Under the OPSEU Pension Plan, the member’s salary is used in several
- The Plan requires that current service contributions be deducted and remitted
to OPTrust based on the member’s “pensionable salary" and the Plan’s contribution
- The member’s pensionable salary is also used in calculating the cost of
contributions for the purchase of past service (“buybacks”).
- The member's earned pension benefit is calculated based on the member's best 60 consecutive months average annual salary rate.
- Finally, the member’s pensionable salary is used in determining the earnings
ceiling for re-employed/re-engaged pensioners.
To ensure that the concept of pensionable salary is applied consistently in all
cases, the OPSEU Pension Trust has clarified the definition of the term. In
cases where this definition differs from employers’ past practice, the OPTrust
policy clarifying the definition of pensionable salary is effective from March
1, 2002 [ref: Employer Update #4].
Under this definition, “pensionable salary” has the following attributes. It:
- must be paid to the member
- must be measured in terms of regular periods of time
- includes, in addition to regular pay, any periodic payments paid on a regular
basis as a permanent component of pay for a position
- excludes fringe benefits and bonuses unless they are paid regularly and
computed by reference to hours, days, weeks or other specific periods of time;
these benefits cannot be ad hoc or unexpected, they must be a regularly
- includes all earnings paid at regular rates for all hours up to full-time
- cannot include overtime, which is interpreted as being wages paid at a rate
greater than the regular rate
- includes any other amount determined to be part of “salary” by the Board of
Trustees of the OPSEU Pension Trust.
In applying the above policy, pensionable salary is defined as including:
- regular earnings/base wages including market value adjustments and yearly
increases that may vary but regularly occur each year (e.g., merit pay)
- payments for vacation when taken as a leave with pay
- allowances that are paid regularly
- retro earnings
- compensating time
- sick pay deemed to be regular wages
- permanent salary notes (e.g., for specific training/certification)
- isolation pay
- on-going long service pay.
Although a member employed on a full-time basis may be in receipt of reduced
wages under the short-term sickness plan or due to a self-funded leave, pension
contributions are calculated on the full-time salary.
Under the OPSEU Pension Plan, pensionable salary does not include:
- overtime (paid at rates exceeding regular rates)
- severance pay
- one-time payments
- reimbursement for expenses incurred
- lump-sum vacation payments in lieu of leave with pay
- 4% vacation pay in lieu of leave with pay
- any payment in lieu of benefits provided by the employer
- payments not regularly paid
- shift premiums.
The effective date of this definition is March 1, 2002.
All participating employers should ensure that the deduction rules incorporated
in their payroll systems are consistent with the definition of pensionable
salary outlined above.
In addition to the use of pensionable salary for the computation of pension
contributions and entitlements, the definition of pensionable salary must also
be used to calculate the earnings ceiling for re-employed/re-engaged pensioners.
Employers should use the definition above when completing the Pensioner’s
Quarterly Re-employed Earnings & Calculation Report (OPTrust1008).
Revised April 2013