FAQs

Read answers to frequently asked questions if you are a member or retiree affected by retroactive salary increases.

Posted: September 19, 2024

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Members

Are the retroactive salary changes reflected in my online pension estimate?

No. Currently, online pension estimates cannot be calculated for members affected by retroactive salary increases. This is because in most cases OPTrust has not received new salary information and pension contributions from your employer. The timing for receiving this information varies by employer and will extend to 2025. As a result, OPTrust is unable to calculate a pension estimate until we process the updated information. Once we have updated your record with the revised financial information from your employer, you will be able to produce a pension estimate through your Online Services account.

What if I have already terminated my membership in the Plan?

If you have already received a Pension Options package (or Termination Options package) and have returned your election to have your entitlement transferred out of the Plan, we expect to start recalculating pension benefits starting in fall 2024 for this group. Once completed you will receive a Payment Options package to select how your additional pension benefit is to be paid out. The payment options available will be detailed in your package, and depending on the amount, the funds may be transferred on a locked in basis to your registered retirement savings plan (RRSP) or paid as cash subject to withholding taxes.

If you have already received a Pension Options package (or Termination Options package) and have not yet returned an election or have elected to defer your pension, we expect to start recalculating pension benefits in 2025 for this group. Your increased deferred pension will be reflected in your Annual Pension Statement once OPTrust has received and processed the data and contributions from your former employer.

Retired members

How much will my pension be affected by the retroactive salary increase?

Generally speaking, your pension should be positively affected by your retroactive salary increase. However, the amount of your pension increase will depend on whether your salary increase impacted your best five-year average salary. The average salary is the average of your highest sequential 60 months of salary based on your annual full-time salary rate, not including overtime or bonuses. Below, we have provided an example to illustrate a member’s pension increase.

Note: The actual increase amount will vary depending on your five-year average salary and years of service.

When will my pension be recalculated to reflect the retroactive salary increase?

We expect to recalculate your pension starting in fall 2024 and you will receive information regarding your updated monthly pension amount, as well as any retroactive pension payment. Due to the timing of when data is expected from each employer and the high volume of recalculations, we anticipate this process will extend into 2025.

What is a retroactive pension payment and why am I receiving this?

A retroactive pension payment is a one-time, lump sum payment that represents the difference between the pension payments you previously received, and your recalculated pension amounts for the period between your pension start date and the month prior to receiving the recalculated pension amount, plus interest. This retroactive pension payment will be paid at the same time as your first recalculated pension payment.

How much tax will be taken from my retroactive pension payment?

Please refer to the Canada Revenue Agency site for information on withholding rates for lump-sum payments.

What are the tax implications of my retroactive pension payment?

As with your regular pension payments, your retroactive pension payment, including the tax deducted, will be reported as income on your T4A in the year it is paid to you.

Please direct any questions or concerns to your accountant, financial advisor or the Canada Revenue Agency.

For members who would like a completed Statement of Qualifying Retroactive Lump-Sum Payment (T1198) form, which will provide a breakdown of the retroactive pension and interest amounts being paid to you for prior tax years, please submit your request through your Online Services account. The T1198 form may be included with your next tax return to request that the Canada Revenue Agency assess any tax you owe on the lump sum payment as if you had received the pension payments in each respective prior year.

How will the retroactive salary payment from my employer impact my pension?

If you are a retired member receiving a pension from the OPSEU Pension Plan and you have become re-employed with an employer who contributes to the Plan you are subject to a re-employment earnings maximum.

Any retroactive salary payments related to pre-retirement employment will not be reported by your employer as re-employment earnings. Only retroactive earnings in respect of post-retirement employment will be reported by your employer as re-employment earnings, in the quarter that it is paid, and will be subject to your re-employment earnings maximum.

Will my re-employment earnings maximum increase?

The maximum quarterly re-employment earnings, which is set by OPTrust when a member first retires, is determined by subtracting the retired member’s gross quarterly pension amount from three times their final monthly salary payable. Once your retroactive earnings have been updated by your employer, any adjustment to your final monthly salary payable will affect your maximum and be reported to you on a Pensioner Information Change Statement.