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When a divestment occurs, you retain your accrued pension credit in the OPSEU Pension Plan and a pension is paid at a later date. If you start to work with a new employer under a divestment, OPTrust will determine your eligibility to start receiving a pension from the OPSEU Pension Plan based on your credit in the OPSEU Pension Plan plus the period of your employment with the new employer while you were a member of the new pension plan. By the same token, your new employer’s pension plan will recognize both your period of membership in the OPSEU Pension Plan and your credit under the new plan in determining your eligibility to retire under the provisions of the new plan. When you retire, you will receive two pensions, one from the OPSEU Pension Plan and one from your new pension plan.
In calculating the amount of your pension, however, each plan will use only your credit and salary history while you were a member of that plan.
Examples
To get a better understanding of the pension you may receive at retirement, we have outlined various pension entitlement examples based on years of credited service or employment in both plans and different retirement options.
In these examples, the pension amounts have not been reduced for CPP integration. Under the OPSEU Pension Plan, pensions are integrated with CPP at age 65. In addition, the pension amounts in these examples have not been increased to show the effect of OPTrust’s inflation protection provisions. For more information on inflation protection, click here.
Let’s take a closer look
Yan is divested from the Ontario Public Service after 25 years of service. He then joins his new employer’s pension plan. At age 60 with 30 years of combined service, Yan is eligible to retire under a Factor 90 provision offered by both plans.
The example assumes an annual 2% accrual rate for both plans.
| OPSEU Pension Plan |
Employment with New Employer |
Total |
| Credited Service | 25 | 5 | 30 |
| Age at Termination | | | 60 |
| Years + Service | | | 90 |
| Best Average Salary | $40,000 | $45,000 | |
| OPTrust (unreduced pension)1 | 2% x 25 yrs x $40,000 = | $20,000 |
| New Employer (unreduced pension) | 2% x 5 yrs x $45,000 = | $4,500 |
| Pension Entitlement | | $24,500 |
Yan is eligible to retire with two annual pensions totaling $24,500.
Caroline was divested from the OPS with 15 years of credited service and joined her new employer’s pension plan. After 10 years in the new plan, she terminated her membership to begin retirement at age 60. Caroline is eligible for an immediate unreduced pension from the OPSEU Pension Plan under the 60/20 option (age 60, plus 20 years service). While her new plan has no comparable provision, she is eligible to retire early with a reduced pension. Under her new plan, the reduction for early retirement equals 5% per year from age 65.
|
OPSEU Pension Plan |
Employment with New Employer |
Total |
| Credited Service |
15 |
10 |
25 |
| Age at Termination |
|
|
60 |
| Years + Service |
|
|
90 |
| Best Average Salary |
$42,000 |
$49,000 |
|
| OPTrust (unreduced pension)2 |
2% x 15 yrs x $40,000 = |
$12,600 |
| New Employer (reduced pension) |
2% x 10 yrs x $49,000 - 25%= |
$7,350 |
| Pension Entitlement |
|
$19,950 |
Caroline is eligible for an unreduced pension of $12,600 from OPTrust and a reduced pension of $7,350 from her new employer, giving her a combined pension of $19,950.
Ahmed is 54 years old and has 26 years of pensionable service: 15 years with OPTrust and 11 years with his new employer. While Ahmed qualifies for the OPSEU Pension Plan’s Factor 80 option, his new plan only has a Factor 90 provision. If Ahmed retires under OPTrust’s Factor 80 option, he will be eligible for a deferred pension from his new plan. Ahmed may be eligible to receive an early reduced pension from his new pension plan after age 55, depending on the terms of the new plan.
|
OPSEU Pension Plan |
Employment with New Employer |
Total |
| Credited Service |
15 |
11 |
26 |
| Age at Termination |
|
|
54 |
| Years + Service |
|
|
80 |
| Best Average Salary |
$47,000 |
$52,000 |
|
| OPTrust (unreduced pension)3 |
2% x 15 yrs x $47,000 = |
$14,100 |
| New Employer (deferred pension) |
2% x 10 yrs x $49,000 = |
$11,440 |
| Pension Entitlement |
|
$25,540 |
Immediately on retirement, Ahmed will receive $14,100 per year from OPTrust. He is also eligible to receive a deferred pension from his new pension plan at age 65. He may also be eligible to take an early reduced pension after age 55. The date he can start his reduced pension will depend on the terms of the new plan. Before he reaches age 55, Ahmed also has the option of transferring the commuted value of this deferred pension in the new plan to another locked-in retirement savings arrangement (such as an RRSP).
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