Pension Plan Basics
What is your pension benefit?
Your pension is a lifetime retirement benefit which is calculated based
on your years of service in the Plan and your salary.
YOUR RIGHT TO A PENSION
You become entitled to a pension benefit in the Plan upon enrolment, however, there are rules on when your pension payments can start. More information on normal and early retirement options.
The basic pension you accrue in the OPSEU Pension Plan:
- is based on
- i) the average annual salary rates for the five consecutive years that produce the highest average and
- ii) accrued pensionable service credit
- is paid for your lifetime
- is adjusted for inflation on an annual basis
- may be paid early without penalty if you qualify for early retirement options
- contains a survivor pension component for your eligible spouse and/or children.
If you retire before age 65, OPTrust pays the full 2% pension. At age 65 your 2% pension is made up of two pieces, the OPTrust pension and the Canada Pension Plan pension. If you decide to collect your CPP pension before age 65, that does not affect your OPTrust pension. OPTrust does not integrate your pension with CPP until age 65.
To receive a CPP pension, you must apply for it through Service Canada.
Your average annual salary is the average of your highest consecutive five-year annual salary rates during your membership. The average YMPE under the Canada Pension Plan is the amount set by the Canada Pension Plan for the year your membership in the OPSEU Pension Plan ends and the four preceding years.
Let's assume you are 65 years old and retired on August 31, 2012, with the following:
Average annual salary: $52,000
Credit: 20 years
Average Year’s Maximum Pensionable Earnings (YMPE):
|÷ 5 = $47,360|
Using the basic pension formula, your lifetime OPTrust retirement pension would be calculated as follows:
|.02 x $52,000 x 20 years||=||
reduction for CPP integration at age 65:
|.00655 x $47,360 x 20 years||=||
|Gross annual benefit effective September 1, 2012||=||$14,596|
To calculate the CPP integration amount, we use the lesser of the average YMPE and the average annual salary. In this example, because the average YMPE ($47,360) is less than the average annual salary ($52,000), the average YMPE is used to calculate the CPP integration amount.