Buybacks
Overview
This section provides background information on the process for purchasing – or “buying back” – past service credit in the OPSEU Pension Plan and describes the procedures and forms employers must provide to OPTrust when a member has applied to buy back past service.
A member may decide to buy back credit for eligible periods of past service for a variety of reasons. For example, completing a buyback:
will increase the member’s pension when they retire;
may help the member to qualify for one of the Plan’s unreduced early retirement options, or may qualify the member sooner;
may allow the member to qualify for post-retirement health, dental and life insurance benefits provided by the Government of Ontario.
Depending on the circumstances, the employer may be required to:
provide documentation as part of the buyback application process;
pay contributions to the OPSEU Pension Plan for a portion of the buyback cost; and
remit the member’s payroll deductions and/or employer contributions to OPTrust.
Important! There is a 24-month time limit for the member to submit his or her buyback application form to OPTrust. Applying for a buyback carries no obligation to purchase the service. Rather, it opens up a 10-year window within which the member may complete the purchase. The member is not committed to the purchase until they sign the Agreement to Purchase Credit (OPTrust 1017) form. The member may also request that OPTrust stop the buyback.
If the Plan's normal 24-month application window has expired, the member can apply to purchase the prior service through the Plan's open option buyback.
For more information, please refer to the Open Option Buyback fact sheet.
Types of service a member can buy back
Service with an employer who contributed to the OPSEU Pension Plan, the Public Service Pension Plan (PSPP), or its predecessor
Unpaid leaves of absence
Temporary part-time work arrangements
Service with another registered Canadian pension plan
1. Service with an employer who contributed to the OPSEU Pension Plan, the Public Service Pension Plan (PSPP), or its predecessor
This category of service includes employment in the Ontario Public Service (OPS) or any other employer that participated in the OPSEU Pension Plan, the PSPP, or its predecessor. This service falls into two types:
Non-contributory service: This type of service is for periods when the member and employer made no pension contributions. This includes contract, unclassified and/or seasonal employment when the individual was not a member of the Plan. Strikes and lockouts are also considered non-contributory service if employee contributions were not made during the period of the work stoppage.
In certain cases, periods of employment are not considered creditable service for pension purposes. For example:
Seasonal employees cannot buy back credit for the time between periods of seasonal employment (hiatus).
Members are not eligible to buy back credit for periods of disciplinary suspension without pay.
Prior contributory service: This type of service is for periods when the individual was a member of the OPSEU Pension Plan, the PSPP or its predecessor. In this case, the member would have previously terminated his or her membership and may have either received a refund of contributions or transferred the entitlement out of the Plan.
2. Unpaid leaves of absence
When a member takes a leave of absence (LOA) without pay greater than one month and chooses not to make pension contributions while on leave, the member may be eligible to buy back credit for the period after the leave ends.
The Income Tax Act limits the total amount of credit an individual can buy back for post-1990 unpaid leaves of absence to five years, plus an additional maximum three years for pregnancy, parental and adoption leaves. The limit does not apply to Illness/WSIB and family medical leaves.
Under the Plan, contributions for an unpaid LOA of one month or less are mandatory and are deducted automatically by the employer. Please ensure that these periods are recorded as leaves of absence in your communication to us to enable us to administer Canada Revenue Agency (CRA) rules.
If the unpaid leave is longer than one month for illness, WSIB, pregnancy, parental, adoption, special or educational purposes, the member has the option of making contributions while on leave. If the member chooses not to continue contributions during the LOA, they may apply to buy back credit for the leave after returning to work.
Contributing during the LOA
Before starting an unpaid leave of longer than one month, the member must complete and submit OPTrust’s Application to Contribute for an Unpaid Leave of Absence (OPTrust 1025) form to the employer. This form is used to indicate whether or not the member wishes to make contributions during the leave. To calculate the contribution amounts, OPTrust must receive this form before the leave starts.
Important! Pregnancy, parental and adoption leaves: Under Ontario’s Employment Standards Act, there are specific rules concerning pregnancy, parental and adoption leaves. Since Nov. 18, 1990, both the member and the employer are required to make contributions for these leaves, unless the employee elects in writing not to contribute. During these leaves, contributions can be deducted from the Supplementary Unemployment Benefit (SUB) allowance.
For pregnancy, parental or adoption leaves where a portion of the leave is to be paid through the SUB allowance, the employer must clearly indicate on the OPTrust 1025 form the period for which the SUB payment will apply. In addition, the form must contain the appropriate employer signature, name and contact information. Forms submitted directly to us by members without an employer signature authorizing contribution deductions from the SUB allowance will be returned to the employer for authorization.
WSIB: If the member is off work due to an injury or occupational disease and has applied for WSIB benefits, contributions to OPTrust will continue as long as the member is still paid by the employer. If the member is paid directly by WSIB, the member must indicate whether or not they will continue to make contributions to OPTrust by completing the form Application to Contribute for an Unpaid Leave of Absence (OPTrust 1025) form. If the member chooses not to continue contributions, they may buy this period back after the leave ends.
Note! Exception: A full-time employee who has been granted approval to regularly take time off is not eligible to buy back this time (i.e. if the member works less than 100 per cent, they cannot purchase the portion they did not work).
3. Temporary part-time work arrangements
If a member enters a temporary part-time work arrangement on or after Feb. 1, 2022, both the member and employer are required to continue making contributions based on the member’s regular work hours, unless the member elects in writing to make contributions on their reduced hours only.
If a member chooses to make pension contributions based on their reduced hours during the arrangement, they can buy back pension service for the time not worked after the arrangement ends. Members who were on an arrangement that started before Feb. 1, 2022 can also buy back pension service for the time not worked.
The Income Tax Act limits the total amount of pension service an individual can buy back for post-1990 unpaid leaves and/or a period of reduced work hours to five years, plus an additional maximum three years for pregnancy, parental and adoption leaves.
4. Service with another Canadian registered pension plan
This category includes service with an employer that did not contribute to the OPSEU Pension Plan, the PSPP or its predecessor. To be eligible, the individual must have been a member of a registered pension plan provided by a previous employer. Under CRA rules, certain restrictions may apply. Members should contact OPTrust directly for further details.
Note: In some cases, members may be eligible to transfer their credit from their previous employer’s pension plan directly to the OPSEU Pension Plan under a “reciprocal transfer agreement.” Very strict time limits apply. Members should contact OPTrust directly regarding specific agreements and eligibility as soon as they join the Plan. For more information, see the section on Enrolling a Member.
Buybacks at enrolment
When employees enrol in the OPSEU Pension Plan, they may be eligible to purchase, or “buy back,” credit for eligible periods of past service. Buying back credit increases the amount of the member’s pension at retirement and may allow him or her to qualify for early retirement, or to qualify sooner.
Under the Plan, there are several types of prior service that eligible members can buy back at enrolment. These include:
service in the Ontario Public Service or with another employer who contributed to the OPSEU Pension Plan, the Public Service Pension Plan, or its predecessor. This includes both:
non-contributory service, and
contributory service that was previously refunded or transferred out of the Plan
service with another Canadian Registered Pension Plan.
Important! To buy back credit for eligible periods of past service, enrolling members should submit an Application for Past Pension Service (OPTrust 1036) form to OPTrust within 24 months of his or her plan membership date. This will ensure an eligible member will:
• receive a buyback cost quote based on his or her salary at the date of application • is offered financing options for payment (if applicable) • has 10 years to complete the buyback, at the original cost plus interest, if the member commits to financing payment options.
If the 24-month application deadline has expired, the member can apply to buy back eligible periods of past service under the Plan's open option buyback. The cost for an open option buyback is calculated on an actuarial basis. As a result, the member pays the full cost of his/her buyback and there is no cost to the Employer or the Plan.
For more information, please refer to OPTrust's fact sheet Open Option Buyback.
Employers should make new members aware of the Plan’s buyback rules and that strict time limits apply. OPTrust will provide new members with additional information on buybacks in their Welcome Package.
For more information, please refer to the section of this manual on Buybacks.
Automatic quotes for prior non-contributory service
As part of the enrolment process, OPTrust automatically checks whether the member is eligible to buy back a period of a non-contributory government service. We do this by comparing the member’s plan membership date with the date his or her current continuous employment began. If there is a gap between the continuous employment date and the plan membership date, we will automatically send the member a quote for the cost of buying back credit for this period.
In effect, the Plan deems the member to have applied to purchase the prior non-contributory service. This procedure ensures that most members will not miss the application window.
Reminder! The employer must provide accurate plan membership and continuous employment dates when completing the Membership Enrolment form. OPTrust requires this information to provide automatic cost quotes at enrolment for non-contributory buy backs. Please see Employment and Membership Dates for more information.
Cases where buyback applications still required
In cases where OPTrust does not have access to the member’s prior service information, the member should still submit a buyback application within the Plan’s 24-month application deadline. However, if the 24-month application deadline has expired, the member can apply to purchase the prior service through the Plan's open option buyback. For more information, refer to OPTrust's fact sheet Open Option Buyback. This includes members who:
may be eligible to purchase
prior non-contributory service where there has been a break in employment
prior contributory service that has been refunded to the member
past service with an employer who contributed to another registered pension plan.
work for non-OPS employers.
Important! To ensure that no member misses his or her buyback application deadline, OPTrust still recommends that all members complete and submit a signed Application for Past Pension Service (OPTrust 1036) form, whether their prior service is captured by the automatic buyback quotes process or not.
Temporary part-time work arrangements
For members who enter a temporary part-time work arrangement on or after Feb. 1, 2022, members and employers are required to continue contributions based on a member’s regular work hours, unless the member elects in writing to make contributions on their reduced hours only.
The member’s choice to make contributions during the arrangement based on their regular hours or on their reduced hours should be indicated on the Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form. This form must be completed by the member and employer. The employer must submit it to OPTrust before the start of the arrangement, whether or not the member elects to contribute based on their regular hours or on their reduced hours only.
The OPTrust 1030 form can also be used for members to apply to buy back pension service after a temporary part-time work arrangement ends.
What is a temporary part-time work arrangement?
A temporary part-time work arrangement is a period of reduced work hours that meets all of the following criteria:
The member temporarily switches from full-time hours to part-time hours or from regular hours to reduced hours.
The part-time work arrangement is temporary, not permanent, and has a start date and anticipated end date.
The employer and member have agreed to the terms of the temporary part-time work arrangement in advance, including its duration.
The conditions in the federal Income Tax Act are met, including:
The 36-month minimum employment rule: members may only accrue full-time pension service for a period of reduced work hours if they have been employed with their employer for at least 36 months before the start of the arrangement. Please note that due to the COVID-19 pandemic, the federal government waived this requirement for arrangements that began in 2020 or 2021.
The five-year cumulative limit: the amount of pension service members can accrue during an unpaid leave and/or a period of reduced work hours with their employer is limited to a maximum of five years with an additional three years for pregnancy/parental leaves.
Job sharing may be one example of a temporary part-time work arrangement. Temporary layoffs, workplace suspensions, periods of disability and permanent changes in work hours do not qualify as temporary part-time work arrangements. Since a temporary part-time work arrangement is subject to an agreement between a member and employer, employers are responsible for reporting each arrangement that meets all of the above criteria to OPTrust. All employees with the same type of arrangements should be treated consistently for pension purposes.
Contributions during a temporary part-time work arrangement occurring on or after Feb. 1, 2022
If the member decides to continue making contributions based on their regular hours during the arrangement, employers are required to match contributions, and the costs for both the member and the employer equal the contribution amounts that would have been paid had the arrangement not taken place. During the arrangement, full contributions should be deducted from the member’s reduced salary.
Members may also elect to contribute only on the reduced hours they work during the arrangement and apply to buy back the pension service for the hours they did not work after the arrangement ends. Members contributing on their reduced hours only will not earn pension service for the hours they do not work during the arrangement.
Note! Members who started a temporary part-time work arrangement before Feb. 1, 2022 may only apply to buy back pension service for the hours they did not work after the arrangement ends and they have returned to their regular working hours.
Important! Members and employers are required to make pension contributions based on the member’s regular hours, unless the member elects in writing to make contributions on their reduced hours by using the Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form. If OPTrust does not receive this form in a timely manner before a temporary part-time work arrangement starts, member and employer contributions will be mandatory and will be treated as missed mandatory contributions if they are remitted to OPTrust late. Any changes to a temporary part-time work arrangement should be reported to OPTrust.
Procedures
Employers must complete the following procedures for a member taking a temporary part-time work arrangement. The same procedures should be followed whether:
the member elects to contribute based on their regular hours during the arrangement, or
the member elects to contribute based on their reduced hours only during the arrangement
1. Have the member complete page one of the Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form
The member must do this before the start of the temporary part-time work arrangement and submit the form to their employer.
2. Complete and submit the OPTrust 1030 form to OPTrust
The employer must complete page two of the OPTrust 1030 form and submit it to OPTrust before the start of the temporary part-time work arrangement. This form must be completed whether the member chooses to make pension contributions based on their regular hours or on their reduced hours during the arrangement.
Note! The employer is responsible for confirming that the member is eligible for a temporary part-time work arrangement as defined under the Plan and for arranging to continue remitting pension contributions to OPTrust.
Application and eligibility
24-month application deadline
The OPSEU Pension Plan sets out strict time limits for submitting a buyback application. To be eligible to make a purchase, the member must submit an Application for Past Pension Service (OPTrust 1036) form to OPTrust within 24 months of the latter of:
the date the member became and continuously remained a member of the OPSEU Pension Plan or the PSPP, or
the last day of the leave of absence the member is applying to buy back.
Important! If OPTrust does not receive the buyback application within the 24-month time limit, the member can still apply to buy back pension service for his or her past service through the Plan's open option buyback. Please see OPTrust's fact sheet Open Option Buyback for more information. Buyback applications must be received prior to the member’s termination or retirement.
What is a “complete application”?
The Application for Past Pension Service (OPTrust 1036) form is the only document that must be received within the 24-month deadline. However, additional documents may be required to complete the member’s application. Since OPTrust calculates the cost of the buyback as of the date the complete application is received, it is in the member’s interest to submit all required documents as quickly as possible.
The documents required to complete the application depend on the type of service the member is buying back.
Service with the OPSEU Pension Plan, the PSPP or its predecessor
For most members who work in the OPS and are paid through CORPAY, the Application for Past Service form is all that is required to complete a buyback application for this type of service. OPTrust will confirm the current salary rate and eligible service directly with the employer.
Note! Automatic quotes for prior non-contributory service at enrolment: In cases where the member has a period of prior non-contributory government service (which can be identified by OPTrust) – contract, unclassified or seasonal service, for example – in conjunction with the individual’s enrolment in the Plan, OPTrust will automatically generate a buyback cost quote and mail the member an Agreement to Purchase Credit (OPTrust 1017) form. Please refer to the section on Enrolling a Member for more information.
For members paid through CORPAY with historical service from more than 10 years previous to the current year, we also require an Employment Information (OPTrust 1035) form, to be completed by the employer.
For non-CORPAY members (i.e. employees of agencies, boards and commissions), the employer must provide OPTrust with the Employment Information (OPTrust 1035) form for all service. This form is required if the buyback is for a period of non-contributory service, including contract or unclassified employment.
If the employer is unable to provide the necessary information the member may still be eligible to apply for a buy back, if they are able to provide other supporting documentation such as pay stubs, T4s, employment contracts, or letters from the employer. The submitted documents are subject to approval by OPTrust.
Unpaid leaves of absence
Before an employee starts any LOA, the employer must complete a Notice of Unpaid Leave of Absence (OPTrust 1025ER) form, and ensure a copy is sent to OPTrust. If the member chooses not to contribute during the leave, using the Application to Contribute During an Unpaid Leave of Absence (OPTrust 1025) form, they can apply for a buyback after the leave by submitting a completed Application for Past Pension Service (OPTrust 1036) form to OPTrust.
Temporary part-time work arrangements
Arrangements on or after Feb. 1, 2022 Before a member starts a temporary part-time work arrangement, the employer must complete a Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form with the member and submit a copy to OPTrust.
If the member chooses to contribute based on their reduced hours during the arrangement, they can apply for a buyback after the arrangement ends by completing page one of a new OPTrust 1030 form and submitting it to their employer to complete page two. The employer must then submit the form to OPTrust.
Twenty-four-month buyback window for arrangements prior to Feb. 1, 2022 A special 24-month buyback window is available to members who were on a temporary part-time work arrangement that occurred before Feb. 1, 2022. If members wish to apply to buy back pension service for a past arrangement, they must complete page one of the OPTrust 1030 form and request their employer complete page two of the form. The employer must then submit the form to OPTrust.
Note! For more information about temporary part-time work arrangement eligibility, please see Temporary part-time work arrangements above.
Service with another pension plan
Members who apply to purchase service with another Canadian registered pension plan will be required to provide additional documentation from the previous employer and/or previous pension plan.
Buyback costs
Once OPTrust receives the complete application and confirms the member’s eligibility, we will calculate the cost and send an Agreement to Purchase Credit (OPTrust 1017) form to the member’s home address. This agreement sets out the cost of the buyback and the member’s payment options. It also shows the member how much his/her estimated pension will increase and the earliest unreduced retirement date if this buyback is completed.
For certain types of service, the employer is also required to pay contributions to the OPSEU Pension Plan. Note that employer matching contributions could become payable for as long as 10 years 3 months after a cost quote is issued.
The cost of the buyback – for both the member and the employer - depends on a number of factors, including:
the type of service to be purchased (see below),
the amount of pension service to be purchased,
the dates of the period of service to be purchased,
the member’s salary rate as at the time OPTrust receives the complete application.
Non-contributory service
Both the member and the employer must pay contributions to the OPSEU Pension Plan for purchases of prior non-contributory service.
The member’s cost for buying back a period of prior non-contributory service is based on the following formula
Member’s annual salary rate (at application date) | x | Member contribution rate (during the period being purchased) | x | Years of service to be purchased |
The employer’s cost for a prior non-contributory buyback is based on a similar formula:
Member’s annual salary rate (at application date) | x | Employer contribution rate (during the period being purchased) | x | Years of service to be purchased |
For a table showing the member and employer contribution rates in effect at different times in the past, see the section on Reporting Pension Data.
Prior contributory service
For all prior contributory buyback service applications made before October 1st, 2010 the member and the employer also pay contributions to the OPSEU Pension Plan. The employer’s cost for this type of buyback is calculated using the same formula as the employer cost for prior non-contributory service (see above). The employer's cost is identical to the member's cost.
Note! The employer's contributions are required for all purchases of prior contributory service for members who submitted applications before October 1, 2010. Buyback payments for this service may be made at any time within 10 years and three months from the mailing date of the original cost quote. This means that prior contributory buyback applications received up to September 30th, 2010 could require matching employer contributions up to the year 2020.
If the member applied to purchase prior contributory service on or after October 1, 2010, the member's cost for the service is based on an "actuarial" basis, meaning it represents the value of the additional pension he or she will receive from OPTrust as a result of the purchase. If the purchase allows the member to retire sooner, this will be reflected in the cost. The employer does not make any matching contributions for this type of buyback.
Unpaid leaves of absence
For leaves due to illness and WSIB, pregnancy, parental and adoption leaves, and any other statutory leaves that are protected under Ontario’s Employment Standards Act (when purchased after the leave has ended), the buyback cost for both the member and the employer is calculated using the same formulas as non-contributory service (see above). If contributions are to be maintained during the LOA, the amount payable is equal to the regular contributions the member and employer would have made if the employee was not on leave.
For special and educational leaves, however, the employer does not make matching contributions. For these types of leave, the member pays both the member and employer share of contributions, based on the above formulas.
Temporary part-time work arrangements on or after February 1, 2022
For temporary part-time work arrangements (when purchased after the arrangement has ended), the member can buy back pension service for the hours that they regularly would have worked during the arrangement had it not occurred. The buyback cost for both the member and the employer is calculated using the same formulas as non-contributory service (see above), for the hours not worked by the member during the arrangement.
The amount of contributions payable is equal to the regular contributions the member would have made if the member was not on a temporary part-time work arrangement. Employers are required to match contributions.
If members apply for a buyback more than 24 months after the temporary part-time work arrangement ends, members will pay the full actuarial cost, and employers do not contribute.
24-month buyback window for temporary part-time work arrangements prior to February 1, 2022
A special 24-month buyback window is available to members who were on a temporary part-time work arrangement that occurred before February 1, 2022.
If members apply for a buyback before February 1, 2024, the cost will be based on the contribution rate during the temporary part-time work arrangement and the member’s salary rate when they apply. Employers are required to match contributions.
If members apply for a buyback after January 31, 2024, members will pay the full actuarial cost, and employers do not contribute.
Service with another registered pension plan
The member’s cost for service with another pension plan is calculated differently. It is based on the projected – or “actuarial” – value of the additional pension he or she will receive from OPTrust as a result of the purchase. If the purchase allows the member to retire sooner, this will be reflected in the cost as well. The employer does not make any matching contributions for this type of buyback.
Open option buybacks
Members can apply to buy back credit for eligible past service, even after the 24-month application deadline. Under the new option, members can also apply for a previous buyback that they did not complete within the 10-year, three-month payment window. The cost for an open option buyback is calculated on an "actuarial" basis. To calculate the actuarial cost, OPTrust uses a number of factors – such as age, current salary rate, current interest rates, and the amount of service being purchased – to determine the current cost of the additional pension the member will receive if the purchase is completed. The employer does not make any matching contributions for this type of buyback
Costing transfers under a reciprocal transfer agreement
Under a reciprocal transfer agreement between OPTrust and another plan, the transfer amount is based on actuarial assumptions set out in the agreement. In general, it is less costly to the member to transfer credit than to purchase the service as a buyback. The employer does not pay any contributions for service purchased under a reciprocal agreement.
Payment options
Once OPTrust receives the complete application and confirms the member’s eligibility, we will send an Agreement to Purchase Credit (OPTrust 1017) form to the member’s home address. This form provides the member with information on the available payment options depending on the circumstances and the cost of the buyback.
Lump-sum payments
In most cases, members can pay for their buyback in a lump sum, using online banking payment. Members can log into their online bank account and add OPSEU Pension Trust (OPTrust) as a payee under "Pay Bills." Next they need to add their OPTrust ID as the account number and then submit their payment.
Please note: any payments must come from the member's bank account or bank account jointly held in the member's name. We cannot accept payments from a third party as specified under the Income Tax Act.
Lump-sum payments can also be made through a direct transfer from a tax-sheltered source such as an RRSP. In some cases, a direct transfer from a tax-sheltered source may be the only payment options permitted under CRA rules.
A lump-sum payment is the only option for buybacks costing less than $500.
Financing option (payroll deduction)
For buybacks costing more than $500 the member may opt to pay through a series of biweekly payroll deductions. This option is only available to classified (permanent) full-time and part-time employees (i.e. not unclassified/seasonal/contract employees). The cost for this option includes interest as well as the principal cost.
If the member is eligible for this option, OPTrust will include an amortization schedule along with the Agreement to Purchase Credit form. The minimum payment is $10 per pay period, based on a maximum payment period of 10 years. The minimum payment must cover interest charges as well as some portion of the principal.
Combined lump sum / financing option
Classified full-time and part-time employees may also opt to pay for buybacks costing more than $500 through a combination of lump-sum payments and payroll deductions. If the member chooses the combination option, the amount remaining to be financed after any lump-sum payment(s) must be equal to or greater than $500.
Other payment options for members
Members who are on an unpaid leave of absence, including WSIB or LTIP, or who work on a seasonal or unclassified basis may be able to make other arrangements to pay for their buybacks. Options include providing a series of post-dated cheques, or regular quarterly payments.
Employer payments
The form and timing of the employer payment matches that selected by the member (e.g., lump sum vs. payroll deductions). The employer does not have the option to prepay the employer portion of the buyback. We do this to ensure that only service actually paid for by the member is billed to the employer. Payroll deductions The method for tracking and remitting buyback-related payroll deductions differs for the OPS and other employers that are part of the CORPAY system and non-CORPAY employers:
For CORPAY employers, OPTrust’s Data Management Group sends a deduction file to SSB every two weeks, indicating the amount of member and employer contributions to be deducted.
For non-CORPAY employers, we will send an OPTrust 1016 form indicating the deduction amount for both the member and employer. These deductions must be remitted every two weeks as part of the payroll process.
For more information, please see the section on Reporting pension data.
Monthly, quarterly and lump-sum payments For all buyback payments received directly from the member, we will notify the employer of the amount of any corresponding employer payment to be remitted to OPTrust.
Pension adjustments
Canada’s Income Tax Act (ITA) limits the total amount of tax-sheltered retirement savings individuals may accumulate. Under the ITA, pension benefits earned after 1989 reduce the individual’s available RRSP contribution room. The amount of this reduction is referred to as a “pension adjustment” (PA). Each year, the PA for an employee’s current employment pension service is reported on the T4 issued by the employer.
Certain types of buybacks for post-1989 service also reduce the employee’s RRSP room. In some cases, the buyback will result in an additional PA. Depending on the circumstances, OPTrust will either:
calculate the buyback-related PA, report it directly to the Canada Revenue Agency (CRA) and issue a T4A to the employee, or
send the employer a request to amend the PA amount reported on the employee’s annual T4.
Leaves of absence and temporary part-time work arrangements
OPTrust calculates pension adjustments (PAs) for the following LOA and temporary part-time work arrangement purchases and reports them to CRA.
For CORPAY employers:
The LOA or temporary part-time work arrangement must end in the tax-reporting year.
OPTrust must receive the member’s signed Agreement to Purchase Credit (OPTrust 1017) before April 30th of the following year.
For non-CORPAY employers (agencies, boards and commissions):
The LOA or temporary part-time work arrangement must end in the tax-reporting year.
OPTrust must receive the member’s signed Agreement to Purchase Credit (OPTrust 1017) before April 30th of the following year.
The member must pay for the buyback in a lump sum.
Reminder! Employers are responsible for calculating and submitting a PA to CRA for the member’s reduced hours worked during a temporary part-time work arrangement.
For all other cases where a PA is required, OPTrust will continue to send a request to the employer to amend the PA reported on the individual employee’s T4.
Non-contributory service
For purchases of prior non-contributory service, OPTrust will continue to provide the necessary information to the employer to amend the PA.
For more information on PA reporting, please see the Tax reporting and pension adjustment section.
T4 tax reporting
OPTrust is responsible for providing the member with a T4A by mid-February for buyback payments made in the previous year for the following situations:
CORPAY employers:
OPTrust reports all payroll, monthly, quarterly and lump sum buyback payments.
Non-CORPAY employers:
OPTrust only reports monthly, quarterly and lump-sum buyback payments (i.e. payments made directly to the OPTrust by the member).
Non-CORPAY employers must report any buyback payments made through payroll deduction on the individual’s annual T4.
For both CORPAY and non-CORPAY employers, OPTrust will also issue T4As to members for LOA and temporary part-time work arrangement purchases that require a PA.
Buyback procedures
The buyback process comprises:
an application from the member, and
an agreement between the member and OPTrust.
Depending on the circumstances, the employer may be required to provide one or more of the following services:
provide documentation as part of the buyback application process;
pay contributions to the OPSEU Pension Plan for a portion of the buyback cost;
remit the member’s payroll deductions and/or employer contributions to OPTrust.
1. Member submits a buyback application
The member is responsible for completing and submitting an Application for Past Pension Service (OPTrust 1036) form to OPTrust within the Plan’s 24-month application time limit.
Leaves of absence
The member is responsible for completing and submitting an Application for Past Pension Service (OPTrust 1036) form to OPTrust within the Plan’s 24-month application time limit.
Temporary part-time work arrangements
The member is responsible for submitting the Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form to their employer. The employer is responsible for completing page two of the OPTrust 1030 form and submitting the completed form to OPTrust.
2. Additional information may be needed to complete the application
The member is responsible for ensuring that any additional information is submitted as requested by OPTrust. The type of information required depends on the type of service purchased. In some cases, the employer must provide this information.
For historical service with a CORPAY employer from more than 10 years previous to the current year, the employer is required to complete and submit OPTrust’s Employment Information (OPTrust 1035) form.
For prior service with a non-CORPAY employer who contributed to OPSEU Pension Plan, PSPP, or its predecessor, the employer must complete and submit the Employment Information (OPTrust 1035) form. OPTrust may contact the employer directly if further information is required.
For unpaid LOAs – the employer must have the member complete an Application to Contribute for an Unpaid Leave of Absence (OPTrust 1025) form prior to the start of the LOA, and submit a copy to OPTrust. If the member chooses not to contribute during the leave, and applies for a buyback after the leave, the Agreement to Purchase Credit (OPTrust 1017) is the only form required.
For temporary part-time work arrangements – the employer must complete page two of the Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form and submit the form to OPTrust.
Service with another pension plan – the member is required to provide additional documentation from the previous employer and/or previous pension plan.
3. Member completes the Agreement to Purchase Credit (OPTrust 1017)
Once OPTrust receives the complete application, we will send an Agreement to Purchase Credit to the member. This form sets out the cost of the purchase and the available payment options. The member must respond within 45 days.
4. OPTrust processes the member’s payment option
Once OPTrust receives the signed Agreement to Purchase Credit, we will process the payment based on the payment option selected and employer (payroll method) involved:
Lump-sum payments:
OPTrust will process the payment and issue a tax receipt as necessary. The employer will be invoiced on a quarterly basis.
Payroll deductions — CORPAY employers:
OPTrust will initiate payroll deductions for both the member and employer buyback contributions through the CORPAY/OPTrust data interface.
Payroll deductions — non-CORPAY employers:
OPTrust will send an OPTrust 1016 form to the employer, requesting the initiation of payroll deductions and indicating the required amount for both the member and employer portions of the payment. These deductions must be remitted every two weeks as part of the payroll process.
Monthly or quarterly payments directly to OPTrust:
members may send post-dated cheques or mail cheques as they become due. OPTrust will process the payment and issue a tax receipt as necessary. The employer will be invoiced on a quarterly basis.
5. OPTrust initiates PA filing
OPTrust has assumed responsibility for calculating and reporting to CRA the pension adjustments (PAs) for some LOA and temporary part-time work arrangement purchases.
For CORPAY employers:
The LOA or temporary part-time work arrangement must end in the tax-reporting year.
OPTrust must receive the signed Agreement to Purchase Credit (OPTrust 1017) before April 30th of the following year.
For non-CORPAY employers (agencies, boards and commissions):
The LOA or temporary part-time work arrangement must end in the tax-reporting year.
OPTrust must receive the signed Agreement to Purchase Credit (OPTrust 1017) before April 30th of the following year.
The buyback payment must be made by lump sum.
For all other LOAs, temporary part-time work arrangements and for prior non-contributory service where a PA is required, OPTrust will continue to send a request to the employer to amend the PA reported on the individual employee’s T4.
6. Tax reporting
OPTrust is responsible for providing the member with a T4A by mid-February for buyback payments made to the Plan in the previous year for following situations:
CORPAY employers:
OPTrust reports all payroll, monthly, quarterly and lump sum buyback payments.
Non-CORPAY employers:
OPTrust only reports monthly, quarterly and lump sum buyback payments (i.e. payments made directly to the OPTrust by the member). Any payroll deductions are to be reported by the employer on the employer’s T4.