Quick Facts about Your Pension
Welcome to the OPSEU Pension Plan (the Plan). You are now part of a defined benefit pension plan which means you will receive a lifetime pension when you retire based on a formula that takes into account your salary and years of pension service. Please keep reading for more information about your pension.
HOW DOES MY PENSION FIT WITH MY RETIREMENT PLAN?
Most financial planners will tell you that you need approximately 60% to 80% of your pre-retirement income to maintain your lifestyle when you retire. Your retirement income will typically include your workplace pension, the Canada Pension Plan (CPP), Old Age Security (OAS) and your personal savings.
- You contribute approximately 10% of your regular salary to the Plan. You do not make pension contributions on overtime pay and bonuses.
- Your pension contributions are tax deductible and reduce your taxable income.
- Your employer matches the pension contributions you make.
- The Canada Revenue Agency requires your employer to calculate and report a PensionAdjustment on your T4 each year, which reduces your RRSP contribution room in thefollowing year.
INCREASING YOUR PENSION
Your pension is calculated based on your years of pension service and the average of your best five sequential years of salary. While you are working, your pension will increase if:
- You transfer in pension service from another pension plan or you buy back service for a periodwhen you worked for your employer but did not contribute to the Plan (e.g. when you took anunpaid leave of absence, were on a contract or worked on a casual basis). Please refer to the Buying Back Pension Pervice section of our website for more information.
- You continue to earn more pension service and your salary increases.
WHEN CAN I REITRE
The normal retirement age in the Plan is 65, but there are early retirement options for long-serving members based on pension service and age. Please refer to the It’s Your Pension booklet on our website for details on how to qualify for early retirement.
WHAT WILL I GET WHEN I RETIRE?
Your pension is calculated based on a formula which takes into account your pension service and salary. Please refer to the It’s Your Pension booklet for details.
Your pension is paid for your lifetime and it is adjusted annually for inflation.
If you retire before age 65, you will receive a temporary bridge benefit that is payable until you turn 65.For more information about early retirement and the temporary bridge benefit, please refer to our It’s Your Pension and Turning Age 65 fact sheet.
The chart below shows some typical examples of the unreduced pension amounts that would be paid to members with different years of pension service and salary ranges who retire in 2023.
HOW DOES MY PENSION FIT WITH MY INVESTMENT STRATEGY?
Most financial planners will tell you that you need approximately 60% to 80% of your pre-retirement income to maintain your preretirement lifestyle. In combination with your expected income from CPP and OAS, consider what remaining income replacement you require, how to best use your remaining RRSP room and whether you require a tax free savings account (TFSA) in retirement.
IF YOU LEAVE YOUR EMPLOYMENT BEFORE RETIREMENT
If you are under the age of 55 you can:
- Defer your pension until you are eligible to retire and start receiving your pension.
- Transfer the value of your pension to your new employer’s pension plan (if the plan permits).
- Transfer the value of your pension to a locked-in retirement account (LIRA), a life income fund(LIF) or use it to puchase an annuity from an insurance company.
If you transfer the value of your pension out of the Plan, no further benefits will be payable to you or your survivors.
For more information about options when you terminate employment, please refer to the Pension options when your employment ends fact sheet available on our website.
When you die, benefits may be payable to your survivors.
- Death before retirement: if eligible, your spouse is entitled to a lump sum amount equal to the value of your pension which may also be taken as an immediate or future lifetime pension.
If you do not have a spouse, your eligible children will receive an immediate pension equal to 60% of your lifetime pension divided equally among them for as long as they qualify, or a lump sum value of the survivor pension.
If you do not have a spouse or eligible children, a lump sum value of your pension is payable to your designated beneficiary(s), or to your estate if you do not have a designated beneficiary.
- Death after retirement: your spouse receives a survivor pension equal to 60% of your pension, payable for their lifetime.
If you do not have a spouse, your eligible children will receive a survivor pension that is equal to 60% of your pension, divided equally among them for as long as they qualify.
If you do not have a spouse or eligible children, a residual balance may be payable to your designated beneficiary(s), or to your estate if you do not have a designated beneficiary.
WHEN CAN I RETIRE?
The normal retirement age in the Plan is 65, but there are early retirement options for long-serving members based on pension service and age.
Please refer to the It’s Your Pension booklet on our website for details on how to qualify for early retirement.