Pension Plan Basics
What is your pension benefit?
VESTING: YOUR RIGHT TO A PENSION
Under the OPSEU Pension Plan, the normal retirement age is 65. If you have at least two years of credit or continuous membership in the Plan, you are entitled to receive a pension at age 65 based on your credit. If you have this right to a pension, you are "vested." If you are a vested member of the pension plan, you may be eligible for additional early retirement benefits, or additional choices when you leave the Plan before retirement.
Less than two years of credit
You do not have a vested right to a pension if you have less than two years of credit and continuous membership. If you are not vested when you leave the Plan, you will receive a refund of your contributions plus interest. If you are 65 and are not vested when you leave the Plan, generally you will receive two times your contributions, plus interest.
THE BASIC FEATURES OF YOUR PENSION BENEFIT
The basic pension you accrue in the OPSEU Pension Plan:
- is based on
- i) the average annual salary rates for the five consecutive years that produce the highest average and
- ii) accrued pensionable service credit
- is paid for your lifetime
- is adjusted for inflation on an annual basis
- may be paid early without penalty if you qualify for early retirement options
- contains a survivor pension component for your eligible spouse and/or children.
How Your OPTrust Pension is Calculated
If you retire before age 65, OPTrust pays the full 2% pension. At age 65 your 2% pension is made up of two pieces, the OPTrust pension and the Canada Pension Plan pension. If you decide to collect your CPP pension before age 65, that does not affect your OPTrust pension. OPTrust does not integrate your pension with CPP until age 65.
To receive a CPP pension, you must apply for it through Service Canada.
CALCULATING YOUR OPTRUST LIFETIME PENSION
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Your average annual salary is the average of your highest consecutive five-year annual salary rates during your membership. The average YMPE under the Canada Pension Plan is the amount set by the Canada Pension Plan for the year your membership in the OPSEU Pension Plan ends and the four preceding years.
Example
Let’s assume you are 65 years old and retired on August 31, 2011,
with the following:
Average annual salary: $52,000
Credit: 20 years
Average Year’s Maximum Pensionable Earnings (YMPE):
| 2011 | $48,300 | |
| 2010 | $47,200 | |
| 2009 | $46,300 | |
| 2008 | $44,900 | |
| 2007 | $43,700 | |
$230,400 |
÷ 5 = $46,080 |
Using the basic pension formula, your lifetime OPTrust retirement pension would be calculated as follows:
| .02 x $52,000 x 20 years | = | $20,800 |
| minus reduction for CPP integration at age 65: |
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| .00655 x $46,080 x 20 years | = | $6,036 |
| Gross annual benefit effective September 1, 2011 | = | $14,764 |
To calculate the CPP integration amount, we use the lesser of the average YMPE and the average annual salary. In this example, because the average YMPE ($46,080) is less than the average annual salary ($52,000), the average YMPE is used to calculate the CPP integration amount.