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How much pension will you get from OPTrust?
The basic pension benefit you accrue in the OPSEU Pension
Plan:
- is based on
- the average annual salary rates for the five consecutive
years that produce the highest average and
- 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 an
early retirement option
- contains a survivor pension
component for your eligible spouse and/or children.
CALCULATING YOUR PENSION AT AGE 65
Your basic pension will be calculated as follows:
| 2% × (a × b) - (c × d)
= age 65 pension |
| a = |
your best five-year average annual salary
|
b =
|
your credit |
| c = |
reduction for CPP integration
0.655% × the lesser of:
your best average annual salary and your final five-year average
Year’s Maximum Pensionable Earnings (YMPE) under the CPP
|
| d= |
your credit after 1965 (to a maximum of 35 years) |
Note: Your pension is integrated with the Canada
Pension Plan (CPP) at age 65. The reduction for CPP
integration at age 65 is an adjustment to your pension that reflects
your reduced contributions to the OPSEU Pension Plan for the portion
of your salary that is less than the YMPE because you also
make contributions to CPP on most of that portion of your salary.
See integration for further explanation. For more information, see OPTrust’s booklet
Your
Pension and the
Canada Pension Plan available from your human resources representative,
OPTrust or our website.
Your average annual salary is the average of your highest consecutive
five-year salary rates during your membership.
The average YMPE under the CPP is an average
of the amount set by CPP for the year your membership
in the OPSEU Pension Plan ends and the four preceding years.
Integration of CPP contributions and benefits
When you were working, you made CPP contributions on the portion
of your salary between the Year's Basic Exemption (YBE) and
the Year's Maximum Pensionable Earnings (YMPE). For 2003, the YBE
is $3,500 and the YMPE is $39,900, so the portion of salary
used
for determining the 2003 CPP contribution is $36,400 ($39,900
minus $3,500). On this amount, you pay 4.95% of your salary
to CPP.
The example shows that your contributions to the Plan
are separated into two parts (6.4% and 8%). It also
shows how your contributions to the OPSEU Pension Plan and CPP are
integrated. You contribute a smaller amount to the OPSEU Pension
Plan on the portion of your salary between up to the YMPE
because you also make contributions to CPP on most of that portion of your
salary.
Your pension is integrated with CPP at age 65. The pension reduction
reflects your reduced contributions to the OPSEU Pension Plan as
a result of your contributions to CPP.
Example:
Let’s assume you are 65 years old and retired on August
31, 2005, with the
following:
Average annual salary: $46,900
Credit: 20 years
Average Year’s Maximum Pensionable Earnings (YMPE)
| 2005 |
|
$41,100 |
| 2004 |
|
$40,500 |
| 2003 |
|
$39,900 |
| 2002 |
|
$39,100 |
| 2001 |
|
$38,300 |
| |
|
$198,900 ÷ 5 = $39,780 |
Using the basic pension formula, your retirement pension would
be calculated
as follows:
| .02 x $46,900 x 20 years |
= |
$18,760 |
| minus |
|
|
| reduction for CPP integration: |
| .00655 x $39,780 x 20 years |
= |
$5,211.18 |
Gross annual benefit from OPTrust starting
Sept.
1, 2005 = $13,548.82 ($18,760 - $5,211.18 = $12,162) |
The OPTrust uses either the five-year average YMPE or your average
annual salary - whichever is lowest - to calculate the CPP integration.
In this example, the average YMPE is used to calculate the reduction
for CPP integration because the average YMPE of $39,780 is less
than your average annual salary of $46,900.
Contributions
Contributions to the Plan are based on your pensionable earnings
(your regular salary not including overtime pay). Contributions
to the Plan are based on
a formula that takes into account CPP contributions.
Member normal contributions: example
| Salary: $46,900 |
|
|
| 2005 Year's Maximum Pensionable Earnings (YMPE*): |
|
$41,100 |
plus
|
| 6.4% of your salary up to the YMPE contributions
to the fund: |
.064 x 41,100 = |
$2,630 |
plus
|
8% of your salary above the YMPE
contributions to the fund: |
.08 x [$46,900 - $41,100] = |
$464 |
| Total contributions** to the fund: |
|
|
| |
$2,630 +
$464 = |
$3,094 |
PRE-1966 SERVICE
If you made pension contributions for service before 1966, your
pension is calculated differently. Please call OPTrust if this
applies to you.
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