Employer Manual

Overview

The OPSEU Pension Plan provides disability benefits to qualified members. There are three types of disability benefits available to members who satisfy the qualification criteria. These are:

• Disability refund

• Disability pension

• Lump sum payment due to shortened life expectancy

Disability benefits

Members who are no longer able to work due to a medical or physical condition may be eligible for a disability benefit provided by the OPSEU Pension Plan. To qualify for a disability benefit the individual must:

• still be employed and a member of the Plan (not terminated or retired),

• have at least 10 years of pension service or 10 years of continuous Plan membership,

• provide medical evidence that supports the presence of a “total and permanent” disability, and

• submit an application to OPTrust and be approved.

Note: Totally and permanently disabled is defined as a physical or mental impairment that prevents the individual from engaging in any employment for which the individual is reasonably suited by virtue of his or her education, training or experience and that can reasonably be expected to last for the remainder of the individual’s lifetime.

In order to receive a disability benefit, the member must apply to OPTrust and satisfy the above criteria. The member must also resign from his/her current employment. A medical assessment is made and provided to OPTrust. Based on this medical assessment, OPTrust makes a decision with respect to eligibility for disability benefits.

The member’s total credit or membership in the Plan will determine if the member is eligible for either a disability pension, or a special disability refund.

Disability refund

If the member has less than 10 years of pension credit and membership, the member may receive a special disability refund. This refund is a one-time lump-sum payment based on the member’s contributions plus interest. The formula used by OPTrust to calculate a special disability refund is:

Disability pension

If the member has more than 10 years of pension credit or continuous membership, the member may be eligible for a disability pension calculated using the Plan’s basic retirement pension formula. The pension benefit is based on the member’s credit in the Plan up to the date of termination. It will be reduced for CPP integration at age 65. A disability pension is payable for the member’s lifetime providing that the member remains totally and permanently disabled. If the medical condition of the member improves, and the member is able to return to work, the disability pension would cease. As with all OPTrust pensions, disability pensions are adjusted every January for the increase in the cost of living (as measured by the Consumer Price Index). The adjustment is applied the year after the pension commences. Any pension paid to an eligible survivor will also be increased annually for inflation.

Insured benefits

Disability retirees are may be eligible to receive post-retirement health and dental benefits.

Note: Individuals who do not qualify for a disability pension, but did receive a disability refund are not eligible to receive post-retirement insured benefits.

Disability procedures

Employers must complete the following procedures to terminate a member from the OPSEU Pension Plan, and apply for a disability benefit.

1. The employer is required to complete:

• Employer's Statement on Disability (OPTrust 3002) form

• The employer may complete: Termination of Membership – Application For Entitlement (OPTrust 1012) form

Important! Disability applications are normally made at the time of termination; however, termination of plan membership is not required before a disability application is made.

2. The member is required to provide:

• Member's Statement on Disability (OPTrust 3001) form - completed by the member

• Medical Examination Report (OPTrust 3003) form - completed by the attending physician or specialist

3. Once approval has been granted, additional documentation required to process entitlement:

• Termination of Membership – Application For Entitlement (OPTrust 1012) form if not previously submitted.

• Disability Refund

• Disability Pension

Shortened life expectancy

A member, former member or retired member who has a life expectancy of less than 24 months may apply to OPTrust to receive a lump sum commuted value payment of their pension or deferred pension.

Active members

If an active member is approved to receive a lump sum payment of their commuted value due to shortened life expectancy (SLE), they may terminate their membership in the Plan to access the lump sum commuted value payment, without terminating their employment.

Retired members

Pensioners who are already in receipt of a pension and have a life expectancy of less than 24 months may also make an application to OPTrust for a lump sum commuted value of the pension in lieu of continued pension payments for their remaining lifetime and the lifetime of their spouse.

If the pensioner is receiving post-retirement insured benefits and the lump sum payment is approved, the insured benefits, including family coverage (if applicable) will continue until the pensioner’s date of death only.

Important! The amount of survivor pension that the spouse would give up could be considerable. It is important that the spouse understands what they are giving up.

Interest of a former spouse “protected”

A former spouse who is entitled to a portion of the member, former member or retired member’s entitlement as a result of a marriage breakdown has their rights protected since the pension entitlement belonging to the former spouse cannot be included in the lump sum commuted value payment.

Important! Any benefits the member is receiving under the long-term income protection (LTIP) plan may be reduced by the amount of the lump-sum pension payment.

Shortened life expectancy procedures

To receive this benefit, the member must apply to OPTrust using the Application for Lump Sum Payout due to Shortened Life Expectancy (OPTrust 3006) form. This form includes a medical certification (to be completed by a physician licensed to practice medicine in Canada). If the member has a spouse at the time of application, the spouse must consent to the payout and acknowledge that they waive any survivor benefits provided under the terms of the Plan.

Employers must complete the following procedures to terminate the membership of a member from the OPSEU Pension Plan and apply for a shortened life expectancy (SLE) payment.

1. OPTrust will generally communicate directly with members to attain the required documentation listed below:

• Application for Lump Sum Payout due to Shortened Life Expectancy (OPTrust 3006) form completed by the member, the member’s spouse (if applicable) and a licensed physician

2. If the member is approved for a lump sum payout due to SLE, the employer is required to complete:

• Termination of Membership – Application For Entitlement (OPTrust 1012) form

Long-term income protection (LTIP)

Note! The procedures for LTIP administration are the responsibility of the employer and are not part of OPTrust’s guidelines. The following material is provided for information purposes only, and does not differentiate between the OPS and other participating employers.

LTIP and pension credit

Unlike other unpaid leaves of absence due to illness, periods when a member is receiving or eligible to receive long-term income protection (LTIP) benefits do not affect his or her pension credit. During these periods, the member continues to accrue credit at his or her normal rate.

LTIP is a benefit provided by employers whereby, if the member is deemed unfit for work by a qualified physician and approved by the insurance carrier, the member will qualify to receive 66.66 per cent of their salary as of the date of disability. A minimum qualifying period of six months applies from the initial date of disability to the LTIP effective date. If the salary for the member increases during this qualifying period it is still the salary at date of disability that determines the earnings while on LTIP.

In addition to paying the regular employer contributions to OPTrust, the employer also pays the member’s contributions for periods when the member is eligible for or receives LTIP benefits (including any periods of rehabilitative employment). Pension contributions for these periods are based on the 100 per cent salary rate as at the date of disability, not the 66.66 per cent LTIP benefit. During the member’s absence while on LTIP, this salary rate is escalated annually for inflation, in accordance with the OPSEU Pension Plan’s rules.

Pension contributions became part of the LTIP benefit for employees of the government on July 1, 1974 and for employees at Agencies, Boards, and Commissions in January 1985. Not all employees of the government are eligible to receive LTIP benefits. Only classified (permanent), full time or regular part time employees are eligible to receive LTIP benefits. Contract, seasonal and casual, or “unclassified” employees are not eligible.

The Dupuis award

The Dupuis award came into effect on June 23, 1989, after a decision by the Grievance Settlement Board. This award ruled that employees who are totally disabled are entitled to pension accruals at no cost to the member provided they are qualified to receive LTIP. Under this award, the employee need not be receiving LTIP benefits to be entitled to accrue pension credit for the affected period or for the employer to be required to pay both the employee and employer contributions.

For more information, please refer to OPTrust’s Employer Update #10 (December 16, 2002).

Salary escalation

Effective January 1, 1990, Order in Council 693/91 amended the calculation methodology of LTIP salary escalation, contributions and pension benefits. Under the amendment, the salary rates used in the calculation of the pension benefit accrual while the member is in receipt of LTIP should only reflect increases due to inflation. Unlike LTIP salaries prior to 1990, the increases in salary rates due to negotiated settlements are not applicable.

While the rules around the initial salary escalation can become quite complicated, subsequent annual escalations will always take place on January 1st. The initial salary escalation is based on the relationship between:

1. the effective date of the member’s current salary rate,

2. the date of member’s disability, and

3. the effective date of the member’s LTIP claim.

In the Ontario Public Service, pension contributions for LTIP periods are calculated and maintained outside of the regular payroll system by the Finance and Controllership Branch of the Shared Services Bureau (SSB).

Important! Termination while on LTIP: When a member is terminating their plan membership while on LTIP, the employer should state “Member on LTIP” in the final salary section of OPTrust's Termination of Membership (OPTrust 1012) form, rather than entering a salary amount. The collective agreement salary for the position may be different from the final salary on LTIP.

Important! Termination from LTIP: The normal retirement age under the OPSEU Pension Plan is 65. When a member on LTIP reaches age 65, a letter will be sent to the member requesting the required documentation and a copy of the letter will be sent to the employer.

Key information

The following information is required for pension calculations for periods when a member is receiving or eligible to receive LTIP benefits.

• Date of disability (DOD): This is usually the member’s last day at work but it may be a prior date if there is an interrupted qualifying period. Insurance carriers now state the DOD on their acceptance letter.

• LTIP effective date: This is the date on which LTIP benefits commence. This follows the later of:

  1. the completion of the six-month qualifying period from the date of disability, or

  2. the expiration of the employee’s short term sickness plan credits. LTIP pension contributions start on the LTIP effective date.

• Salary at date of disability: This is the annual salary that the employee was earning on the DOD (including any retroactive revisions). The salary reported is the full time equivalent. If the employee is part-time this is recorded in the RPT ratio per cent. If the member’s salary changes during the qualifying period, it is still the salary at date of disability that is reported.

• Salary effective date: This is the date that the salary at DOD became effective. For example, it could be the most recent salary revision date, the date of a merit increase, the start date of a temporary assignment, etc.

• Termination of LTIP pension accruals: This is the last day that the LTIP benefit is payable or the date on which the member’s employment ends, whichever is earlier. For example, when an employee retires but continues to receive LTIP benefits, his or her retirement date is the date on which LTIP pension accrual ends.

• Termination reason: When the member’s LTIP pension accrual is to end, the employer must provide the reason the accrual should stop. Examples include: return to full time work, retirement, resignation or termination of the LTIP benefit by the insurance carrier.

Important! Rehabilitative Employment: If the member is on rehabilitative employment, as approved by the insurance carrier, the employer continues to pay both the employer and member pension contributions for this period.

Financial and data reconciliation

The Finance and Controllership Branch of the Shared Services Bureau (SSB) administers all the LTIP pension accruals for members in the Ontario Public Service. Contribution payments are sent to OPTrust every quarter, based on the escalated salary rate in effect at the start of the calendar year. In February, SSB provides OPTrust with data on the escalated salary rate and contributions for the previous calendar year. This information is then loaded into OPTrust’s member database in time for the Annual Pension Statements to be produced.

LTIP procedures

Note! The employer is responsible for confirming that the member is eligible to receive LTIP benefits and arranging to continue remitting pension contributions to OPTrust.

The following steps are internal employer procedures specific to the Ontario Public Service. This process is not administered by OPTrust.

1. Confirm that the member’s LTIP claim has been approved

The employer must get written confirmation from the insurance carrier that LTIP has been approved.

2. Complete the LTIP Pension Accrual Tracking Form

The employer must complete the LTIP Pension Accrual Tracking form. This form must be submitted to Ontario Shared Services, along with the insurance carrier’s written confirmation that the LTIP claim has been approved, to the following address: