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Note! The procedures for LTIP administration are the
responsibility of the employer and are not part of OPTrust’s guidelines. The
following material is provided for information purposes only, and does not
differentiate between the OPS and other participating employers.
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Unlike other unpaid leaves of absence due to illness, periods when a member is
receiving or eligible to receive Long-Term Income Protection (LTIP) benefits do
not affect his or her pension credit. During these periods, the member continues
to accrue credit at his or her normal rate.
LTIP is a benefit provided by employers whereby, if the member is deemed unfit
for work by a qualified physician and approved by the insurance carrier, the
member will qualify to receive 66.66% of his or her salary as of the date of
disability. A minimum qualifying period of six months applies from the initial
date of disability to the LTIP effective date. If the salary for the member
increases during this qualifying period it is still the salary at date of
disability that determines the earnings while on LTIP.
In addition to paying the regular employer contributions to OPTrust, the
employer also pays the member’s contributions for periods when the member is
eligible for or receives LTIP benefits (including any periods of rehabilitative
employment). Pension contributions for these periods are based on the 100%
salary rate as at the date of disability, not the 66.66% LTIP benefit. During
the member’s absence while on LTIP, this salary rate is escalated annually for
inflation, in accordance with the OPSEU Pension Plan’s rules.
Pension contributions became part of the LTIP benefit for employees of the
government on July 1, 1974 and for employees at Agencies, Boards, and
Commissions in January 1985. Not all employees of the government are eligible to
receive LTIP benefits. Only classified (permanent), full-time or regular part
time employees are eligible to receive LTIP benefits. Contract, seasonal and
casual, or “unclassified” employees are not eligible.
The Dupuis award came into effect on June 23, 1989, after a decision by the
Grievance Settlement Board. This award ruled that employees who are totally
disabled are entitled to pension accruals at no cost to the member provided they
are qualified to receive LTIP. Under this award, the employee need not be
receiving LTIP benefits to be entitled to accrue pension credit for the affected
period or for the employer to be required to pay both the employee and employer
contributions.
For more information, please refer to OPTrust’s
Employer Update #10
(December 16, 2002).
Effective January 1, 1990, Order in Council 693/91 amended the calculation methodology
of LTIP salary escalation, contributions and pension benefits. Under the
amendment, the salary rates used in the calculation of the pension benefit
accrual while the member is in receipt of LTIP should only reflect increases due
to inflation. Unlike LTIP salaries prior to 1990, the increases in salary rates
due to negotiated settlements are not applicable.While the rules around the
initial salary escalation can become quite complicated, subsequent annual
escalations will always take place on January 1st. The initial salary escalation
is based on the relationship between: i) the effective date of the member’s
current salary rate, ii) the date of member’s disability, iii) and the effective
date of the member’s LTIP claim.
In the Ontario Public Service, pension contributions for LTIP periods are
calculated and maintained outside of the regular payroll system by the Finance &
Controllership Branch of the Shared Services Bureau (SSB).
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Important! Termination while on LTIP: When a member is terminating his or her plan
membership while on LTIP, the employer should state “Member on LTIP” in the
final salary section of OPTrust's Termination of Membership (OPTrust 1012)
form, rather than entering a salary amount.
The collective agreement salary for the position may be different from the final
salary on LTIP.
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The following information is required for pension calculations for periods when
a member is receiving or eligible to receive LTIP benefits.
- Date of disability (DOD) – This is usually the member’s last day at work but
it may be a prior date if there is an interrupted qualifying period. Insurance
carriers now state the DOD on their acceptance letter.
- LTIP effective date – This is the date on which LTIP benefits commence. This
follows the later of i) the completion of the six-month qualifying period from
the date of disability, or ii) the expiration of the employee’s short term
sickness plan credits. LTIP pension contributions start on the LTIP effective
date.
- Salary at date of disability – This is the annual salary that the employee was
earning on the DOD (including any retroactive revisions). The salary reported is
the full time equivalent. If the employee is part-time this is recorded in the
RPT ratio %. If the member’s salary changes during the qualifying period, it is
still the salary at date of disability that is reported.
- Salary effective date – This is the date that the salary at DOD became
effective. For example, it could be the most recent salary revision date, the
date of a merit increase, the start date of a temporary assignment, etc.
- Termination of LTIP pension accruals – This is the last day that the LTIP
benefit is payable or the date on which the member’s employment ends, whichever
is earlier. For example, when an employee retires but continues to receive LTIP
benefits, his or her retirement date is the date on which LTIP pension accrual
ends.
- Termination reason – When the member’s LTIP pension accrual is to end, the
employer must provide the reason the accrual should stop. Examples include:
return to full-time work, retirement, resignation, or termination of the LTIP
benefit by the insurance carrier.
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Important! Rehabilitative Employment: If the member is on rehabilitative employment, as
approved by the insurance carrier, the employer continues to pay both the
employer and member pension contributions for this period.
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Financial and Data Reconciliation
The Finance and Controllership Branch of the Shared Services Bureau (SSB)
administers all the LTIP pension accruals for members in the Ontario Public
Service. Contribution payments are sent to OPTrust every quarter, based on the
escalated salary rate in effect at the start of the calendar year. In February,
SSB provides OPTrust with data on the escalated salary rate and contributions
for the previous calendar year. This information is then loaded into OPTrust’s
member database in time for the Annual Pension Statements to be produced.
Revised September 3, 2004
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 For more information on the OPSEU Pension Plan’s rules regarding LTIP,
please refer to Article 7.3 of the
OPSEU Pension Plan Text.
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