The quarterly newsletter for members of the OPSEU Pension Trust
Spring 2009, Number 47
In this issue...
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Plan for the future with your Annual Pension Statement
Wondering how your pension increased during 2008? Want to find out when you can retire and how much you’ll receive? You can start by checking out your 2008 Annual Pension Statement (APS) – available electronically or in print.
Whether you’re a new member or a few years away from retirement, your statement is a great tool to help you plan for the future. It provides a detailed snapshot of your pension at December 31, 2008 and includes valuable retirement planning information, such as:
- an estimate of your earned pension at year-end
- a projection of your earned pension at retirement
- the pension credit and salary information used for your calculations, as well as your total contributions
- credit for buybacks you have paid for and/or transfers from other pension plans
- your beneficiaries on record at OPTrust.
Online tools
Your 2008 Annual Pension Statement and OPTrust’s online tools – pension estimator and retirement income calculator – are important resources that will help give you a clear picture of what you will receive and when you can retire.
To explore various retirement options, start with the pension estimator to generate a chart showing your different retirement dates and pension amounts. From there, you can use the retirement income calculator to add additional income, for example government benefits and investments, and compare your options.
Your green alternative
Your Annual Pension Statement is already available online. You do not need to wait for the mail to find out how the value of your pension grew in 2008. When you sign in or register for secure Online Services you have access to your three most recent statements.
Distributing members’ Annual Pension Statements electronically is one more way OPTrust is working to reduce our environmental footprint. With your help we can continue to reduce paper and contribute to a greener future.
Want to make the switch? Simply sign in to your secure Online Services account, then go to Communicate with OPTrust and click on the link Set your communication preferences to let us know you want an electronic statement only.
Mailing dates
For members who prefer to receive a printed copy, the statements will be mailed between May and June. To find out when your statement will be mailed, view the Annual Pension Statement mailing dates.
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2008 Annual Highlights
Want to know how your pension plan responded to the difficult challenges in 2008? Interested in the approach OPTrust takes to build the long-term security of your pension? Looking for the latest on the Plan’s funding status?
Check out the 2008 Annual Highlights Report to OPTrust Members to read more. There you’ll find key statistics on the financial performance of the OPSEU Pension Plan and news on how we serve you and our 82,000 other members and retirees.
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Get the big picture
OPTrust’s full annual report is available online.
A list of
OPTrust’s significant investment is also available. To order a printed copy of the annual report, please contact us. |
Jennifer Volpato is one of the OPTrust members profiled in the online version of our annual highlights report.
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OPTrust welcomed over 1,500 new members
For most OPTrust members joining the OPSEU Pension Plan is mandatory. But for unclassified and contract employees membership is optional.
Over the last several years, OPTrust has sent e-mails to thousands of unclassified employees to inform them of the benefits of an OPTrust membership and their option to join. During 2008, more than 1,500 unclassified employees who recognized the benefits of becoming a Plan member opted to join and start contributing towards an OPTrust pension.
Do you know a co-worker who is not part of the OPSEU Pension Plan? Why not suggest joining the Plan? All you need to do is refer them to our “Join the Plan” section.
Who can join?
Employees who are in an unclassified, contract or other non-permanent position in the Ontario Public Service, affiliated agencies, boards or commissions have the option to join at anytime.
Key benefits:
Unclassified workers receive the same benefits as permanent employees when they join the Plan, including a pension that:
- is paid for the member’s lifetime
- may be paid early if a member qualifies for early retirement options
- is adjusted annually for inflation
- provides survivor benefits
- is portable until age 55.
Non-members can find out how to join by speaking to their human resources representative or by contacting OPTrust.
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OPTions new look
If you think your OPTions newsletter looks fresh and different, you are right! After eight years, we are pleased to present you with a new design. In focus groups held in late 2008, members and retirees provided feedback that helped reshape the look of your newsletter.
You will also notice that your 2008 Annual Highlights Report to OPTrust Members is incorporated into this issue. That’s because members and retirees said they wanted to receive the Plan’s financial highlights and newsletter content in one package.
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Take a few minutes to update your beneficiary information
Your OPTrust pension provides a secure income that you can count on in retirement. You can also count on OPTrust to provide benefits for your survivors if you die before or after retirement. That’s why it’s important that you keep your beneficiary information up-to-date.
So, take a couple of minutes to check your Annual Pension Statement or secure Online Services account to make sure your beneficiary information is correct. Has your marital status changed since joining the Plan? If the answer is yes, you should confirm that OPTrust has the correct spousal information on record too.
With the correct information in our files, we can pay survivor benefits quickly and according to your wishes when you die. If the information listed on your APS or Online Services is wrong, be sure to update your account.
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Your lifetime OPTrust pension value
Your OPTrust pension provides a secure base for any retirement plan. Even if you have not yet developed a financial plan for your future, your OPTrust pension is a good investment with a predictable income that you can count on in retirement.
During your career you, along with your employer, are contributing towards your financial future through payroll deductions. This is a safe way to save for retirement regardless of what stage you are in your career.
What you may not realize is how the value of those contributions grows throughout your career and in retirement. In fact, the return on your payroll contributions, plus interest, may surprise you.
Let’s look at an example. Michael retires at age 60 with 25 years of credit in the Plan and a best-average annual salary of $50,000. The following chart shows the return on Michael’s investment during his 25 year membership in the Plan, assuming an average 2.75% increase per year for inflation protection in retirement.
Michael’s contributions plus interest during his employment total $104,500. Let’s say Michael lives to age 84 and has an eligible spouse, who receives his survivor pension, the total OPTrust benefits paid during his lifetime and to his spouse is $742,135. That’s an 8.16% annual return on his investment. You may not see such significant returns with other retirement savings arrangements.
Want to see how your contributions today will pay for your retirement tomorrow? Check out OPTrust’s online pension estimator, where you can project your pension income and determine your retirement dates.
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Retirement planning
Your employment income vs. your retirement income
Do you have an idea of how your future retirement income will compare to your present employment income? As a general rule, most financial advisors estimate that you will need between 60% and 80% of your pre-retirement income to maintain your lifestyle after retirement.
One of the ways you can find out is to use our online pension estimator and retirement income calculator to compare different scenarios. You’ll have a better idea of how your pension will complement other sources of retirement income such as government benefits, RRSPs or personal savings to help plan for the future.
Let’s look at an example. Orzala retires at age 60 with 20 years of credit and an annual salary of $54,000. This chart shows how Orzala’s net employment income compares to her retirement income. Orzala’s retirement income at age 60 is 42% of her net income during her working years. But at age 65 when she starts to collect CPP and OAS, her total income increases to 71% of her pre-retirement income. Of course, if she has additional income, such as an RRSP or savings, the percentage would increase.
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Planning a leave of absence without pay? Don’t forget to inform OPTrust
If you’re planning to take a leave of absence longer than one month, you have the option of continuing to contribute to the Plan – and increasing your pension – during your leave.
This applies for:
- pregnancy, parental, adoption and family medical leaves
- leaves due to illness or while on Workplace Safety and Insurance Board (WSIB) benefits
- special or educational leaves.
Before you start any of these types of leave, you must complete an application online using our secure Online Services or fill out an Application to Contribute During an Unpaid Leave of Absence form with your human resourcesrepresentative.
This form is used to indicate whether or not you want to make pension contributions during your leave. For pregnancy, parental, adoption and family medical leaves, the law requires you and your employer to contribute during the leave unless you submit a signed copy of the form declining to contribute.
If you decide not to contribute during your absence, you have the option to buy back your missed period of service when you return. Buying back credit is an important way to boost your pension in retirement and may help you qualify sooner for one of the Plan’s early retirement options.
For more information on buying back credit after a leave of absence, see our booklet Your Pension and Buying Back Credit.
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Planning to leave your employment?
Throughout your career, you may work for different employers in both the public and private sectors. As your career changes, it’s good to know that your OPTrust pension is portable. Depending on where you work, you may have the option to take it with you.
So, if you’re planning to leave your job and end your membership in the Plan before retirement, you have several options for your pension benefit.
Since your OPTrust pension will likely be a significant component of your retirement income, it’s important to have the information you need to make an informed decision as your career changes.
OPTrust has three new fact sheets to help you decide what to do with your earned OPTrust pension should you change employers:
• Pension options when your employment ends
• Leaving your employment – checklist for process and paperwork
• Bridging to an unreduced pension
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Question: Is it possible to stop paying my pension contributions for a period of time? I am going through financial difficulty and would like to access some extra money.
Answer: No. Once you join the Plan you cannot stop pension contributions unless you end your employment and membership in the Plan. Your payroll deductions will continue for as long as you are a member of the Plan.
Question: How is my pension at retirement calculated?
Answer: Your OPTrust pension is calculated based on a formula that uses your years of credit and salary. One way to find out how much you’ll get in retirement is to use our online pension planning tools such as our pension estimate calculator. OPTrust also provides members who are over the age of 55 with detailed pension estimates.
Question: I plan to work past age 65. Do I need to complete a form, or will my pension contributions continue until I retire?
Answer: No, you do not need to complete a form. You can continue contributing to your pension until you reach age 71, when you are required by the Income Tax Act to stop making pension contributions.
Question: I noticed on my Annual Pension Statement there are two different amounts for my pension before and at age 65. Why is there a difference?
Answer: As a plan member, your contributions to OPTrust are integrated with the Canada Pension Plan (CPP). This means you pay lower contributions to OPTrust for the part of your earnings that are also covered by CPP. These reduced contributions are taken into account in the way your OPTrust pension is calculated starting at age 65.
Your OPTrust pension at retirement is designed to provide you with a combined pension income – from both OPTrust and CPP – that equals approximately 2% of your average salary multiplied by your years of credited service in the Plan. 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 CPP.
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Booklet series covers a range of topics
For a more detailed description of your pension plan benefits, you can read and download a booklet from our series online, including:
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Point and click your way through the Plan
Want a quick overview of your pension plan?
Our interactive online presentation is a great place to start. You can find out more about your pension plan. With links to different sections of our website and a description of key plan features, the presentation is one way to learn more about your pension plan in a couple of minutes.
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Marriage breakdown rules set to change
The Government of Ontario is proposing new legislation to clarify how and when pensions are divided when a marriage breaks down. The changes are designed to reduce some of the strain of family court proceedings by saving court time and the cost of hiring experts.
The proposed legislation would allow for a simple way for separating couples to find out the value of the pension benefits to which they are entitled and allows pension plans to pay out the non-member spouse’s share¹.
The proposed changes follow the general direction of advice provided by the Law Commission of Ontario. The Commission consulted widely with pension plan administrators on the best ways to divide pensions when marriages break down.
OPTrust plans to update its fact sheet on this topic in the near future. But until then, if you are involved in a marriage breakdown and you need information please contact us.
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¹Ontario Ministry of the Attorney General website (www.attorneygeneral.jus.gov.on.ca)
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600 divested employees remain with OPTrust
Approximately 600 OPTrust members from the Ontario Public Health Laboratories at the Ministry of Health and Long-Term Care were transferred to the new Ontario Agency for Health Protection and Promotion (OAHPP). Even though their positions were divested on December 15, 2008, these employees will remain active members of the OPSEU Pension Plan.
Under an agreement between OPSEU and OAHPP, their OPTrust membership has been “grandfathered.” As a result, they will continue to contribute to the OPSEU Pension Plan – and earn credit towards an OPTrust pension.
The members at the new agency are able to remain with OPTrust under a special provision in the OPSEU Pension Plan. This allows divested members who remain in OPSEU to stay in the OPSEU Pension Plan, provided OPSEU and the new employer sign an agreement to that effect.
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Posted on April 24, 2009
