• OPTrust Assumes Responsibility for Bridging Calculations and Pension Adjustment Reporting
• Bridging Calculations
• New Rules for Pension Adjustment (PA) Reporting
• Leave of absence during a non-contributory buyback
• Income Tax Receipts for Buyback Payments

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OPTrust Assumes Responsibility for Bridging Calculations and Pension Adjustment Reporting

The OPSEU Pension Plan includes a provision that allows members who receive a notice of layoff to "bridge" to the nearest unreduced early retirement pension that they may qualify for (Factor 90, 60/20, Age 65, or Factor 80). "Bridging,” means using leaves of absence, the surplus notice period and the period represented by severance payments to qualify for an unreduced OPTrust pension.

Bridging calculations

When a member exercises the leave of absence without pay option, the employer is required – on the member’s behalf – to continue remitting pension contributions to OPTrust. The contribution amount is calculated based on the member’s salary immediately prior to his or her leave of absence (LOA). In the past, this amount was calculated by the member’s employer and submitted directly to OPTrust.

As of January 2004, for the first time the responsibility for determining bridging calculations has shifted to OPTrust. OPTrust will now calculate and prepare cost quotations for members who are bridging to one of the Plan’s unreduced retirement options.

Requesting a quotation
For OPTrust to process a bridging cost quotation, employers are required to send a written request to OPTrust. As part of the process, OPTrust requires a signed letter from the member’s human resources representative stating the following information:

• member’s name and Social Insurance Number
• subject line: “RE: Request for Bridging Cost”
• bridge period start and end dates
• surplus date or provide a copy of surplus letter (if applicable)
• method of payment (e.g. severance, during or after LOA)

A copy of the letter should also be provided to the member. Members are advised to sign and submit an Authorization for the Release of Personal Information form (OPTrust 3004), to confirm that the employer is approved to release personal information on his or her behalf.

Once this information is received, OPTrust will send the cost quotation to the requesting employer along with a copy to the member. Within 45 days of the mailing date, the employer is required to provide OPTrust with the following information:

• written confirmation that the bridging LOA will proceed, and
• confirmation of payment method, frequency and an estimated timeframe for payments.

Employers are asked to submit this information within the specified timeframe.

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New Rules for Pension Adjustment (PA) Reporting

Starting with the 2003 tax year, OPTrust will calculate and report pension adjustments for certain buybacks, including:

• a leave of absence that ended in the current tax reporting year (2003), whereby the member has submitted a signed Agreement to Purchase Credit form on or before April 30th 2004.

For example, if a member’s leave of absence (LOA) ended on December 12, 2003 and he or she submitted a signed Agreement to Purchase Credit form on February 12, 2004, OPTrust will report the PA directly to the Canada Revenue Agency (CRA). In the past, employers were requested to amend and report PAs to CRA.

There are some exceptions to this new rule. If the leave of absence began prior to 2003, OPTrust will only calculate the pension adjustment for the current year. In the future, OPTrust will calculate and report a PA for every year of a member’s LOA.

CORPAY System
For employers who use the CORPAY system, OPTrust will report the PAs for all qualifying LOAs whether or not the payment was received. This applies regardless of the type of payment.

Non-CORPAY System
For employers who are not part of the CORPAY system, the rules are slightly different. OPTrust will report a pension adjustment for the LOAs described above for payments that are made directly to OPTrust (e.g. lump-sum or monthly payments).

Non-CORPAY employers are asked to calculate and report PAs for members who elect to make payments by payroll deductions or combination of payment methods for these LOAs. We will continue to ask non-CORPAY employers to report PAs for LOAs that fit this description.

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Leave of absence during a non-contributory buyback

Once a member joins the Plan, he or she has the option to buy back any unclassified service for the period he or she did not contribute to the Plan or was not a member.

When buying back non-contributory service, members have the option to also purchase any breaks (e.g. pregnancy or parental leave) within this service, provided that his or her employer confirms the break in service was an authorized leave of absence.

Example
For example, let’s say a member who was in an unclassified position for 3 years joins the Plan and decides to purchase the period of his or her unclassified service. During this period the member took a 6-month parental leave of absence. If the member was on an approved LOA, this will be included in his or her buyback costing. But, the member’s employer must notify OPTrust that the break in service was an authorized leave of absence.

When processing a member’s non-contributory buyback, employers are asked to notify OPTrust of an approved leave of absence during the non-contributory period. This ensures that the member receives full credit for his or her past service including any approved leave of absence, which occurred during the period.

If this information is received, OPTrust will provide the member’s employer with a costing calculation for the non-contributory period and any breaks in service within this period.

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Income Tax Receipts for Buyback Payments

In mid February 2004, OPTrust mailed official income tax receipts to more than 4,500 members who purchased credit in the OPSEU Pension Plan during 2003. The 2003 Buyback T4A statement details the member’s total annual buyback contributions for 2003. The receipt, consistent with Canada Revenue Agency (CRA) T4A standards, includes a tear off portion for income tax filing purposes.

Since buyback payments are tax deductible, members should report their buyback contributions with their 2003 tax return.
 

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