Toronto (September 10, 2010) –The OPSEU Pension Plan’s sponsors – OPSEU and the Government of Ontario – have approved a new buyback provision for the reinstatement of prior contributory service for active plan members. This provision will affect members who choose to “buy back” credit for past service in the OPSEU Pension Plan or the Public Service Pension Plan for which they received a contribution refund or pension transfer when their previous employment ended.
Effective October 1, 2010, the cost to reinstate prior contributory service in the Plan will be based on the projected – or “actuarial” – value of the additional pension service. Employers will no longer make matching contributions for this type of buyback. Depending on a member’s individual circumstance, this may substantially increase the cost of reinstating prior service.
However, applications to reinstate prior non-contributory service that are received by OPTrust on or before September 30, 2010, will be processed under the Plan’s previous method for calculating the cost.
OPTrust has notified members – who are still within your 24-month application window – of the new change with a reminder of their opportunity to reinstate prior contributory service under the old cost calculation rules before October 1, 2010.
For applications received on or before September 30, 2010 and within the 24-month application window, the cost to purchase prior contributory service is calculated as the higher of the member’s:
- gross payout amount plus interest, and
- contributions for the period calculated at the salary rate at application.
The cost is matched by the employer.
For applications received on or after October 1, 2010, the cost to reinstate prior contributory service will be calculated as the “actuarial” value of the pension benefit. The full cost of the buyback is paid by the member.
To calculate the actuarial cost, OPTrust uses a number of factors – such as the member’s age and current salary rate, current interest rates, and the amount of service he or she is purchasing – to determine the current cost of the additional pension the member will receive if he or she completes the purchase. In most cases, the actuarial cost for reinstating this service will be higher than under the cost formula that ends on September 30, 2010.
For more information
To learn how you could save on the cost of reinstating your past service with this time-limited opportunity, please read our detailed Questions & Answers: Reinstating past service.
Member and Pensioner Services