When and How Pensions are Paid
OPTrust pensions are paid on a monthly basis, usually on the 26th day of the month, except for December when pensions are paid approximately one week earlier. If the date of payment falls on a weekend or holiday, the actual payment will be made on the prior business day.
Pension payments commence in the month following the member’s retirement date.
Example: John Doe retires on March 18, 2016. Mr. Doe’s first pension payment will be for the month of April and will be deposited into his account on April 26, 2016.
Monthly pensions are paid by direct deposit to the pensioner’s bank account. Unless otherwise instructed by the member at this time, OPTrust will only deduct income tax based on the OPTrust pension income and applicable ITA requirements.
Annual Increase for Inflation Protection
Currently, in January of each year, every pension in pay (including a survivor pension) is adjusted to reflect the increase in the cost of living. The adjustment is applied annually starting with the year after the retiree’s pension commences, with the first adjustment pro-rated for the length of time the pension was paid during the previous year.
The annual inflation adjustment reflects the increase in the cost of living in Canada as measured by the Consumer Price Index. It is calculated by dividing the CPI average for the two 12-month periods ending the preceding September. For example, the 2016 inflation adjustment was calculated as follows:
|Average CPI for October 2014 to September 2015
Average CPI for October 2013 to September 2014
The maximum increase applied in any one year is 8%. Any increase over 8% is carried over into the next year, to be applied when the adjustment is less than 8%. A Pensioner Information Change Statement outlining the pensioners’ individual annual inflation protection adjustment is mailed mid-January each year to pensioners in pay.
Important! – Retroactive Salary Changes: The employer must notify OPTrust when a retroactive salary change has been implemented after the member’s retirement date. OPTrust will recalculate the pension, and make any retroactive payments necessary.