, consider attending one of our “Social Security 101″ seminars. Just send an e-mail to my attention; I will put you on our events e-mail list.

Alan MacDonald is an Investment Advisor with Richardson Partners Financial Ltd. Alan helps investors with over $500,000 of assets make smart decisions about money. For more information please visit alanmacdonald.ca or e-mail Alan at Alan.Macdonald@RichardsonGMP.com