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Once OPTrust receives the complete application and confirms the member’s
eligibility, we will calculate the cost and send an Agreement to Purchase Credit
(OPTrust 1017) to the member’s home address. This agreement sets out the cost of
the buyback and the member’s payment options. It also shows the member how much
his/her estimated pension will increase and the earliest unreduced retirement
date if this buyback is completed.
For certain types of service, the employer is also required to pay contributions
to the OPSEU Pension Plan.
The cost of the buyback – for both the member and the employer - depends on a
number of factors, including:
- the type of service to be purchased (see below)
- the amount of credit to be purchased
- the dates of the period of service to be purchased
- the member’s salary rate as at the time OPTrust receives the complete
application.
Both the member and the employer must pay contributions to the OPSEU Pension
Plan for purchases of prior non-contributory service.
The member’s cost for buying back a period of prior non-contributory service is
based on the following formula:
Member’s Annual Salary Rate
(as at complete application) |
x |
Member Contribution
Rate
(during the period being purchased) |
x |
Years of Credit to Be Purchased |
The employer’s cost for a prior non-contributory buyback is based on a similar
formula:
Member’s Annual Salary Rate
(as at complete application) |
x |
Employer Contribution
Rate
(during the period being purchased) |
x |
Years of Credit to Be Purchased |
For a table showing the member and employer contribution rates in effect at
different times in the past, see the section on
Reporting Pension Data.
The member and the employer also both pay contributions to the OPSEU Pension
Plan for purchases of prior contributory service. The employer’s cost for this
type of buyback is calculated using the same formula as the employer cost for
prior non-contributory service (see above).
For leaves due to illness and WSIB, and pregnancy, parental and adoption leaves,
the buyback cost for both the member and the employer is calculated using the
same formulas as non-contributory service (see above).
For special and educational leaves, however, the employer does not make matching
contributions. For these types of leave, the member pays both the member and
employer share of contributions, based on the above formulas.
The member’s cost for service with another pension plan is calculated
differently. It is based on the projected – or “actuarial” – value of the
additional pension the he or she will receive from OPTrust as a result of the
purchase. If the purchase allows the member to retire sooner, this will be
reflected in the cost as well. The employer does not make any matching
contributions for this type of buyback.
Under a reciprocal transfer agreement between OPTrust and another plans, the
transfer amount is based on actuarial assumptions set out in the agreement. In
general, it is less costly to the member to transfer credit than to purchase the
service as a buyback. The employer does not pay any contributions for service
purchased under a reciprocal agreement.
Revised September 3, 2004
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