How your pension is calculated
if you have been divested

Inflation protection for your OPTrust pension

Your special deferred pension from the OPSEU Pension Plan will be calculated based on your years of credit in the Plan and the average of your best five consecutive years’ salary prior to the date of your divestment. Before you retire, your pension amount will be adjusted annually to reflect changes in the Consumer Price Index (CPI). That means the buying power of your deferred OPTrust pension will keep pace with inflation.

Under the Plan, the maximum adjustment is 8% per year. If inflation is higher than 8% in any year, the remainder of the adjustment is carried forward to future years. In addition, once you start to collect a pension from OPTrust, your benefits will also continue to increase with inflation throughout your lifetime.

OPTrust sends a statement to all deferred pensioners every year to inform them of the cost-of-living adjustment. Deferred pensions accumulate the cost-of-living adjustments starting the month after termination of employment. Note: You may also receive inflation protection with your new employer but that is governed by the terms of that pension plan.

Now let’s see how this works before retirement

As we saw earlier, when Yan was divested in August 1998, he had a deferred OPTrust pension of $20,000. While he was working for his new employer, Yan’s OPTrust pension was adjusted to match increases in the Consumer Price Index since his divestment. In 2003, Yan decides to retire under the Factor 90 provision in both plans.

As a result, Yan’s OPTrust pension – indexed to inflation – increased to $21,839.96 by 2003 when he retired.

And after retirement

Using the inflation protection calculation, let’s see how Caroline’s pension will increase after she retires.

Caroline started receiving her OPTrust pension in May 2002, and was on pension for 8 months.

(number of months on pension, divided by 12)
times
increase in CPI for 2002 = 2003 adjustment
(8 ÷ 12) x 1.6% = 1.06670%

Caroline’s OPTrust pension increased to $14,846.74 in 2003.

4 While working for her new employer, Caroline’s deferred OPTrust pension was adjusted for inflation from $12,600 in 1993 to $14,690.04 in 2002 when she retired.