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August 20, 2001, Number 1
In this issue
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Agreement between sponsors addresses credit
discrepancies identified by PDPP
OPSEU and the Government of Ontario have reached an agreement resolving certain
discrepancies in OPSEU Pension Plan members’ credit and contribution records. This
agreement between the Plan’s sponsors settles a number of issues affecting
members’ pension data and entitlements that have been uncovered by the
Government’s Pension Data Purification Project (PDPP).
The agreement applies to service before 1999 and is effective as of April 2, 2001.
Under the agreement, plan members who missed pension contributions or buyback payments
due to payroll or other administrative errors will receive full credit for the affected
service, at no cost to the member. Those who are found to have over-contributed to the
Plan will receive a contribution refund, plus interest. Matching employer contributions
for overpayments will be credited to the employer.
The agreement also sets out how any resulting financial cost to the Plan will be
handled.
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Background
When the OPSEU Pension Plan was established in 1993, both sponsors recognized
that there were numerous discrepancies in members’ past pension records. The
government created the Pension Data
Purification Project (PDPP) as part of its commitment to correct these errors. Since
1995, the OPSEU Pension Trust has been working with PDPP staff to review and correct
members’ pension records and notify those who are affected.
PDPP is reviewing data for service up to December 31, 1998 for members paid through the
CORPAY system, and to December 31, 1994 for non-CORPAY members. PDPP is scheduled for
completion by the end of 2001.
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Who the agreement covers
The agreement covers active members, pensioners, deferred pensioners and divested
members who retain credit in the Plan. It applies to service to December 31, 1998 for all
members, whether or not they are paid through the CORPAY system.
The agreement also applies to terminated members who are in the process of transferring
their entitlement out of the Plan, provided the funds were still in the OPSEU Pension Fund
on the agreement date of April 2, 2001.
The agreement does not apply to terminated members who transferred their commuted value
out of the Plan, transferred their entitlement out of the Plan under a reciprocal
agreement, or transferred out of the Plan into the Public Service Pension Plan prior to
April 2, 2001.
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Scope of the agreement
The general scope of the agreement is that members who are found to have
under-contributed to the Plan as a result of payroll or other administrative errors will
be awarded credit for the affected service. No pension contributions will be collected
from the member for periods of service covered by the agreement.
The cost to the Plan for periods prior to January 1, 1993 will be recovered through an
adjustment of the Government of Ontario’s initial unfunded liability. For periods
from January 1, 1993 to December 31, 1998, the cost will be shared between the Government
and OPSEU and will be paid for through adjustments of past or future gains in the Plan.
Members who have over-contributed, including those who have since retired, will receive a
refund of the over-contribution, plus interest. In addition, where members have previously
repaid missed contributions for periods of service covered by the agreement in response to
a request from OPTrust, the member will be refunded the amount they paid back, plus
interest.
Retirees whose service credit increases as a result of the agreement will receive a
higher monthly pension amount as well as a retroactive payment, plus interest.
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Implementing the agreement
OPTrust has established a special Project Team to administer the agreement
between the sponsors. This team will be responsible for:
- identifying cases where members and pensioners are affected by the terms of the
agreement and making the necessary adjustments to their pension records
- recalculating pensions and issuing retroactive payments to affected retirees
- issuing refunds to members and pensioners who are found to have over-contributed to the
Plan.
With the number of cases and the amount of work involved, it will take several months
to implement all aspects of the agreement. OPTrust will notify all members and pensioners
whose pension entitlements change as a result of the agreement. Any refunds or retroactive
increases will be made by mid-2002.
In the meantime, OPTrust will fast-track adjustments that could have an
immediate impact on affected members. This includes members who request a confirmation of
their eligibility date under Factor 80 or who are nearing retirement.
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Cases affected by the agreement
The agreement applies to service up to December 31, 1998 for which members
under-contributed to the Plan due to payroll or other administrative errors. This
includes:
- periods of regular employment for which mandatory contributions were not deducted from
the member’s pay
- maternity leaves commencing on or after November 18, 1990
- buybacks for which the member had signed an Agreement to Purchase Credit form,
provided the member did not later ask to stop his or her payments.
1. Regular Employment: Under the agreement, "regular"
employment includes periods of service for which the member worked or legitimately accrued
credit in the Plan. Regular employment includes classified service, unclassified service
with plan membership, leaves of less than one month, paid sick leaves and LTIP.
1.1 Over-contributions: Members and pensioners who are affected by the agreement
will receive service credit for the maximum period for which they are eligible in
accordance with the Plan rules. Members’ and pensioners’ over-contributions will
be refunded with interest. Financial credit will also be given to the employer for any
employer-remitted over-contributions, plus interest.
1.2 Under-contributions prior to January 1, 1993: Under the agreement, members
will receive service credit for periods worked or leave periods for which mandatory
contributions were not deducted due to payroll or administrative errors.
The employee’s contribution record will reflect the amount actually contributed by
the employee. The missing contributions will not be credited to the member or the
employer. Any additional cost to the Plan will be paid through an adjustment to the
initial unfunded liability.
1.3 Under-contributions – January 1, 1993 to December 31, 1998: Members
will receive credit for the periods worked or leave periods for which mandatory
contributions are missing. OPTrust will calculate the employee and employer share of
missing pension contributions, plus interest.
The cost of the under-contributions will be paid from adjustments to past and future
gains in the Plan. Members and employers will not be billed.
2. Maternity/Parental Leaves
2.1 Leaves commencing on or after November 18, 1990 where the member made no
election to opt out: The member will receive credit for the period of the leave unless
he or she elected not to contribute. Contributions are mandatory for both the statutory
maternity/parental leave period of 35 weeks and the additional 8-week extension (total 43
weeks) unless there is documentation that the member made an election not to contribute
for the leave.
Any over-contribution or under-contribution will be accounted for in the same way as
pre-1993 and post-1992 contribution discrepancies for regular employment, as described
above.
If the member provided a signed election choosing not to contribute during the leave,
the member will not receive service credit for the leave period.
2.2 Leaves commencing before November 18, 1990: For leaves that commenced before
November 18, 1990, the rules governing regular buybacks apply. If the member made a
written application and signed an Agreement to Purchase Credit, he or she will
receive full credit for the leave. Any over-contributions or under-contributions will be
accounted for in the same way as pre-1993 and post-1992 contribution discrepancies for
regular employment.
If the member signed an agreement declining to make pension contributions or did not
sign an Agreement to Purchase Credit, there will be no adjustments to his or her
contributions or credit.
3. Buybacks
3.1 Over-contributions: The member’s service should reflect only the
actual service credit that was to be purchased under the signed Agreement to
Purchase Credit. Any employee over-contributions will be refunded with interest. The
employer will also be refunded any matching over-contribution it made, plus interest
3.2 Under-contributions due to interrupted or missed payments: The agreement
applies to buyback payments that were missed due to interruptions in biweekly deductions
or other administrative errors. It does not apply where the member did not sign an Agreement
to Purchase Credit form.
In addition, the agreement does not apply if the member made a request to stop his or
her buyback payments. The agreement only applies if the interruption or missed payments
resulted from a payroll or administrative error.
For buyback periods covered by the agreement, the member will receive full credit for
the leave as per the signed Agreement to Purchase Credit form. Any
under-contribution will be treated in the same manner as under-contributions for pre-1993
and post-1992 periods of regular employment. OPTrust will not bill the member or the
employer for missing contributions.
As a result of discrepancies identified by PDPP, some members who missed buyback
payments received requests from OPTrust to pay the outstanding balance plus interest.
Under the agreement, members who paid the balance will have their arrears payment
refunded, with interest, and will retain the full service credit as under the signed
purchase agreement.
Members who elected not to purchase the balance, and subsequently had their service
credit reduced, will have their service credit restored up to the full amount of service
as per the signed Agreement to Purchase Credit. Members’ contribution records
will reflect the actual amount of contributions remitted.
When OPSEU and the Government of Ontario began negotiations regarding PDPP credit
changes, OPTrust stopped sending requests to members to pay outstanding balances until the
final terms of the agreement were known.
4. Salary Rate Corrections: Corrections in salary rate have no impact
on service, but any discrepancies in the member’s salary records will be corrected
with written salary confirmation from the employer.
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This Employer Update is intended to provide participating employers
with news and information about the OPSEU Pension Plan. It does not create any rights to
benefits not provided for in the actual terms of the Plan. In the event of any conflict or
omission, the legal documents of OPSEU Pension Plan will govern in all cases. We recommend
that specific questions regarding personal benefits be directed to our office.
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