GlossaryA B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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.
Basic pension: The gross pension payable at age 65.
Buyback: The purchase of credit in the Plan for an eligible period of past service.
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 between the Year’s Basic Exemption (YBE) and the Year’s Maximum Pensionable Earnings (YMPE).
Credit: See “pensionable service credit.”
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 determined eligibility for the new employer’s pension plan.
EEligible child: Under the OPSEU Pension Plan, a child is eligible to receive survivor benefits if:
- the child is under the age of 18, or
- if the child is over 18, he or she is in continuous full-time attendance at a secondary school or immediately following secondary school, is attending a post-secondary institution, to a maximum of five years.
Eligible Spouse: Defined as one of two individuals, whether of the same or opposite sex, who:
- are married to each other, or
- are living together in a conjugal, common-law relationship
i) for at least three years, or
ii) in a relationship of some permanence and are the natural or adoptive parents of a child.
FFactor 90: A permanent early retirement option under which members whose age plus credit total at least 90 years may retire with an immediate unreduced pension from OPTrust.
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.
LLocked-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.
NNormal retirement age (NRA): The age at which retirement will normally occur and when the employee will be entitled to full retirement benefits. In the OPSEU Pension Plan, the NRA is 65 years.
OOntario Pension Board (OPB): Administrator of the Public Service Pension Plan (PSPP), the pension plan for management and excluded staff of the Ontario Public Service.
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): of Ontario Legislation that sets out the rules for pension plans registered in the Province of Ontario. Pension plans must comply with these rules in their day-to-day operations. The PBA sets the minimum benefits payable by the pension plan
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 the OPSEU Pension Trust.
Plan text: The plan text defines the specific legal provisions 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.
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).
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: Following a pensioner’s death and the payment of all benefits to the pensioner’s eligible survivors, OPTrust compares the pensioner’s total contributions, plus interest, to the total amount of pension and survivor benefits paid. Where the contributions, plus interest, exceed the total benefits paid, the residual balance is payable to the pensioner’s designated payment recipient or estate.
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 Trust. With a special deferred pension, the member’s credit with OPSEU Pension Trust is added to the period of employment with the successor employer to determine eligibility for early retirement.
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
- Member has switched from full-time hours to part-time hours or from regular hours to
- 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
- The 36-month minimum employment rule – member may only accrue full-time pension
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.
VVested: A member is vested when he or she becomes entitled to benefits under the Plan as a result of satisfying membership and credited service requirements. Benefits accrued after December 31, 1986, are vested after two years of credit or membership and are locked in. Before December 31, 1986, service is vested after 10 years of plan membership, credit or employment or if the member is 45 or older and has 10 years of continuous employment.
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.