Pensionable Salary

Revised: May 2024 Print this page Email the link

Under the OPSEU Pension Plan (the Plan), the member’s salary is used in several important calculations:

• The Plan requires that current service contributions be deducted and remitted to OPTrust based on the member’s pensionable salary and the Plan’s contribution formula.
• The member's earned pension benefit is calculated based on an average of the member's highest 60 sequential months of salary based on the annual full-time salary rate.
• The member’s pensionable salary is also used in calculating the cost of contributions for the purchase of past service (“buybacks”).
• Finally, the member’s quarterly pensionable salary based on their final pre-retirement annual salary rate is used in determining the ”maximum quarterly re-employment earnings” for employed or re-employed retired members.

Definition

Under this definition, “pensionable salary” has the following attributes. It:

1. must be paid to the member
2. must be measured in terms of regular periods of time
3. includes in addition to regular pay, any periodic payments paid on a regular basis as a permanent component of pay for a position
4. excludes fringe benefits and bonuses unless they are paid regularly and computed by reference to hours, days, weeks or other specific periods of time; these benefits cannot be ad hoc or unexpected, they must be a regularly recurring payment
5. includes all earnings paid at regular rates for all hours up to full-time hours
6. cannot include overtime, which is interpreted as being wages paid at a rate greater than the regular rate
7. includes any other amount determined to be part of “salary” by OPTrust’s Board of Trustees.

Application

In applying the above policy, pensionable salary is defined as including:

• regular earnings/base wages including market value adjustments and yearly increases that may vary but regularly occur each year (e.g. merit pay)
• payments for vacation when taken as a leave with pay
• allowances that are paid regularly
• retro earnings
• compensating time
• sick pay deemed to be regular wages
• permanent salary notes (e.g. for specific training/certification)
• isolation pay
• ongoing long service pay
• statutory holiday pay.

Although a member employed on a full-time basis may be in receipt of reduced wages under the short-term sickness plan or due to a self-funded leave, pension contributions are calculated on the full-time salary.

Payments not included in pensionable salary

Under the OPSEU Pension Plan, pensionable salary does not include:

• overtime (paid at rates exceeding regular rates)
• severance pay
• one-time payments
• reimbursement for expenses incurred
• lump-sum vacation payments in lieu of leave with pay
• 4% vacation pay in lieu of leave with pay
• any payment in lieu of benefits provided by the employer
• payments not regularly paid
• shift premiums.

Reporting Employment Earnings for a Retired Member

The definition of pensionable salary above must also be used to calculate the post-retirement earnings that are reported to OPTrust on the Retired Member Quarterly Employment Earnings Report (OPTrust 1008) for retired members who are receiving a pension while they are working for an employer that contributes to the Plan. It is important to note that retroactive salary related to pre-retirement employment should not be reported.