• the member’s pensionable salary
• the member and employer contribution rates as prescribed by the Plan
• the Year’s Basic Exemption (YBE) and Year’s Maximum Pensionable Earnings (YMPE) as prescribed under the Canada Pension Plan (CPP).

The OPSEU Pension Plan is integrated with the CPP. As a result, members and employers pay a lower contribution rate to the Plan for that portion of the member’s pensionable salary on which CPP contributions are also paid. CPP Integration also affects the member’s pension benefit. At age 65, the member’s OPTrust pension will be reduced to reflect the lower contributions paid to the Plan for earnings that are also covered by CPP.

• For annual earnings up to CPP’s Year’s Maximum Pensionable Earnings (YMPE), contributions will equal 6.4% of pensionable salary.
• For earnings above the YMPE, OPTrust contributions will equal the full 8.0% of salary.

Under the OPSEU Pension Plan, the normal contribution rate for both members and employers is 8% of pensionable salary, integrated with CPP. As a result, for periods when the normal contribution rate is in effect, contributions are calculated using the following formula:

			Example The following example illustrates the member and employer contributions payable for an employee who earns an annual pensionable salary of $45,000. This example is based on the Plan’s normal contribution rate and the YBE and YMPE for 2005.   Contribution Rate Pensionable Salary (Contribution Calculation) Member Contributions Employer Contributions 6.4% Pensionable Salary up to the YMPE ($41,100) (0.064 x $41,100) $2630.40 $2630.40 8% Pensionable Salary above the YMPE ($41,100) (0.08 x $3,900) $312.00 $312.00 Total contributions to the OPSEU Pension Plan $2942.40 $2942.40

For more information on the OPTrust formula change please see Employer Update 20.

Contributions to the OPSEU Pension Plan are based on the member’s year-to-date pensionable salary. As a result, each year:

• The full contribution rate (normally 8%) is deducted on the member’s pensionable salary until his or her earnings reach the YBE.
• When the member’s year-to-date pensionable salary reaches the YBE, the contributions are calculated based on the CPP-integrated rate (normally 6.2%) until the YMPE is reached.
• When the member’s year-to-date pensionable salary reaches the YMPE, the contributions are calculated based on the full rate (normally 8%) for the remainder of the year.

			Example The following example illustrates the member and employer contributions payable for an employee who earns an annual pensionable salary of $45,000. This example is based on the Plan’s normal contribution rate and the YBE and YMPE for 2003.   Contribution Rate Pensionable Salary (Contribution Calculation) Member Contributions Employer Contributions 8% Pensionable Salary up to the YBE (0.08 x $3,500) $280 $280 6.2% Pensionable Salary between the YBE ($3,500) and the YMPE ($39,900) (0.062 x $36,400) $2256 $2256 8% Pensionable Salary above the YMPE ($39,900) (0.08 x $5,100) $408 $408 Total contributions to the OPSEU Pension Plan $2944 $2944

The example above uses the OPSEU Pension Plan’s normal contribution rates. On December 1, 1999 a temporary reduction in the member contribution rate went into effect. The reduced contribution rate, which equaled 4% of the member’s pensionable salary (integrated with CPP), was originally scheduled to end on December 1, 2002. Instead, a portion of the members’ share of the Plan’s actuarial gains has been used to phase the contribution reduction out through a series of annual increments. As a result, contributions were increased to 5% of pensionable salary effective December 1, 2002 and to 6% effective December 1, 2003. For this period the employer rate remained at the normal rate.

These changes in contribution rates apply to the pay period that includes December 1. For example:

Please see the Forms and Tools section for a table of historical OPSEU Pension Plan contribution rates.
 

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