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Accrued pension benefit: The amount of annual pension earned by a plan member,
based on his or her earned credit and salary rate, up to a given date.
Actuarial valuation: A study to determine whether the Plan’s assets are
sufficient to fund the anticipated future cost of members’ and pensioners’
accrued pension benefits, based on current contribution rates. In comparing the
Plan’s assets and liabilities, actuarial valuations use a range of assumptions
regarding investment returns, inflation and salary increases and various
demographic factors.
Actuary: A trained pension professional who specializes in calculating pension
plan liabilities. In Canada, full professional recognition requires membership
in the Canadian Institute of Actuaries.
Basic pension: The gross pension payable at age 65.
Buyback: The purchase of credit in the Plan for an eligible period of past
service.
Canada Pension Plan (CPP): The Canada Pension Plan was established in 1966 to
provide all working Canadians with a source of retirement income. When CPP was
being introduced, the Ontario Government made a policy decision to “integrate”
the major public service pension plans in Ontario with the CPP.
Canada Revenue Agency (CRA): The federal government department, formerly
known as Canada Customs and Revenue Agency and Revenue Canada, responsible for
administering the Income Tax
Act.
Commuted value :The amount of an immediate lump-sum payment in today’s dollars
estimated to be equal in value to a future series of pension payments.
Continuous employment date: The first day of the employee’s most recent period of
unbroken employment – whether in a permanent/classified, contract/unclassified,
or seasonal position.
Continuous service date: Employers use the continuous service date to calculate
an employee’s seniority, severance payments and entitlement to benefits. The
continuous service date is not directly linked to the member’s credit in the
OPSEU Pension Plan.
Consumer Price Index (CPI): A measure of the average price change of commodities
commonly bought by households in Canada; compiled monthly by Statistics Canada.
CPP integration: A reduction in a retiree’s OPTrust pension at age 65. CPP
integration reflects the lower contributions paid to the OPSEU Pension Plan for
the portion of the member’s earnings between the Year’s Basic Exemption (YBE)
and the Year’s Maximum Pensionable Earnings (YMPE).
Credit: See “pensionable service credit.”
Deferred pension: A specified pension determined at the time of termination of
employment, which is payable at normal retirement age. A deferred pension from
OPTrust is also payable as a reduced pension, starting at age 55 or older.
Defined benefit pension plan: A pension plan that defines the pension to be
provided (based on credit and average salary) but not the total contributions.
Divestment :Under Ontario’s Pension Benefits Act (PBA), there are special rules
protecting the pension entitlements of Plan members in the event of a
divestment. These special rules apply when:
- the former employer transfers, or “divests,” all or part of an operation to
another employer
- affected employees become employed by the new employer
- the new employer contributes to a different pension plan, and
- the affected employees become members of the new employer’s pension plan.
When OPTrust members are affected by a divestment, their earned pension remains
with OPTrust and they have the right to a “special deferred pension” from the
OPSEU Pension Plan. The new employer must recognize the period of membership in
the OPSEU Pension Plan when determined eligibility for the new employer’s
pension plan.
Eligible child: Under the OPSEU Pension Plan, a child is eligible to receive
survivor benefits if:
- the child is under the age of 18, or
- if the child is over 18, he or she is in continuous full-time attendance at a
secondary school or immediately following secondary school, is attending a
post-secondary institution, to a maximum of five years.
Eligible Spouse: Defined as one of two individuals, whether of the same or
opposite sex, who:
- are married to each other, or
- are living together in a conjugal, common-law relationship
i) for at least three years, or
ii) in a relationship of some permanence and are the natural or adoptive parents
of a child.
Factor 90: A permanent early retirement option under which members whose age plus
credit total at least 90 years may retire with an immediate unreduced pension
from OPTrust.
Immediate pension: A pension payable commencing the month following the month of
termination of plan membership. An immediate unreduced pension may be payable to
a member who qualifies for Factor 90 or 60/20 or at age 65. An immediate reduced
pension is payable as early as age 55.
Income Tax Act (ITA): Federal legislation that, among many other things,
regulates the registration, funding, investments, contributions and benefits of
registered plans. The ITA sets the maximum benefits allowable under the plan.
Indexing (inflation protection): An annual adjustment to a retired member’s
pension amount designed to offset the effects of inflation. OPTrust pensions are
increased annually, based on changes in the Consumer Price Index, to a maximum
of 8% per year. Any increase above 8% is carried over and applied in future
years.
Locked-in: A legislative requirement that vested benefits under the Plan must be
used to provide a lifetime retirement income and are not available as an
immediate cash payment.
Normal retirement age (NRA): The age at which retirement will normally occur and
when the employee will be entitled to full retirement benefits. In the OPSEU
Pension Plan, the NRA is 65 years.
Ontario Pension Board (OPB): Administrator of the Public Service Pension Plan (PSPP),
the pension plan for management and excluded staff of the Ontario Public
Service.
Past service pension adjustment (PSPA): An increase in the “deemed value” of the
member’s pension resulting from a “past service event,” such as buying back
credit for periods of post-1989 service. A PSPA will reduce the member’s RRSP
contribution room, and must be approved by the Canada Revenue
Agency.
Pension adjustment (PA): The “deemed value” of the pension benefit earned during
a given year. A PA reduces the member’s RRSP contribution room for the following
year.
Pension Benefits Act (PBA): of Ontario Legislation that sets out the rules for
pension plans registered in the Province of Ontario. Pension plans must comply
with these rules in their day-to-day operations. The PBA sets the minimum
benefits payable by the pension plan
Pensionable service credit: The total period of time during which a member
contributes to the pension fund or has contributions made on his/her behalf.
Credit is used in the determination of early retirement options, eligibility of
insured benefits, pension payable as at retirement.
Plan membership date (PMD): The first day of the employee’s most recent period of
unbroken membership in the Plan.
Plan sponsors: The OPSEU Pension Plan is jointly sponsored by the Government of
Ontario and OPSEU. Each sponsor appoints five members to the OPTrust Board of
Trustees, which is responsible for the administration of the OPSEU Pension Plan
and oversees the operations of the OPSEU Pension Trust.
Plan text: The plan text defines the specific legal provisions of the OPSEU
Pension Plan. The plan text contains provisions on membership eligibility, pensionable service credit, vesting and locking-in, normal form of pension,
normal retirement age and includes many other provisions.
Public Service Pension Plan (PSPP): The predecessor plan to the OPSEU Pension
Plan. Effective January 1, 1993, the PSPP is the pension plan for management and
excluded staff members in the Ontario Public Service. The PSPP is administered
by the Ontario Pension Board (OPB).
Reciprocal transfer agreements (RTAs): Service may be transferred into or out of
the OPSEU Pension Plan under the Major Ontario Pension Plans (MOPPs) Transfer
Agreement or bi-lateral agreements between OPTrust and other individual pension
plans.
Re-employed or engaged: A re-employed pensioner is someone who is working for
(becomes an employee of) an employer who contributes to the OSPEU Pension Plan.
The pensioner is considered engaged if he or she has a fee-for-service contract
with an employer who contributes to the Plan.
Residual Balance: Following a pensioner’s death and the payment of all benefits
to the pensioner’s eligible survivors, OPTrust compares the pensioner’s total
contributions, plus interest, to the total amount of pension and survivor
benefits paid. Where the contributions, plus interest, exceed the total benefits
paid, the residual balance is payable to the pensioner’s designated payment
recipient or estate.
60/20: A permanent early retirement option under which members who are age 60 or
older and have at least 20 years of credit may retire with an immediate
unreduced pension from OPTrust.
Special deferred pension: When a change of employment occurs that is a divestment
under the Pension Benefits Act (PBA), and the member joins the new employer’s
pension plan, the member is entitled to a special deferred pension from the
OPSEU Pension Trust. With a special deferred pension, the member’s credit with
OPSEU Pension Trust is added to the period of employment with the successor
employer to determine eligibility for early retirement.
T4: Annual statement of earnings and deductions (including buyback contributions)
made by the member and reported to CRA.
T4A: Annual statement of taxable payments from the pension plan to a member,
former member or pensioner, and reported to CRA.
Termination: In the OSPEU Pension Plan, termination of plan membership means that
you stop making contributions to the Plan because your employment has ended.
Employment could end because of retirement, layoff, dismissal, resignation,
death or permanent disability.
Vested: A member is vested when he or she becomes entitled to benefits under the
Plan as a result of satisfying membership and credited service requirements.
Benefits accrued after December 31, 1986, are vested after two years of credit
or membership and are locked in. Before December 31, 1986, service is vested
after 10 years of plan membership, credit or employment or if the member is 45
or older and has 10 years of continuous employment.
Year’s Basic Exemption (YBE): The earnings amount set every calendar year by
Canada Pension Plan (CPP) below which Canadians do not make any CPP
contributions.
Year’s Maximum Pensionable Earnings (YMPE): The maximum earnings from employment
per calendar year on which CPP contributions and benefits are calculated. The
YMPE is changed every year according to a formula based on average industrial
wage levels.
Glossary
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