Contribution Formula

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Under the OPSEU Pension Plan, members and employers are required to make pension contributions to OPTrust. The pension deductions are calculated based on the Plan’s contribution formula, which reflects the following factors:

  • the member’s pensionable earnings per pay
  • the member's annualized salary
  • the member and employer contribution rates as prescribed by the Plan
  • the Year’s Maximum Pensionable Earnings (YMPE) as prescribed under the Canada Pension Plan (CPP).

The OPSEU Pension Plan is integrated with the CPP. As a result, members and employers pay a lower contribution rate to the Plan for that portion of the member’s pensionable salary up to the current YMPE. CPP integration also affects the member’s pension benefit. At age 65, the member’s OPTrust pension will be reduced to reflect the lower contributions paid to the Plan for earnings that are also covered by CPP.

Effective December 3, 2009 the OPSEU Pension Plan's sponsors approved a 3% increase in the employers and members' contribution rates, which were phased in over three years. Contribution rates increased by 1% of salary starting in January 2010, another 1% in January 2011 and again in 2012.

OPTrust contributions are paid on an "annualized" basis. This means the annual contributions will be calculated based on the member's regular salary rate, then divided by the number of pay periods in the year to arrive at the contribution required to be paid on a bi-weekly basis. As a result, all members with a salary over the YMPE will pay a portion of the 'Under YMPE' and 'Over YMPE' rates on each biweekly contribution (even if the earnings are under the YMPE)..

How to Calculate Employee/Employer Contributions

Employers should use the following payroll deduction method to calculate required contributions for all OPTrust members (full or part-time, unclassified, contract, seasonal, etc.).

    Step 1: calculate annualized salary
    Step 2: calculate earnings per pay
    Step 3: calculate contributions below the YMPE
    Step 4: calculate contributions above the YMPE
    Step 5: calculate total OPTrust contributions by adding totals from step 3 and step 4 ('below YMPE' and 'above YMPE' portions)

For more information on the OPTrust formula change please see Employer Update 20.

Example: To calculate Employee/Employer contributions for a full-time member in 2016:

9.4%

x

pensionable salary up to the Year's Maximum Pensionable Earnings (YMPE)

11%

x

pensionable salary above the YMPE

The following example illustrates the member and employer contributions payable for an employee who earns an annual pensionable salary of $60,000. This example is based on the Plan's normal contribution rate and the YMPE for 2016 ($54,900).

 

Step 1
Annualized full time salary: $60,000

Step 2
Earnings per pay $60,000 ÷ (365.25 ÷ 14) = $2,299.79

Step 3
Contributions below the YMPE are calculated as follows:

contributions at 9.4% = [earnings per pay x (YMPE* x 9.4%)] ÷ annualized full-time salary

*use the lesser of the member's annualized salary or YMPE

Therefore the biweekly contributions below the YMPE are:

[$2,299.79 x ($54,900 x .094)] ÷ $60,000 = $197.80

Step 4
Contributions above the YMPE are calculated as follows:

contributions at 11% = [earnings per pay x (annualized earnings - YMPE) x 11%] ÷ annualized full-time salary

Therefore the biweekly contributions above the YMPE are:

[$2,299.79 x ($60,000 - $54,900 x .11] ÷ $60,000 = $21.50

Step 5
Total OPTrust pension contributions

Employer: $197.80 + $21.50 = $219.30

Employee: $197.80 + $21.50 = $219.30

Example: To calculate Employee/Employer contributions for an unclassified member for 2016:

9.4%

x

pensionable salary up to the Year's Maximum Pensionable Earnings (YMPE)

11.0%

x

pensionable salary above the YMPE

 

The following example illustrates the member and employer contributions payable for an unclassified employee who earns $27.20 an hour based on a 40 hour work week. This example is based on the Plan's normal contribution rate and the YMPE for 2016 ($54,900). For the pay period the employee worked 74 hours.

 

Step 1
Annualized full time salary: $27.20 x 80 x 365.25 ÷14 = $56,770

Step 2
Earnings per pay $27.20 x 74 hours =$2,012.80

Step 3
Contributions below the YMPE are calculated as follows:

contributions at 9.4% = [earnings per pay x (YMPE* x 9.4%)] ÷ annualized full-time salary

*use the lesser of the member's annualized salary or YMPE

Therefore the biweekly contributions below the YMPE are:

[$2,012.80 x ($54,900 x .094)] ÷ $56,770 = $182.97

Step 4
Contributions above the YMPE are calculated as follows:

contributions at 11% = [earnings per pay x (annualized earnings - YMPE) x 11%] ÷ annualized full-time salary

Therefore the biweekly contributions above the YMPE are:

[$2,012.80 x ($56,770 - $54,900) x .11] ÷ $56,770 = $7.29

Step 5
Total OPTrust pension contributions

Employer: $182.97 + $7.29 = $190.26
Employee: $182.97 + $7.29 = $190.26

Example: To calculate Employee/Employer contributions for a regular part-time member for 2016:

9.4%

x

pensionable salary up to the Year's Maximum Pensionable Earnings (YMPE)

11.0%

x

pensionable salary above the YMPE

The following example illustrates the member and employer contributions payable for a regular part-time employee. Annual full-time pensionable salary is $60,000. This example is based on the Plan's normal contribution rate and the YMPE for 2016 ($54,900). The member works part-time at 60%.

 

Step 1
Annualized full time salary: $60,000

Step 2
Earnings per pay $60,000 ÷ (365.25 ÷ 14) x.60% = $1,379.87

Step 3
Contributions below the YMPE are calculated as follows:

contributions at 9.4% = [earnings per pay x (YMPE* x 9.4%)] ÷ annualized full-time salary

*use the lesser of the member's annualized salary or YMPE

Therefore the biweekly contributions below the YMPE are:

[$1,379.87 x ($54,900 x .094)] ÷ $60,000 = $118.68

Step 4
Contributions above the YMPE are calculated as follows:

contributions at 11% = [earnings per pay x (annualized earnings - YMPE) x 11%] ÷ annualized full-time salary

Therefore the biweekly contributions above the YMPE are:

[$1,379.87 x ($60,000 - $54,900) x .11] ÷ $60,000 = $12.90

Step 5
Total OPTrust pension contributions

Employer: $118.68 + $12.90 = $131.59
Employee: $118.68 + $12.90 = $131.59

OPTrust's contribution formula prior to January 1, 2010 can be found in the link below.

Contribution formula before 2010.

Please see the Forms and Tools section for a table of historical OPSEU Pension Plan contribution rates.