Glossary

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A

Accrued pension benefit: The amount of annual pension earned by a plan member, based on his or her earned credit and salary rate, up to a given date.

Actuarial valuation: A study to determine whether the Plan’s assets are sufficient to fund the anticipated future cost of members’ and pensioners’ accrued pension benefits, based on current contribution rates. In comparing the Plan’s assets and liabilities, actuarial valuations use a range of assumptions regarding investment returns, inflation and salary increases and various demographic factors.

Actuary: A trained pension professional who specializes in calculating pension plan liabilities. In Canada, full professional recognition requires membership in the Canadian Institute of Actuaries.

B

Basic pension: The gross pension payable at age 65.

Buyback: The purchase of credit in the Plan for an eligible period of past service.

C

Canada Pension Plan (CPP): The Canada Pension Plan was established in 1966 to provide all working Canadians with a source of retirement income. When CPP was being introduced, the Ontario Government made a policy decision to “integrate” the major public service pension plans in Ontario with the CPP.

Canada Revenue Agency (CRA): The federal government department, formerly known as Canada Customs and Revenue Agency and Revenue Canada, responsible for administering the Income Tax Act.

Commuted value: The amount of an immediate lump-sum payment in today’s dollars estimated to be equal in value to a future series of pension payments.

Continuous employment date: The first day of the employee’s most recent period of unbroken employment – whether in a permanent/classified, contract/unclassified, or seasonal position.

Continuous service date: Employers use the continuous service date to calculate an employee’s seniority, severance payments and entitlement to benefits. The continuous service date is not directly linked to the member’s credit in the OPSEU Pension Plan.

Consumer Price Index (CPI): A measure of the average price change of commodities commonly bought by households in Canada; compiled monthly by Statistics Canada.

CPP integration: A reduction in a retiree’s OPTrust pension at age 65. CPP integration reflects the lower contributions paid to the OPSEU Pension Plan for the portion of the member’s earnings below the Year’s Maximum Pensionable Earnings (YMPE).

Credit: See “pensionable service credit.”

D

Deferred pension: A specified pension determined at the time of termination of employment, which is payable at normal retirement age. A deferred pension from OPTrust is also payable as a reduced pension, starting at age 55 or older.

Defined benefit pension plan: A pension plan that defines the pension to be provided (based on credit and average salary) but not the total contributions.

Divestment: Under Ontario’s Pension Benefits Act (PBA), there are special rules protecting the pension entitlements of Plan members in the event of a divestment. These special rules apply when:

• the former employer transfers, or “divests,” all or part of an operation to another employer
• affected employees become employed by the new employer
• the new employer contributes to a different pension plan, and
• the affected employees become members of the new employer’s pension plan.

When OPTrust members are affected by a divestment, their earned pension remains with OPTrust and they have the right to a “special deferred pension” from the OPSEU Pension Plan. The new employer must recognize the period of membership in the OPSEU Pension Plan when determining early retirement eligibility for the new employer’s pension plan.

E

Eligible child: Under the OPSEU Pension Plan, a child is:

• dependent on the member or the member’s spouse and under the age of 18, or is 18 or older and is in continuous full-time attendance at a secondary school or post-secondary institution for up to five years immediately following secondary school, or
• dependent on the member or the member’s spouse for financial support by reason of a severe and prolonged mental or physical disability on the date of the member’s death and continuing thereafter until the earlier of the date the child dies or is no longer disabled.

Eligible spouse: For pension purposes, a spouse is someone who is married to or has been living with the member in a common-law relationship for at least three years, or a shorter period if the parties are in a relationship of some permanence and are the parents of a child. If the member and their common-law spouse are not the parents of a child, they must be living together continuously for three years before the spouse qualifies for a survivor benefit. For the member’s spouse to qualify for a survivor benefit, they must not be living separate and apart at the time a determination is being made (i.e. at date of retirement, or date of death if the member dies before retirement).

F

G

H

I

Immediate pension: A pension payable commencing the month following the month of termination of plan membership. An immediate unreduced pension may be payable to a member who qualifies for Factor 90 or 60/20 or at age 65. An immediate reduced pension is payable as early as age 55.

Income Tax Act (ITA): Federal legislation that, among many other things, regulates the registration, funding, investments, contributions and benefits of registered plans. The ITA sets the maximum benefits allowable under the plan.

Indexing (inflation protection): An annual adjustment to a retired member’s pension amount designed to offset the effects of inflation. OPTrust pensions are increased annually, based on changes in the Consumer Price Index, to a maximum of 8% per year. Any increase above 8% is carried over and applied in future years.

J

K

L

Locked-in: A legislative requirement that vested benefits under the Plan must be used to provide a lifetime retirement income and are not available as an immediate cash payment.

M

N

Normal retirement age (NRA): The age at which retirement will normally occur and when the employee will be entitled to an unreduced retirement benefit. In the OPSEU Pension Plan, the NRA is age 65.

O

Ontario Pension Board (OPB): Administrator of the Public Service Pension Plan (PSPP), the pension plan for management and excluded staff of the Ontario Public Service.

P

Past service pension adjustment (PSPA): An increase in the “deemed value” of the member’s pension resulting from a “past service event,” such as buying back credit for periods of post-1989 service. A PSPA will reduce the member’s RRSP contribution room, and must be approved by the Canada Revenue Agency.

Pension adjustment (PA): The “deemed value” of the pension benefit earned during a given year. A PA reduces the member’s RRSP contribution room for the following year.

Pension Benefits Act (PBA): Ontario legislation that sets out the rules for pension plans registered in Ontario. Pension plans must comply with these rules in their day-to-day operations.

Pensionable service credit: The total period of time during which a member contributes to the pension fund or has contributions made on his/her behalf. Credit is used in the determination of early retirement options, eligibility of insured benefits, pension payable as at retirement.

Plan membership date (PMD): The first day of the employee’s most recent period of unbroken membership in the Plan.

Plan sponsors: The OPSEU Pension Plan is jointly sponsored by the Government of Ontario and OPSEU. Each sponsor appoints five members to the OPTrust Board of Trustees, which is responsible for the administration of the OPSEU Pension Plan and oversees the operations of OPTrust.

Plan text: The plan text sets out the terms of the OPSEU Pension Plan. The plan text contains provisions on membership eligibility, pensionable service credit, vesting and locking-in, normal form of pension, normal retirement age and includes many other provisions. In the event of a conflict between this booklet and OPSEU Pension Plan text, the Plan text will govern.

Public Service Pension Plan (PSPP): The predecessor plan to the OPSEU Pension Plan. Effective January 1, 1993, the PSPP is the pension plan for management and excluded staff members in the Ontario Public Service. The PSPP is administered by the Ontario Pension Board (OPB).

Q

R

Reciprocal transfer agreements (RTAs): Service may be transferred into or out of the OPSEU Pension Plan under the Major Ontario Pension Plans (MOPPs) Transfer Agreement or bi-lateral agreements between OPTrust and other individual pension plans.

Re-employed: A re-employed pensioner is someone who is working for (becomes an employee of) an employer who contributes to the OSPEU Pension Plan.

Residual Balance: Upon death of the member or the death of their survivors, whichever occurs later, a residual balance may be payable. If the total of the retiree’s contributions plus interest at their date of retirement exceeds the total payments received by them (and their survivors if applicable), the difference is payable as a lump sum cash payment to their designated beneficiary(s), or to the member’s estate if they did not designate a beneficiary. After a retiree receives their pension for a few years, the residual balance is usually exhausted.

S

60/20: A permanent early retirement option under which members who are age 60 or older and have at least 20 years of credit may retire with an immediate unreduced pension from OPTrust.

Special deferred pension: When a change of employment occurs that is a divestment under the Pension Benefits Act (PBA), and the member joins the new employer’s pension plan, the member is entitled to a special deferred pension from the OPSEU Pension Plan. With a special deferred pension, the member’s credit with the OPSEU Pension Plan is added to the period of employment with the successor employer to determine eligibility for early retirement.

T

T4: Annual statement of earnings and deductions (including buyback contributions) made by the member and reported to CRA.

T4A: Annual statement of taxable payments from the pension plan to a member, former member or pensioner, and reported to CRA.

Temporary part-time work arrangement: A period of reduced work hours that meets all of the following criteria:

• Member has switched from full-time hours to part-time hours or from regular hours to
  reduced hours.
• The part-time work arrangement is temporary, not permanent, and has a start date and
  anticipated end date.
• Member and employer have agreed to the terms of the temporary part-time work
  arrangement, including its duration.
• The conditions in the federal Income Tax Act are met. These include:
  • The 36-month minimum employment rule – member may only accrue full-time pension
    service for a period of reduced work hours if they have been employed with their
    employer for at least 36 months before the start of the arrangement. Due to the COVID-19
    pandemic, the federal government waived this requirement for arrangements that began in 2020 or 2021.
  • The five-year cumulative limit - the amount of pension service member can accrue during
    an unpaid leave and/or a period of reduced work hours with their employer is limited
    to a maximum of five years with an additional three years for pregnancy/parental
    leaves.

Temporary layoffs, workplace suspensions, periods of disability and permanent changes in work hours do not qualify as temporary part-time work arrangements.

Termination: In the OSPEU Pension Plan, termination of plan membership means that you stop making contributions to the Plan because your employment has ended. Employment could end because of retirement, layoff, dismissal, resignation, death or permanent disability. 

U

V

Vested: A member is vested when he or she becomes entitled to benefits under the Plan. Pensions vest immediately in Ontario.

W

X

Y

Year’s Basic Exemption (YBE): The earnings amount set every calendar year by Canada Pension Plan (CPP) below which Canadians do not make any CPP contributions.

Year’s Maximum Pensionable Earnings (YMPE): The maximum earnings from employment per calendar year on which CPP contributions and benefits are calculated. The YMPE is changed every year according to a formula based on average industrial wage levels.

Z