It's Your Pension

Your right to a pension

You become entitled to a pension benefit in the Plan upon enrolment, however, there are rules on when your pension payments can start. Find out more about normal and early retirement options here.

The basic features of your pension benefit

Under the current plan terms

The pension you accrue in the OPSEU Pension Plan:

• is based on

  1. the average annual salary rates for the five sequential years (60 months) that produce the highest average, and

  2. accrued pension service

• is designed to provide a fixed or “defined” monthly amount, calculated in accordance with the plan formula, for your lifetime (see the formula below)

• normally starts at age 65, but you can start anytime after age 55

• may be paid early without a reduction if you qualify for early unreduced retirement options such as Factor 90 or 60/20

• may be paid early with a reduction if you’re 55 or older and do not qualify for early unreduced retirement options

• provides a survivor benefit for your eligible spouse and/or eligible children

• is adjusted for inflation on an annual basis.

Integration of the OPSEU Pension Plan with the Canada Pension Plan

Most working Canadians contribute to the Canada Pension Plan (CPP). When CPP was established in 1966, the decision was made to allow employers to blend or integrate their pension plans with the CPP. Generally, integration means that your contributions to and benefits from the OPSEU Pension Plan are reduced because you are also making contributions to and will receive benefits from the CPP.

How your pension is calculated

The calculation of your pension is a two-step formula as described above. The pension formula appears in your annual pension statement, termination statement and other personalized material. The formula is used to calculate your pension.

The CPP bridge

If you start receiving your pension between the ages of 55 and 65, you will receive the “CPP bridge.” The CPP bridge is part of the pension formula and is one of the ways the OPSEU Pension Plan benefit is integrated with CPP. The CPP bridge is only payable until age 65. At age 65 you qualify for unreduced CPP benefits. If you retire early and are not eligible for early unreduced retirement, the CPP bridge will be reduced.

Your CPP pension

Your CPP pension does not start automatically. You must apply for it through Service Canada. It is also important to note that the actual amount of your CPP benefit is based on the CPP formula and depends on your individual circumstances. Your CPP benefit will not equal the amount of the CPP bridge payable to you from the OPSEU Pension Plan. This means it is possible that your combined pension from the OPSEU Pension Plan and CPP after you turn 65 may be less than the amount you were receiving before you turned 65.

To get more information about your CPP pension, go to the Service Canada website at servicecanada.gc.ca, or call toll-free at 1-800-622-6232.

To get a pension estimate using your personal information, log into Online Services.

Sample pension with CPP bridge

Sally retires at age 63 on August 31, 2016 with the 60/20 factor, an average annual salary* of $60,000 and 20 years of pension service.

• Sally’s pension

  from the OPSEU Pension Plan, effective September 1, 2016:

  $17,130 + a CPP bridge pension until age 65

Both you and your employer contribute to the Plan. These contributions are invested, and it’s the investment returns that pay for your pension. Because this is a defined benefit plan, contributions do not directly determine the amount of your pension; they are pooled with the contributions of other members and invested together.

Employer contributions

Employers make pension contributions for all members of the Plan. Your employer contributes the same amount as you.

Employee contributions

Your contributions to the Plan are based on your salary (this means your regular salary and does not include overtime pay or bonuses). As long as you continue to receive your regular salary, you continue to make contributions to the Plan. Your contributions to the Plan also continue during a paid leave of absence and during temporary part-time work arrangements, unless you elect to make contributions on your reduced hours only.

Just as the calculation of your benefits takes into account that you will receive benefits from CPP, contributions to the Plan are based on a formula that takes into account that you make contributions to CPP at the same time.

The example below shows that your contributions to the Plan are separated into two parts (9.4 per cent and 11 per cent). It shows how your contributions to the OPSEU Pension Plan and CPP are integrated. You contribute a smaller amount to the OPSEU Pension Plan on the portion of your salary up to the Year’s Maximum Pensionable Earnings (YMPE) because you also make contributions to CPP on that portion of your salary.

Under the Plan’s current contribution formula, this is how your contributions are calculated:

9.4 per cent of your salary up to the YMPE plus 11 per cent of your salary above the YMPE.

Example: Member annual contributions

* All calculations use the 2023 YMPE. Actual contributions will vary depending on the YMPE set by CPP annually.

Contributions to CPP

You make CPP contributions on the portion of your salary between the Year's Basic Exemption (YBE) and the YMPE. For 2023, the YBE is $3,500 and the YMPE is $66,600. So based on the example, the portion of salary used for determining the 2023 CPP contribution is $63,100 ($66,600 – $3,500). On this amount you will pay 5.95 per cent of your salary to CPP in 2023.

Tax status of contributions

The regular contributions you make to the OPSEU Pension Plan from your earnings are tax deductible, which means they reduce the amount of employment income you pay taxes on. They are deducted from your pre-tax income and your employer will report them on your income tax slip (T4).

Note: Contributions to CPP are integrated with your contributions to the OPSEU Pension Plan. This means you contribute a smaller amount to the OPSEU Pension Plan on the portion of your salary up the YMPE because you also make contribution to CPP on that portion of your salary.