Leaving the OPSEU Pension Plan
before your pension begins
What are your options when your
employment ends before retirement?
IF YOU ARE NOT VESTED
If you have less than two years of credit and continuous membership in the Plan when you leave, you are not vested. In this case, you will receive a refund of your contributions, plus interest. The only exception to this is if you are 65 years or older when you leave and have less than two years of continuous membership or credit in the Plan. In this case, generally you will receive a refund of two times your contributions, plus interest.
IF YOU ARE VESTED AND UNDER AGE 55
When you have two or more years of continuous membership or credit in the Plan, you have earned the right to a pension (you are vested).
If you are vested and under age 55, you have some choices:
- you can choose a deferred pension (which means leaving your pension entitlement with OPTrust and having the right to a pension from OPTrust in the future)
- you can transfer the commuted value of your pension to another retirement savings arrangement such as a locked-in retirement account or another employer’s pension plan, if that plan permits transfers.
IF YOU ARE VESTED AND AGE 55 OR OLDER
If you are 55 or older and have more than two years of credit or continuous membership, the value of your pension cannot be transferred (unless it is transferred under a reciprocal transfer agreement) because you are entitled to receive a pension. You may request to start your pension anytime between the ages of 55 and 71. If you are not eligible for an unreduced early retirement provision and you choose to start your pension between the ages of 55 and 65, your pension amount will be reduced (see Reduced Pension for more information on the age-reduced early retirement provision).
For more information on the available options, refer to the OPTrust fact sheet Pension Options When Your Employment Ends.
DIVESTMENT SITUATIONS
The Pension Benefits Act imposes statutory requirements to protect the pension benefits you accrued with your former employer if your branch or unit is divested or privatized. The effect of the divestment on your pension plan entitlement depends on whether your new employer provides employees with a registered pension plan. When a divestment happens, if the new employer has a pension plan for new employees, Ontario pension law imposes special obligations on both the OPSEU Pension Plan and the new pension plan. These obligations may provide special benefit rights and entitlements to the affected plan members.
If your new employer does not have a registered pension plan or only has a group RRSP, you are entitled to termination rights.
In some divestment situations, members of the OPSEU Pension Plan are “grandfathered” or allowed to remain as active members in the OPSEU Pension Plan.
Each divestment case has to be examined to determine if the Pension Benefits Act applies and if regulatory approval or guidance is needed from the Financial Services Commission of Ontario (FSCO). In addition, OPTrust liaises with employers and members where a “grandfathering” arrangement is possible. Contact OPTrust for more information.
For more information on divestments, please refer to OPTrust's booklet Your Pension and Divestments.
LIMITED LIFE EXPECTANCY
If, based on medical evidence satisfactory to OPTrust, you have a life expectancy of less than 24 months, you may end your membership in the Plan without terminating your employment and OPTrust will pay you the commuted value of your deferred pension in cash or transfer it to an RRSP. To receive this benefit, you must apply to OPTrust and submit the appropriate medical information. If you have an eligible spouse at the time of application, your spouse will be required to waive all future survivor benefits. You must also revoke any beneficiaries you have named.
Any benefits you are receiving under the LTIP plan may be reduced by the amount of the lump-sum pension payment. Please contact your employer for more information.
REFUND OF EXCESS PENSION CONTRIBUTIONS
When OPTrust determines the commuted value of your pension at termination, we compare the total of your contributions plus interest to one half the value of your benefit accrued after 1986. This ensures that you do not contribute more than 50% of the commuted value. For example: let's assume you end your membership in the Plan and we determine the value of your pension benefit to be $80,000. You have made contributions of $45,000 including interest. Fifty percent of $80,000 is $40,000. In this case you have an “excess” of $5,000, which OPTrust will pay you.
If you take the refund as cash, it is subject to withholding tax. If you transfer it to an RRSP, it is not subject to tax.