OPTions Winter 2015, Number 60
In this issue:
- OPTrust hires leading pension expert as President and CEO
- New Ontario pension regulation requires disclosure on ESG factors
- Research study demonstrates efficiency of DB model
- OPTrust Board names new Chair and Vice-Chair
- OPTrust pensions increase by 1.7% in 2015
- Coming soon: Pay for your buyback with online banking
- Go online for your Annual Buyback Statement
- Data project leads to 2,600 clean records
- Plan ahead for your survivors
- Facts about... LTIP and your pension
- A note about insured benefits
- Thinking about retirement? Get the facts
- You asked... Spousal relationships
- Direct Contact
- Quick tips to protect your personal information
OPTrust hires leading pension expert as President and CEO
The OPTrust Board of Trustees appointed Hugh O’Reilly to the position of President and CEO, effective January 2, 2015.
Mr. O’Reilly is one of Canada’s leading experts on pensions and brings to the organization an unmatched knowledge of the operation and governance of jointly sponsored pension plans.
“We are very pleased to have someone with Mr. O’Reilly’s depth of knowledge in public sector pension plans, and their challenges and opportunities, to lead the organization and help implement our strategic plan going forward,” said Michael Grimaldi, Chair of the Board of Trustees. “On behalf of the Board we look forward to working with Mr. O’Reilly to ensure the organization fulfills its mission of delivering sustainable pension security for all our plan members.”
Mr. O’Reilly previously led the Pension Benefits and Insolvency Practice Group at Cavalluzzo Shilton McIntyre Cornish LLP, a firm he joined after a successful career on the management side as a partner at Torys LLP. Mr. O’Reilly is one of two pension lawyers in Canada rated by Lexpert on both the management and union side, and he has a reputation for crafting innovative, practical outcomes to pension challenges.
“Public sector pensions in Ontario have made tremendous progress over the last decade, however many challenges still face the sector, including at OPTrust. The Board of Trustees believes that Mr. O’Reilly is the right leader to help us continue to grow,” said Vicki Ringelberg, Vice-Chair OPTrust. “Mr. O’Reilly will build on the work of outgoing President and CEO, Bill Hatanaka, who we thank for his excellent service to the organization.”
New Ontario pension regulation requires disclosure on ESG factors
Starting January 2016, Ontario registered pension funds will have to disclose information about their investment policy consideration of environmental, social and governance (ESG) factors. OPTrust recognized well ahead of the new regulation that ESG factors have the potential to affect the Plan’s long-term investment performance for many years.
OPTrust has established a responsible investing program, an overarching policy, and implemented a range of measures to identify, assess, and manage ESG-related factors as part of our investment activities. The approach reflects OPTrust’s fiduciary responsibility to the Plan’s members and sponsors, which includes identifying and addressing all factors that could affect the Fund’s investment returns.
As part of our commitment to promoting responsible investing, and as signatory to the UN-supported Principles for Responsible Investment, OPTrust actively reports to our members, sponsors and other key stakeholders on our responsible investing program.
In December 2014, we launched our inaugural Responsible Investing Report for 2014, available on our website. We are proud to have been shortlisted for a global award recognizing excellence in responsible investment reporting in 2013 and 2014.
Learn more about OPTrust’s responsible investing activities.
Research study demonstrates efficiency of DB model
A study by a renowned actuary examines what would happen if public sector defined benefit (DB) plans were converted to defined contribution (DC) and concludes it would create higher costs, inefficiencies and increased risks.
In October 2014, a new research paper was released: Shifting Public Sector DB Plans to DC – The Experience So Far and Implications for Canada. The paper was authored by actuary Robert Brown and journalist Craig McInnes and was sponsored by the Canadian Public Pension Leadership Council, a group of which OPTrust is a member. The research identifies five stakeholders in the conversion debate and examines whether in every case a shift to a DC arrangement would solve problems or create them. The stakeholder groups are: employers, including governments; employees and their dependants; current taxpayers; future generations of taxpayers; and society at large.
The paper also examines the claim that converting public sector DB plans to DC is in the best interests of taxpayers and other stakeholders by studying the experience of other jurisdictions, including Australia, Michigan, Nebraska, New York City, Saskatchewan and Texas and applying those lessons here.
After examining the literature on the experience in other jurisdictions and modelling what the ramifications would be in converting a large Canadian DB plan to DC, the paper concludes that none of the stakeholders, including taxpayers, would ultimately be better off.
It also shows that for an efficient $10 billion DB plan, converting to individual-account DC arrangements to provide the same value of pension benefit would increase the ongoing cost of the plan by about 26 to 77 per cent, depending on how the funds are invested, and increase the required contribution rates accordingly.
Rather than saving money as conversion proponents argue, converting to DC increases costs and reduces efficiency.
OPTrust Board names new Chair and Vice-Chair
As part of OPTrust’s governance structure one Government appointee and one OPSEU appointee fill the positions of Chair and Vice-Chair, with the roles alternating between the Government and OPSEU appointees every two years.
Michael Grimaldi was named Chair of OPTrust’s Board of Trustees, effective November 2014.
Mr. Grimaldi was first appointed to the Board in 2012 by OPSEU, and became Vice-Chair in 2013. Retired in 2013, Mr. Grimaldi, with over 30 years’ experience in the Ontario Public Service, is a strong advocate for defined benefit and jointly sponsored pension plans. Mr. Grimaldi replaces former Chair Scott Campbell who remains on the Board.
The Board also appointed Vicki Ringelberg as Vice-Chair.
Ms. Ringelberg joined the Board in 2011 as a Government appointee. Her career spans over 20 years in the investment industry, where she held various senior positions. Ms. Ringelberg is currently director of Portland India Select Business Mauritius Portfolios Ltd., Portland General Partner Inc., and a member of the Board of Trustees for Portland Canadian Trusts.
OPTrust pensions increase by 1.7% in 2015
Every January, OPTrust pensions are adjusted to reflect changes in the cost of living. This inflation protection is an important feature of the OPSEU Pension Plan – and a source of security for your future retirement income.
In January 2015, the most recent increase – of 1.7% – took effect. OPTrust retirees saw an immediate adjustment to their annual pension.
The annual inflation increase also applies to the deferred pensions that will be paid to members in the future. For these individuals, the annual inflation adjustments start from the first day of the month following their termination from active membership.
The increase for the first year is pro-rated based on the number of months as a deferred member. In each subsequent year, the full increase applies. When the member retires, OPTrust calculates the cumulative inflation adjustment for the whole deferred period and increases the member’s pension accordingly. The adjustment is based on the change in Canada’s Consumer Price Index.
The maximum pension increase in any year is 8%, with any additional adjustment carried forward to the next year. For deferred members, the 2015 inflation adjustment – and the increase in your future pension – will be shown on your 2014 Annual Pension Statement available in the spring.
Coming soon: Pay for your buyback with online banking
Buying back pension service is getting easier. If you are registered for online banking with a Canadian financial institution, you will soon have the option to complete your buyback payments directly from your bank account.
With online payments:
- you can set up an automatic payment schedule
- you save time with immediate payments
- your cheque will not be lost or stolen
- you have a record of your payments.
Watch optrust.com to find out when this new service is available.
Go online for your Annual Buyback Statement
Effective 2015, OPTrust is switching from paper to online Annual Buyback Statements. If you have a buyback in progress you can view your statement with OPTrust’s secure Online Services. Once you register or sign in, click “My Pension Statements” from your secure home page to view records of the three most recent statements.
Data project leads to 2,600 clean records
At OPTrust, our focus is to provide you with a sustainable pension that you can count on in retirement. We know it’s very important for you to have accurate information to understand your pension options and plan for the future.
Our Member Services staff constantly strives to deliver consistent and personalized service for your pension and plan membership. That’s why we are always looking at ways to enhance our service to you, and our over 84,000 members.
Throughout your membership your employer provides OPTrust with the relevant information required to calculate your entitlement and retirement eligibility, such as your service, salary, and pension contributions. On occasion, our information may be incorrect or missing key data required to validate your pension entitlement from OPTrust.
In 2014, our Member Services team worked behind the scenes to investigate over 2,600 members records and confirm the data we have on file is accurate as part of a data cleanup project. When required, our staff worked directly with employers to correct any inaccuracies. As a result, members may see prior year adjustments on their 2014 Annual Pension Statements this spring.
Plan ahead for your survivors
Your OPTrust pension provides benefits for your survivors, so it’s important that you identify who you want to receive those benefits. Our new online video explains what you need to know about designating a beneficiary to give you peace of mind.
Remember it’s always a good idea to:
- make sure OPTrust knows who your beneficiaries are
- review your designation on a regular basis.
Facts about... LTIP and your pension
OPTrust members who are required to take time off from work due to a severe illness and go on Long Term Income Protection (LTIP), will continue to earn pension service while away from work.
If you need to take a leave of absence from work and go on LTIP, your employer is responsible for paying your share of pension contributions, as well as theirs during this period. Unlike other unpaid leaves of absence due to illness, periods when you receive or are eligible to receive LTIP benefits do not affect accrual of pension service.
The good news is your earned pension benefit continues to grow while you are in receipt of an LTIP benefit. And you are not required to buy back any missed periods of service during the LTIP period, because your employer pays both their share and your share of pension contributions.
What happens if you qualify for LTIP?
Employers offer LTIP as a benefit to employees who are deemed unfit for work by a qualified physician and approved by an insurance carrier. The benefit is only available to permanent, full-time or regular part-time employees. Contract, seasonal and casual, or fixed term employees are not eligible for LTIP benefits with the Ontario Public Service.
If you qualify for an LTIP benefit and do not resign from your employment, your employer is required to make contributions to the OPSEU Pension Plan on your behalf, until you:
- recover from your illness
- resign your employment
- reach age 65 or die (whichever occurs first).
When you qualify for LTIP benefits you will receive 66.66% of your current salary as of the date of the onset of your illness. But your pension contributions are based on 100% of your salary.
Read more in our fact sheet LTIP and Your Pension Contributions.
Keep your beneficiaries current
If you are on an LTIP leave, it’s important to keep your beneficiary information up-to-date with OPTrust. That way we have the correct information on record for you and your beneficiaries. To view or update your beneficiary information, log in to your secure Online Services.
A note about insured benefits
In February 2014, the Ministry of Government Services announced proposed changes to the eligibility criteria and terms for post-retirement insured benefits for members of the OPSEU Pension Plan, to take effect on January 1, 2017. Although announced, these changes have not been finalized.
Current eligibility rules allow all plan members who have at least 10 years of pension service to receive insured benefits at no cost to them. For more information, please contact your employer or OPSEU.
Thinking about retirement? Get the facts
Retirement is a major life change. Preparation and planning will help with a smooth transition to this next phase of your life.
At optrust.com we have a wide-range of online resources and tools to help you get started with your retirement plans.
Secure Online Services
A gateway to your personal pension information in a secure web environment. While online, use the pension estimator to calculate your pension based on a range of different retirement dates with your current personal data.
Pension Information Sessions
Learn more about your pension plan – directly from an OPTrust representative (see page 7 for dates). Sessions are scheduled across Ontario from September to June. They cover key features of your pension and provide an opportunity to ask questions.
Planning for Retirement section
A useful section on our website is geared for members who are planning to retire within a few years and features helpful information to start the retirement process.
For questions about your pension, contact our Member Services staff at 416 681-6100, 1 800-637-0024 (toll-free in Canada) or through your secure Online Services account.
Our staff is here to help you make informed decisions about your retirement.
You asked...Spousal relationships
Question: Who qualifies as an eligible spouse?
Answer: Under the OPSEU Pension Plan, an eligible spouse is defined as one of two individuals who:
- are married to each other, or
- are living together in a conjugal relationship for at least three years, or
- have a relationship of some permanence and are the natural or
- adoptive parents of a child.
Question: When do you want proof of my common-law relationship?
Answer: It’s easier to prove a common-law relationship as soon as you qualify (i.e. you’re living together for three years or become parents). If not, should you pass away, after your death, your surviving spouse would have to submit evidence that your relationship existed at least three years before your membership in the Plan ended. OPTrust will not pay survivor benefits unless we have evidence to prove spousal relationship status.
Question: I’m going through a divorce. How much can OPTrust pay my former spouse?
Answer: Pension law limits the amount OPTrust can pay your former spouse. The law does not permit payment of more than 50% of your OPTrust pension earned during the spousal relationship to a former spouse to divide family assets. This limit applies even if a separation agreement, court order or other document states a higher amount.
Regardless of your age or your former spouse’s age, there are two options for his or her portion of your pension:
- transfer to a locked-in retirement savings arrangement
- transfer to another Canadian pension plan; but only if the other
- pension plan will accept the transfer.
Question: If I have a new spouse after my pension starts, will my new spouse get survivor benefits?
Answer: If you are single when you retire, start a spousal relationship later, and want to provide a survivor pension for your new spouse your pension will be reduced to fund the survivor pension for your new spouse. The same rule applies if you have a new spouse during the deferred or divestment period.
Bringing Your Pension Plan to You
OPTrust Direct Contact sessions are a great way to learn more about your pension – directly from an OPTrust representative. Non-members who are eligible to join the Plan (e.g., fixed term or casual employees) are also welcome to come and learn more about enrolling in the Plan.
Getting Ready to Retire
Our evening seminars are tailored for members who are within 10 years of retirement, but all members are welcome to attend.
- how your pension grows over your career
- how your pension is calculated and when can you retire
- what your options are if you leave your job
- what "CPP integration" means and how it affects you
- how to buy back pension service
- what other benefits are available, and more…
Understanding Your Pension
Lunch & Learn Seminars
OPTrust staff also offer shorter lunchtime seminars in workplaces across Ontario for members at any stage in their careers. Special sessions for fixed term/casual staff who may be interested in joining are also an option.
To book a lunchtime seminar for your workplace, you or your human resources representative can contact us at firstname.lastname@example.org.
See the schedule below for a session in your area and sign up online at optrust.com, or call us at 416 681-6100 or 1 800 637-0024.
Important: Space is limited. Please register at least two weeks in advance.
Direct Contact sessions are designed to give you an overview of the OPSEU Pension Plan. OPTrust staff cannot provide personal financial advice.
OPSEU PENSION TRUST DIRECT CONTACT SESSIONS SCHEDULE
|Waterloo||February 18, 2015||5:30 – 7:30 p.m.||Waterloo Inn and Conference Centre – 475 King Street||Register|
|Toronto||February 25, 2015||5:30 – 7:30 p.m.||OPSEU Pension Trust – 1 Adelaide Street East, Suite 1200||Register|
|Hamilton||March 4, 2015||5:30 – 7:30 p.m.||Courtyard by Marriott Hamilton – 1224 Upper James Street||Join Waiting List|
|Toronto||March 25, 2015||5:30 – 7:30 p.m.||OPSEU Pension Trust – 1 Adelaide Street East, Suite 1200||Register|
|St. Thomas||March 26, 2015||5:30 – 7:30 p.m.||Columbus Club of St. Thomas – 265 Wellington Street||Register|
|Guelph||April 14, 2015||5:30 – 7:30 p.m.||Holiday Inn Guelph – 601 Scottsdale Drive||Register|
|Barrie||April 21, 2015||6:00 – 8:00 p.m.||Holiday Inn Barrie, Hotel and Conference Centre – 20 Fairview Road||Register|
Future sessions will be scheduled for other communities across Ontario. View a complete, up-to-date schedule and register online.
Quick tips to protect your personal information
When you communicate with OPTrust – whether online, over the phone or by mail – our top priority is to ensure that your personal information is always protected
Here are some quick reminders to protect your personal information at OPTrust:
- When you visit OPTrust in person, bring two pieces of identification, including one with a photo (e.g. driver’s licence, health card, passport, etc.).
- Do not share your secure Online Services password or verification questions and answers with anyone.
- When communicating with OPTrust electronically – send your message through your secure Online Services account, which uses encrypted technology unlike regular email.
- If you don’t have an Online Services account, use the Contact Us page on our website to send your email through an encrypted server.
- Use your OPTrust ID, not your social insurance number, when communicating with OPTrust.
- Keep your personalized pension information, such as your Annual Pension Statement in a safe place along with other important financial documents.
- Inform OPTrust of your new home address, so we can continue to provide you with important information about your pension. To protect your privacy, you can change your mailing address by regular mail, phone or through your Online Services account.
Learn more about how OPTrust protects your privacy