Changes to commuted value calculations take effect December 1, 2020Posted: November 5, 2020
Earlier this year, the Canadian Institute of Actuaries announced that it would be changing the standards for calculating commuted values (CVs). Like all defined benefit pension plans registered in Ontario, the OPSEU Pension Plan is required to adopt the new standards on December 1, 2020 to comply with provincial pension law.
A CV is the lump sum value of a deferred pension in today’s dollars, estimated to be equal in value to a future pension.
The changes will impact the interest rate and retirement age assumptions that OPTrust uses to calculate CVs for members when they end their plan membership. These changes will likely reduce CVs in the short term but the impact over the mid to long term remains to be seen.
Pensions that are being paid to retired members or their survivors will not be affected by the changes, nor will pensions that members are entitled to receive when they retire in the future. Only members who are eligible to take their CV out of the Plan and decide to do so will be affected.