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Buyback time limits and the OPSEU Pension
Plan
Purchasing or "buying back" credit for eligible periods of past service
is one way members can increase the value of their OPTrust pension.
For those who are eligible, making a buyback has two important benefits. First, by
adding to your years of credit in the OPSEU Pension Plan, your buyback will increase the
amount of your pension when you retire. Second, increasing your credit may help you
qualify for one of the Plan’s early retirement options – or help you to qualify
sooner.
To purchase past service credit, eligible members must meet important time limits.
These include:
- a strict 24-month window for submitting a buyback application
- a maximum of 10 years to complete payment.
The 10-year payment period starts three months after the date OPTrust mails your Agreement
to Purchase Credit. Members who retire or leave the Plan before the end of the 10-year
period must complete their purchase before they terminate membership. Members who do not
complete their payments within the 10 years will not receive credit for the unpaid portion
of their buyback.
This OPTions Update summarizes some key features of OPTrust’s buyback
process. It also describes what you can do if you have a buyback that was interrupted and
which you now want to complete.
Types of eligible service
OPTrust members may be eligible to purchase credit for the following types of service:
Non-credited government service with the Ontario Public Service (OPS) or
another employer that contributes to the OPSEU Pension Plan, the Public Service Pension
Plan or its predecessor plan. This includes periods when you did not contribute –
such as unclassified, contract or casual work – or periods for which your
contributions were refunded or your entitlement was withdrawn from the Plan.
Prior non-OPS employment with an employer who was not part of the OPSEU
Pension Plan but provided another registered pension plan. For service before 1992, you
must still have credit in the prior plan (i.e., you cannot have taken a refund or
transferred your entitlement out of the plan). For service after 1991, the Canada Customs
and Revenue Agency (formerly Revenue Canada) must approve your purchase. CCRA will approve
your purchase if you have enough unused "RRSP" room.
Leaves of absence without pay of more than one month for illness,
pregnancy, parental, adoption, special or educational purposes, or workplace injuries
(WSIB).
Time limit for applications
The OPSEU Pension Plan sets out strict time limits for applying to buy back credit for
past service. To be eligible, you must submit your Application for Past Service Credit
to OPTrust within 24 months of the later of:
- the date you become a member of the Plan, or
- the last day of the leave that you are applying to buy back.
This window was first introduced on January 1, 1990. At that time, members who were
eligible to buy back periods of service from before 1990 were given 24 months (until
December 31, 1991) to apply under the new rules.
The 24-month time limit is not affected by the recent agreement between OPSEU and the
Province of Ontario concerning the Pension Data Purification Project. (Please see the Summer 2001 issue of
OPTions,
for more details.)
The buyback agreement
Once OPTrust processes your application and determines the cost of the buyback, we
will mail you an Agreement to Purchase Credit. The agreement states the cost of
your buyback and describes the available payment options.
The cost of your buyback is calculated using your salary rate as of the date OPTrust
receives your complete application, including any necessary supporting documents.
If you do not return the signed agreement to OPTrust within three months, the quoted
cost of the buyback lapses. You can still decide to complete your buyback at a later time,
subject to the payment time limits outlined below. In this case, you will have to contact
OPTrust to have the cost recalculated.
Payment time limits
Once you have applied within the 24-month window, you can take up to 10 years to
complete your purchase, provided you are eligible to buyback the service in question. The
10-year payment period starts three months from the date that OPTrust mails you your Agreement
to Purchase Credit. This period cannot be extended.
You can make payments at any time within the 10-year period. This opportunity remains
open to eligible members who apply within the 24-month window, even if they:
- do not return the signed Agreement to Purchase Credit form to OPTrust
- initially decline the buyback opportunity
- decide to purchase only part of the service period, or
- choose not to complete their installment payments.
Before the end of the 10-year payment period, you can pay any outstanding amount as a
lump sum. If you leave the Plan or retire before completing your payments, you will have
to pay the outstanding balance as a lump sum when you terminate.
If you don’t complete your purchase, you will not receive credit for the unpaid
portion of your buyback. OPTrust cannot accept payments after the 10-year period has
expired.
Payment options
Members who apply to buy back eligible service within the Plan’s 24-month time
limit have a range of payment options. Details will be provided with your Agreement to
Purchase Credit form.
Lump sum payment. You can pay for your buyback in a lump sum. In most
cases, payment can be made in cash or by a transfer from a tax-sheltered source such as an
RRSP.
You can complete your lump sum payment anytime within the 10-year period, starting
three months after OPTrust mails you the Agreement to Purchase Credit. Buybacks
costing $500 or less must be paid in a lump sum. If you choose to pay more than three
months after receiving the initial quote, interest will be applied to the purchase cost.
Payroll deduction. For a buyback costing more than $500, you have the
option of completing your purchase through payroll deductions. This may make completing
your purchase more convenient. Payroll deduction is not available to seasonal or casual
employees.
If you choose the payroll deduction option, the total cost of your buyback will include
interest charges calculated at a standard rate. Your biweekly payments must cover interest
charges plus some part of the principal. The minimum payment is $10 every two weeks.
Other payment options. Regular employees may also choose to pay for their
buyback through a combination of lump sum payments and payroll deductions, provided the
total cost is over $500.
Members who are on a leave of absence, LTIP or working seasonal or casual hours may
make other payment arrangements, such as a series of post-dated cheques payable to
OPTrust.
Partial payment. To receive full credit for your buyback, you must
complete your payments within the 10-year period and before you retire or terminate
membership in the Plan. If you don’t complete your purchase, you will receive credit
only for the part of the buyback that you pay for.
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Did you apply for a buyback that you are
still eligible to complete?
Under OPTrust’s buyback rules, if you submitted a buyback application
within the 24-month window at any time after 1989, but did not finish your payments,
you may still be able to complete your purchase.
This includes current plan members who submitted an application but:
- did not sign their Agreement to Purchase Credit form
- initially declined the agreement to purchase
- decided to buy back only part of the period they applied to purchase, or
- signed an agreement but chose not to complete some or all of their payments.
Under OPTrust’s 10-year payment period, these members may still be eligible to
complete their purchase, either by installments or in a lump sum.
Provided you submitted your application within the 24-month window, there is no need to
reapply. Simply complete the attached form and return it to OPTrust.
If more than three months has passed since OPTrust mailed the purchase agreement, we
will have to recalculate the cost of your buyback. Because the new cost will include
interest, it will be higher than the original quoted price.
Pre-1990 service
The opportunity to complete a buyback is also open to members who applied to purchase
eligible pre-1990 service, provided they submitted an application under the new rules
introduced in 1990. The deadline for these applications was December 31, 1991.
In these cases, members have until the end of the 10-year period or June 30, 2002,
whichever is later, to complete their buyback payments.
Note: OPSEU and the Government of Ontario recently reached a separate agreement
concerning the Pension Data Purification Project. Under this agreement, members who signed
an Agreement to Purchase Credit but who did not complete their payments due to a
payroll error will receive full credit for their buyback at no cost to the member. (Please
see the Summer 2001 issue of OPTions for more details.)
The option to complete an approved buyback within the 10-year payment period is open to
all eligible members who applied within the 24-month window. This option is a
permanent feature of the Plan and is not related to the recent agreement between the
sponsors concerning the correction of payroll errors. OPTrust cannot waive the 24-month
time limit.
If this applies to you…
If you submitted a buyback application within the 24-month window but did not make
some or all of your payments, you may still be eligible to complete your buyback.
If you think this applies to you – or that your buyback may be covered by the
agreement between the Plan sponsors, OPSEU and the Government of Ontario – please
fill out the "Request for a review of
the status of my OPTrust buyback" form and return it to the OPSEU Pension
Trust as soon as possible.
We will review your file and contact you to confirm the status of your buyback. Due to the
number of cases that may be affected and the amount of work involved, it may take us
several months to confirm:
- whether you have an outstanding buyback that you are still eligible to complete, or
- if you are eligible to receive credit for an incomplete buyback under the agreement
between the sponsors.
We appreciate your patience as we serve you and your fellow members of the OPSEU
Pension Plan.
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