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Pension transfers out of OPTrust: Commuted value excess refunds ended

posting date Posted: Feburary 4, 2014

An amendment to the OPSEU Pension Plan effective September 27, 2013 ends commuted value excess refunds for former members who transfer their OPTrust pension benefits to another pension plan.

OPTrust participates in several reciprocal transfer agreements, which allows members the opportunity to transfer funds easily from one pension plan to another.

Before the amendment, if a former member’s commuted value was higher than the amount required by the new pension plan, all of the member’s pension service was transferred to the new plan plus a cash refund of the difference – a “commuted value excess” – was paid to the former member.

The new amendment changes the way the Plan handles transfers of pension service out of OPTrust to other pension plans. The commuted value excess refund is no longer paid to members who transfer their pension service after September 27, 2013.

These refunds are not required under the either the Pension Benefits Act or the Income Tax Act. More importantly, paying commuted value excess refunds to some members when they leave the Plan does not treat all members equitably.

How this change affects you

If you started a pension transfer before the amendment came into effect, and your termination date is before September 27, 2013 it will be processed under the previous terms of the Plan text.  

If your termination date is on or after September 27, 2013 and the commuted value of your OPTrust pension is greater than the transfer value the receiving plan requires, you have three options:

  1. You can choose to transfer your pension service to your new pension plan under the terms of a reciprocal transfer agreement, using the transfer value calculated for you.
  2. You can choose to withdraw the commuted value of your pension from OPTrust and transfer it to your new pension plan under a service purchase agreement. Your new pension plan will determine the cost to purchase your OPTrust pension service in that plan and your payment options.
  3. You can choose to withdraw the commuted value of your pension from the OPSEU Pension Plan and transfer it to a locked-in retirement arrangement. If you do this, no pension service will transfer to your new pension plan and you will not have any further entitlement in the OPSEU Pension Plan.

With any option, you will not be eligible for a commuted value excess amount refund or further payment from the Plan.

 

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