Employer Manual

Overview

This section provides employers with detailed information on the pension data requirements of the OPSEU Pension Trust. It describes key pension data reports, components and requirements, including the data files used by OPTrust and the format in which they should be presented.

We have also provided procedures for submitting the various data reports and samples showing the required file formats and layouts.

Unless stated otherwise, the information and procedures set out in this section apply to all employers that participate in the Plan.

Contacts for employers

For any questions regarding pension data reporting or data file formats, employers should contact OPTrust’s Data Management Group directly.

Data Management Group

The Data Management Group (DMG) is responsible for service, contribution and payroll data submitted by employers.

Contact DMG by email: EmployerService@optrust.com

Important! Email messages sent to this address are not encrypted. Do not send confidential member information via unsecured email. Please use this email address for general inquiries only.

Data requirements

Employers must report member pension data to OPTrust. The operating default is a biweekly update. However, employers can discuss alternate arrangements with the Data Management Group directly. At a minimum, the data that must be reported includes each member’s pension contributions. Other member pension data (salary and employment updates) may be reported either as they change or on a predetermined timeline (i.e. every quarter), by arrangement with the Data Management Group.

OPTrust's current pension administration system is capable of automating a number of transactions, including:

• basic client information (name, date of birth, marital status)

• address information (at onset, clients maintain their own updates going forward)

• work details (start and end dates, standard hours, ratio of full-time equivalency)

• leave of absence details (type, start and end dates, date of disability, if applicable)

• salary information (base, rate, start and end dates)

• contribution details (regular, buyback, pensionable hours)

• termination information (effective date)

For information on the file format and transmission requirements, contact the Data Management Group directly.

Pensionable salary

Under the OPSEU Pension Plan (the Plan), the member’s salary is used in several important calculations:

• The Plan requires that current service contributions be deducted and remitted to OPTrust based on the member’s pensionable salary and the Plan’s contribution formula.

• The member's earned pension benefit is calculated based on an average of the member's highest 60 sequential months of salary based on the annual full-time salary rate.

• The member’s pensionable salary is also used in calculating the cost of contributions for the purchase of past service (“buybacks”).

• Finally, the member’s quarterly pensionable salary based on their final pre-retirement annual salary rate is used in determining the ”maximum quarterly re-employment earnings” for employed or re-employed retired members.

Definition

Under this definition, “pensionable salary” has the following attributes. It:

1. must be paid to the member

2. must be measured in terms of regular periods of time

3. includes, in addition to regular pay, any periodic payments paid on a regular basis as a permanent component of pay for a position

4. excludes fringe benefits and bonuses, unless they are paid regularly and computed by reference to hours, days, weeks or other specific periods of time; these benefits cannot be ad hoc or unexpected, they must be a regularly recurring payment

5. includes all earnings paid at regular rates for all hours up to full-time hours

6. cannot include overtime, which is interpreted as being wages paid at a rate greater than the regular rate

7. includes any other amount determined to be part of “salary” by OPTrust’s Board of Trustees.

Application

In applying the above policy, pensionable salary is defined as including:

• regular earnings/base wages, including market value adjustments and yearly increases that may vary but regularly occur each year (e.g. merit pay)

• payments for vacation when taken as a leave with pay

• allowances that are paid regularly

• retro earnings

• compensating time

• sick pay deemed to be regular wages

• permanent salary notes (e.g. for specific training/certification)

• isolation pay

• ongoing long service pay

• statutory holiday pay.

Although a member employed on a full-time basis may be in receipt of reduced wages under the short-term sickness plan or due to a self-funded leave, pension contributions are calculated on the full-time salary.

Payments not included in pensionable salary

Under the OPSEU Pension Plan, pensionable salary does not include:

• overtime (paid at rates exceeding regular rates)

• severance pay

• one-time payments

• reimbursement for expenses incurred

• lump-sum vacation payments in lieu of leave with pay

• 4 per cent vacation pay in lieu of leave with pay

• any payment in lieu of benefits provided by the employer

• payments not regularly paid

• shift premiums.

Reporting employment earnings for a retired member

The definition of pensionable salary above must also be used to calculate the post-retirement earnings that are reported to OPTrust on the Retired Member Quarterly Employment Earnings Report (OPTrust 1008) for retired members who are receiving a pension while they are working for an employer that contributes to the Plan. It is important to note that retroactive salary related to pre-retirement employment should not be reported.

Contribution formula

Under the OPSEU Pension Plan, members and employers are required to make pension contributions to OPTrust. The pension deductions are calculated based on the Plan’s contribution formula, which reflects the following factors:

• the member’s pensionable earnings per pay

• the member's annualized salary

• the member and employer contribution rates as prescribed by the Plan

• the Year’s Maximum Pensionable Earnings (YMPE) as prescribed under the Canada Pension Plan (CPP).

The OPSEU Pension Plan is integrated with the CPP. As a result, members and employers pay a lower contribution rate to the Plan for that portion of the member’s pensionable salary up to the current YMPE. CPP integration also affects the member’s pension benefit. At age 65, the member’s OPTrust pension will be reduced to reflect the lower contributions paid to the Plan for earnings that are also covered by CPP.

Effective Dec. 3, 2009, the OPSEU Pension Plan's sponsors approved a 3 per cent increase in the employers and members' contribution rates, which were phased in over three years. Contribution rates increased by 1 per cent of salary starting in January 2010, another 1 per cent in January 2011 and again in 2012.

OPTrust contributions are paid on an "annualized" basis. This means the annual contributions will be calculated based on the member's regular salary rate, then divided by the number of pay periods in the year to arrive at the contribution required to be paid on a biweekly basis. As a result, all members with a salary over the YMPE will pay a portion of the 'Under YMPE' and 'Over YMPE' rates on each biweekly contribution (even if the earnings are under the YMPE).

How to calculate employee/employer contributions

Employers should use the following payroll deduction method to calculate required contributions for all OPTrust members (full or part-time, unclassified, contract, seasonal, etc.).

Step 1: calculate annualized salary Step 2: calculate earnings per pay Step 3: calculate contributions below the YMPE Step 4: calculate contributions above the YMPE Step 5: calculate total OPTrust contributions by adding totals from step 3 and step 4 ('below YMPE' and 'above YMPE' portions)

Example: To calculate employee/employer contributions for a full-time member in 2016:

The following example illustrates the member and employer contributions payable for an employee who earns an annual pensionable salary of $70,000. This example is based on the Plan's normal contribution rate and the YMPE for 2023 ($66,600).

Step 1 Annualized full time salary: $70,000

Step 2 Earnings per pay $70,000 ÷ (365.25 ÷ 14) = $2,683.02

Step 3 Contributions below the YMPE are calculated as follows:

contributions at 9.4% = [earnings per pay x (YMPE x 9.4%)] ÷ annualized full-time salary

*use the lesser of the member's annualized salary or YMPE

Therefore, the biweekly contributions below the YMPE are:

[$2,683.02 x ($66,600 x .094)] ÷ $70,000 = $239.95

Step 4 Contributions above the YMPE are calculated as follows:

contributions at 11% = [earnings per pay x (annualized earnings - YMPE) x 11%] ÷ annualized full-time salary

Therefore, the biweekly contributions above the YMPE are:

[$2,683.02 x ($70,000 - $66,600 x .11] ÷ $70,000 = $16.86

Step 5 Total OPTrust pension contributions

Employer: $239.95 + $16.86 = $266.81

Employee: $239.95 + $16.86 = $266.81

Example: To calculate employee/employer contributions for an unclassified member for 2016:

The following example illustrates the member and employer contributions payable for an unclassified employee who earns $27.20 an hour based on a 40-hour work week. This example is based on the Plan's normal contribution rate and the YMPE for 2023 ($66,600). For the pay period the employee worked 74 hours.

Step 1 Annualized full time salary: $27.20 x 80 x 365.25 ÷ 14 = $56,770

Step 2 Earnings per pay $27.20 x 74 hours = $2,012.80

Step 3 Contributions below the YMPE are calculated as follows: contributions at 9.4% = [earnings per pay x (YMPE x 9.4%)] ÷ annualized full-time salary

*use the lesser of the member's annualized salary or YMPE

Therefore, the biweekly contributions below the YMPE are: [$2,012.80 x ($66,600 x .094)] ÷ $56,770 = $221.96

Step 4 The employee's salary is below the YMPE, so we skip step 4 in this example.

Step 5 Total OPTrust pension contributions

Employer: $221.96 Employee: $221.96

Example: To calculate employee/employer contributions for a regular part-time member for 2016:

The following example illustrates the member and employer contributions payable for a regular part-time employee. Annual full-time pensionable salary is $70,000. This example is based on the Plan's normal contribution rate and the YMPE for 2023 ($66,600). The member works part-time at 60 per cent.

Step 1 Annualized full time salary: $70,000

Step 2 $70,000 ÷ (365.25 ÷ 14) x .6 = $1,609.81

Step 3 Contributions below the YMPE are calculated as follows: contributions at 9.4% = [earnings per pay x (YMPE x 9.4%)] ÷ annualized full-time salary

*use the lesser of the member's annualized salary or YMPE

Therefore the biweekly contributions below the YMPE are: [$1,609.81 x ($66,600 x .094)] ÷ $70,000 = $143.97

Step 4 Contributions above the YMPE are calculated as follows: contributions at 11% = [earnings per pay x (annualized earnings - YMPE) x 11%] ÷ annualized full-time salary

Therefore the biweekly contributions above the YMPE are: [$1,609.81x ($70,000 - $66,600) x .11] ÷ $70,000 = $8.60

Step 5 Total OPTrust pension contributions Employer: $143.97 + $8.60 = $152.57 Employee: $143.97 + $8.60 = $152.57

Please see the Forms and Tools section below for a table of historical OPSEU Pension Plan contribution rates.

Missed mandatory contributions

Employers are required to remit pension contributions to OPTrust for all Plan members. This includes contributions for all pensionable earnings, as well as for temporary part-time work arrangements and certain leaves of absence (LOA) where contributions are mandatory under the Employment Standards Act.

Required contributions for regular, temporary part-time work arrangements or LOA service that are not remitted to OPTrust are referred to as “missed mandatory contributions.”

Note: If OPTrust identifies a period of service for which missed mandatory contributions are owed, we will notify the employer of the amount due, including applicable interest. If the required contributions are not remitted on time, additional interest will be calculated. For more information, please see missed mandatory contributions in the Procedures section below.

Causes of missed mandatory contributions

Situations that commonly result in missed mandatory contributions include the following:

1. Administrative error

• The employer did not commence contribution deductions from the member’s payroll effective as of the plan membership date (PMD). The contributions commenced after the PMD, and no catch-up of contributions was made for the missed period.

• The employer failed to remit contributions for a particular period when the member was receiving pensionable earnings. Therefore, pension contributions are insufficient to support the pensionable earnings for the period.

• The employer remitted contributions to the wrong plan, either to the Ontario Pension Board or another Plan in error

2. Salary increase

• Retro Salary – Pension contributions were not deducted on retro salary increases as a result of a grievance settlement or reclassification of job position resulting in a higher salary.

• Top-Up Salary – The member received top-up salary, and no contributions were deducted for the top-up salary portion. The employer is responsible for both employee and employer contributions for the top-up portion.

3. Leave of absence (LOA)

• An LOA (paid or unpaid) that was less than 30 days and the member did not make pension contributions for the period of the leave.

• Maternity Leave of Absence (MAT LOA) when the member elected to make contributions from sub-allowance and no contributions were submitted for the LOA period.

• MAT LOA commencing Jan. 1, 1999, for which the member did not make an election not to contribute. Contributions for periods of statutory pregnancy and parental leaves are deemed to be mandatory under the Employment Standards Act.

4. Temporary part-time work arrangement

• A temporary part-time work arrangement when the member elected to make contributions based on their regular hours during the arrangement and full contributions were not submitted for the arrangement.

• A temporary part-time work arrangement where the member did not make an election or where the employer did not submit the Temporary Part-time Work Arrangement Contribution/Buyback Application (OPTrust 1030) form to OPTrust. During a temporary part-time work arrangement, contributions must continue based on the member’s regular hours unless the member elects in writing to contribute on their reduced hours only during the arrangement.

5. Pension bridging

• When a member has been granted a leave of absence with pay pursuant to a bridging benefit and no contributions were submitted for the bridging period.

6. Long-term income protection (LTIP)

• If the member was on LTIP and contributions are missing for periods prior to 1990. All post-1990 LTIP contributions are based on a salary escalation factor; prior to 1990, contributions are calculated based on the employees’ actual salary rate.

Contribution requirements

The employer is required to remit both the member and employer share of missed mandatory in-service contributions for the following reasons:

• The plan text requires the employer to remit all mandatory contributions. Deduction and remittance of contributions on all pensionable salary are the responsibility of the employer.

• The plan text requires contributions to be remitted within 15 days of credit accrual. Credit accrual is immediate at the Trust for mandatory contribution cases.

• Taxation and T4 implications for regular pension contributions are the responsibility of the employer. Therefore, the member may not remit funds for the missed mandatory period directly to OPTrust.

Procedures

The remittance of missed mandatory contributions can be initiated by either the employer or OPTrust.

1. OPTrust identifies missed mandatory contributions

OPTrust will identify any periods for which the employer has missed mandatory contributions and calculate the total amount to be remitted, including interest. We will then inform the employer of the amounts by uploading a report via the secure Employer Site. OPTrust will allow for a 90-day period from the end of the month in which the missed mandatory invoice is dated, for the Employer to make the remittance. During this 90-day period, OPTrust will continue to provide the Employer with the list of outstanding missed mandatory contributions on a biweekly basis.

At the end of the 90 days, OPTrust will take responsibility for the collection of the outstanding contributions. OPTrust will send a letter to the member requesting payment be made to the Plan. OPTrust will allow 45 days for the member to make the payment.

If the member does not make the payment within 45 days, OPTrust will advise the member that we have closed the case and the member will not be allocated the credit for the period in which the contributions were not provided.

2. Employer remits missed mandatory contributions

The employer may remit the funds or data through the biweekly data feed or by cheque to OPTrust.

• The employer must ensure that both the contributions and the pensionable hours worked for the period are remitted correctly.

• The employer must indicate to OPTrust the payment method and the term of the repayment.

3. OPTrust updates the member’s file

• Once OPTrust receives payment for the missed mandatory contributions (and/or any corrected data), we will update the member’s file to reflect the contributions received.

Important! All cheques are to be made payable to the OPSEU Pension Trust for the full amount due, including both the employee and employer share, as well as all applicable interest. While the member may negotiate directly with the employer on payment terms, OPTrust must receive payment for the full amount of the contributions by the due date. If funds are not remitted on time, a recalculation of interest will be applied.

Payments must be sent by the employer. OPTrust cannot accept direct payment from the member/employee.

Buyback deductions

Currently, under the OPSEU Pension Plan, members may have the option of making buyback contribution payments through a series of payroll deductions. Buyback contributions made through payroll deduction are tracked and reported using one of two methods:

1. OPTrust-administered deductions

OPTrust currently administers buyback contribution deductions for OPS employers that are part of the WIN system. Under this method, OPTrust generates a deduction file (known as the DS file) based on members’ open buybacks and submits this file to be run against the WIN payroll system. The deduction is either completely satisfied or no deduction is taken (this applies to both the member and employer deduction). The employer does not need to track or administer any portion of the buyback.

Deduction methodology:

Deductions are requested for all members with active buybacks, regardless of their current employment status (Active, On Leave or Terminated). If the member is not paid for the period in question, no deduction will be taken. OPTrust will then follow up with the member directly to confirm their status and arrange for a catch-up payment or the recalculation of the remaining payments. Terminated members will be removed from subsequent requests. While this method is designed for the WIN payroll system, the OPTrust-administered deduction file can be modified to meet other system requirements. Please contact OPTrust’s Data Management Group for further details.

Data Management Group

The Data Management Group (DMG) is responsible for service, contribution and payroll data submitted by employers.

Contact DMG by email: EmployerService@optrust.com

Important! Email messages sent to this address are not encrypted. Do not send confidential member information via unsecured email. Please use this email address for general inquiries only.

Codes

Only three deduction codes are required to identify buyback contributions.

• 054 is used for buybacks where the employee is paying both shares of the cost (i.e. special or an educational leave)

• 055 is used for buybacks where the employee is paying their share of the cost (i.e. Non-Contributory buyback)

• 056 is used for buybacks where the employer is "matching" the cost of the employee (i.e. Non-Contributory buyback).

A "matched" buyback does not necessarily mean that the cost for the employee and the employer are the same, as the cost is calculated based on the member and employer contribution rates in effect for the period of service purchased.

2. Employer-administered deductions

Employers that are not part of the WIN system currently use this method for administering buyback contribution payroll deductions. Under this method, OPTrust provides the employer with directions regarding the deduction of member and employer contributions via the OPTrust 1016 form or a secure Employer Site message. These contributions are reported as part of the biweekly data file. The payment schedule established by OPTrust must be adhered to throughout the lifetime of the buyback. Any change may adversely affect the member's credit accrual. Employers should not stop the deductions unless a member has terminated, transferred, retired or died.

Members must contact OPTrust directly to change the deduction amount.

Procedures

Buyback contributions made through regular biweekly payroll deductions are tracked and reported using one of two methods.

1. OPTrust-administered deductions

For employers that are part of the Ontario Public Service WIN system, buyback deduction files are processed as follows:

• OPTrust supplies a biweekly transaction report for inclusion in pay run.

• Pay run: Buyback amounts are deducted from the employees’ biweekly pay.

• Following pay run: The employer submits the payroll data, together with a report of any problems, to OPTrust.

2. Employer-administered deductions

All other employers that are not part of the WIN system must set up buyback deductions for their employees based on documents provided by OPTrust.

• OPTrust sends the employer a copy of the OPTrust 1016 form, or Secure Site Message, advising the employer to set up a schedule of deductions for the employee. This form/message will specify the start date, end date, employee deduction amount, employer deduction amount and number of payments.

• The employer sets up the payroll deductions and remits the buyback contributions and related data to OPTrust as part of the regular biweekly data file.

• The funds for both employee and employer must be remitted at the requested amount.

• The employer must use the appropriate buyback deduction code. For a list of the approved codes, please refer back to the Employee Deduction Codes above.

Note: The employer and employee buyback deduction amounts may differ, depending on the employer and member contribution rates in effect for the period of service purchased.

Important! The buyback deduction method used is not at the discretion of individual Pay and Benefits Representatives. Due to efficiency requirements, the OPTrust-administered option may not be available to all employers. For more information, please contact OPTrust’s Data Management Group.

Data Management Group

The Data Management Group (DMG) is responsible for service, contribution and payroll data submitted by employers.

Contact DMG by email: EmployerService@optrust.com

Important! Email messages sent to this address are not encrypted. Do not send confidential member information via unsecured email. Please use this email address for general inquiries only.

File transmittal

The preferred method for file transmission to OPTrust is via the secure employer site. Batch data files from WIN are excluded. They should be sent via SFTP.

Employers can send secure messages and transmit files over this secure portal. To create an account, please contact OPTrust's Data Management Group directly.

Data Management Group

The Data Management Group (DMG) is responsible for service, contribution and payroll data submitted by employers.

Contact DMG by email: EmployerService@optrust.com

Important! Email messages sent to this address are not encrypted. Do not send confidential member information via unsecured email. Please use this email address for general inquiries only.

Important! To ensure the security of members' pension data, employers should not send data files or other confidential information by unsecured email.

Downloadable forms

We have provided links to downloadable versions of many OPTrust forms, checklists and other tools in Acrobat PDF format. You will need Adobe’s Acrobat Reader to use these forms. If the Acrobat Reader is not installed on your system, see your system administrator or download a free copy.

To use the downloadable forms, simply click on the links below. If your Acrobat Reader is set up to work with your browser, the form will open inside the browser window. Otherwise, you will be prompted to save or open the file; choose Open and click OK to open the form.

Next, enter the required information and print the number of copies you require. Once all the required signatures are complete, submit one copy to OPTrust, provide a copy to the member and keep a copy for your records, as required.