A Handbook for Members of the OMERS Plan
This handbook is a summary of the defined benefit provision of the OMERS Primary Pension Plan (OMERS Plan). In this booklet, we refer to the OMERS Primary Pension Plan as the “OMERS Plan.”
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The information in this booklet provides a summary of the terms of the OMERS Plan text at the time of publication. From time to time, the OMERS Plan text may be amended by the OMERS Sponsors Corporation. If there is any discrepancy between this information and the Ontario Municipal Employees Retirement System Act, 2006 (OMERS Act, 2006) and the OMERS Plan text, the OMERS Act, 2006 and OMERS Plan text will govern. OMERS Primary Pension Plan Registration Number: 0345983
Your Information Is Secure
Providing OMERS with your personal information is considered consent for its use and disclosure for the purposes set out in our Privacy Statement, as amended from time to time. You can find out more about our collection, use, disclosure and retention of personal information by reviewing our Privacy Statement.
If you have questions about privacy at OMERS, please call OMERS Member Services.
Joining the OMERS Plan
OMERS is aplan, which means you can expect a predictable monthly income for life. Together with government benefits and your savings, your OMERS Plan pension can grow into an important financial asset and play a key role in your financial and retirement security.
Full-time employees
If you’re a permanent, full-time employee (also called), you automatically become a member of the OMERS Plan on the date you are hired by a participating employer, or on the date you become full-time. You remain a member even if you change from full-time to part-time.
Non-full-time employees
You’re a employee if, for example, you work less than a full work week or you are a 10-month, contract or seasonal employee.
You either:
join the OMERS Plan when you are hired (if it is your employer’s policy); or
choose to join the OMERS Plan when you become eligible.
You become eligible and may choose to join if you meet one of the following conditions in both the previous two calendar years with any OMERS participating employer:
you worked at least 700 hours; or
you earned at least 35% of the.
Once you become a member, you remain in the OMERS Plan even if your work hours or income fall below the eligibility requirements, or if your work status changes to or from full-time.
Effective January 1, 2023, the current eligibility rules for non-full-time employees will be removed. This means that all non-full-time employees may elect to join the OMERS Plan at any time. Enrolment in the OMERS Plan would take effect on the first day of the month after the employee's election is received and would remain in place as long as the member continues working with their current employer.
How Your Pension Grows
The more years you have in the OMERS Plan, the larger your pension in the OMERS Plan. OMERS defined benefit formula takes into account your best five consecutive years of earnings (earnings) and service in the OMERS Plan.
OMERS Plan pension formula
Your OMERS Plan lifetime pension + bridge benefit to age 65 equals
2% x credited service (years) x “best five” earnings
Less OMERS Plan bridge benefit at age 65
0.675% x credited service (years) x lesser of “best five” earnings or AYMPE
Equals your OMERS Plan lifetime pension from age 65
The bridge benefit supplements your OMERS Plan lifetime pension until age 65, when it is expected your Canada Pension Plan (CPP) pension will begin. The bridge benefit continues to be paid to age 65 even if you start your CPP pension before age 65.
An OMERS pension earned in excess of the maximum set by the Income Tax Act is paid through the OMERS retirement compensation arrangement (RCA) – a special fund for this purpose.
Service in the OMERS Plan
In the OMERS Plan, there are two types of service.
Credited service
This is the paid service (years and months) you have in the OMERS Plan, including any service you purchased or transferred in. The maximum amount ofyou can have depends on when you reach 35 years of credited service. We use your credited service and your earnings to calculate your pension.
If you’re, you earn one year of credited service for every full year you work.
If you’re, we calculate your credited service as a proportion of what a full-time member would earn. Also, when we calculate your pension, we annualize your earnings.
Effective January 1, 2021, the 35-year cap for credited service will be eliminated. This means that if you have less than 35 years of credited service prior to this date, you can continue to accumulate credited service. If you meet the 35-year cap prior to this date, the limit will continue to apply.
Eligible service
This is service with any OMERS participating employer that isn’t credited service. It can help bring you closer to an unreducedpension; however, it does not change the credited service used in the OMERS Plan pension formula. We add yourto your credited service when we calculate your early retirement pension factor.
Examples of eligible service include:
summer-student work with an OMERS employer
service that was refunded when you left an OMERS employer
unpurchased pregnancy/parental leave
unpurchased waiting periods.
You may be able to purchase some eligible service and convert it to credited service. See “Retire with a Bigger OMERS Plan Pension.”
Have you worked for an OMERS employer, but you were not in the pension plan? Check myOMERS and make sure that period of employment is included with your eligible service. If it isn’t, contact Member Services.
Your Contributions
You will contribute a percentage of your earnings to help pay for your future pension. Your employer will also contribute an equal amount. These contributions will fund a portion of your pension. Investment earnings of the OMERS Fund will fund the balance.
Your contributions to the OMERS Plan lower your taxable income. Amounts you contribute to buy aor past service may also lower your taxable income.
Contributions are lower on salary up to the, and higher on any salary above the CPP earnings limit.
To keep the OMERS Plan fully funded, the OMERS Sponsors Corporation periodically adjusts contribution rates. See OMERS current contribution rates.
Tax Relief
Alike OMERS is a tax-efficient form of saving.
Under the Income Tax Act, the federal government provides you with tax relief on the contributions that you pay into OMERS.
You contribute a percentage of your earnings to help pay for your future OMERS pension.
Your employer deducts these contributions from your gross income, which reduces your taxable income – the amount of income on which you pay taxes. As a result, over the course of the year, the income on which you pay taxes has been reduced by the amount of your pension contributions.
This is like contributing to an RRSP – except that your employer reduces your tax right away, so that you don’t have to wait until you file your tax return to benefit.
Your employer also contributes an equal amount. These contributions are not a taxable benefit – you do not count them as income.
Once you retire and begin collecting your OMERS pension, income tax will be applied to your payments. However, in most cases, it will be at a lower marginal tax rate than when you were employed.
Why Contributory Earnings Matter
While you’re working, you pay OMERS Plan contributions on your regular “contributory” earnings – excluding additional amounts such as overtime pay and most one-time, lump-sum payments. And then when you retire, these same contributory earnings are used to calculate your pension (the “best five” earnings in the OMERS Plan pension formula).
There are two caps on contributory earnings:
Cap on incentive pay – post-2010 contributory earnings are capped at:
• 150% x your contributory earnings before incentive pay “Incentive pay” is earnings related to performance-based bonus payments and similar pay arrangements. Bonus payments for service retention (common in the police/fire sectors) are not considered incentive pay.
Additional cap – total annual contributory earnings are limited to seven times the CPP earnings limit effective:
• January 1, 2014 for members who enrolled on/after January 1, 2014; and
• January 1, 2016 for members who enrolled before January 1, 2014.
Inflation Protection
Inflation protection increases OMERS retirement, disability and survivor pensions each year, based on the increase in the Canadian Consumer Price Index (CPI), as follows:
Benefits earned on or before December 31, 2022 receive full inflation protection, up to a maximum increase of 6%. Any excess is carried forward so it can be used in later years when the CPI increase is less than 6%.
Benefits earned on or after January 1, 2023 are subject to Shared Risk Indexing, meaning that the level of inflation protection will depend on the OMERS Sponsors Corporation (SC) Board’s annual assessment of the financial health of the OMERS Plan.
OMERS and Your RRSP Room
The pension adjustment (PA) on your T4 tax slip is a deemed value of the pension you earned as an OMERS Plan member. The Canada Revenue Agency (CRA) uses the PA from the previous year to calculate your new RRSP contribution room for the current year.
Disability Benefits
The OMERS Plan has a disability waiver benefit and a disability pension.
Disability waiver
While on disability waiver (also called “disability waiver of contributions”), you continue to accumulatein the OMERS Plan, as if you are still working. The OMERS Plan covers your contributions and your employer’s contributions. Earnings used to calculate your pension are increased by the lower of the annual increase in the Average Industrial Wage (AIW) or the Consumer Price Index (CPI).
To qualify for a disability waiver you must beas defined by the OMERS Plan.
The disability waiver begins on the later of:
the first day of the fifth month after you become totally disabled; or
the day after you cease to make regular contributions.
The disability waiver benefit continues until one of these events occurs:
You are no longer totally disabled.
You begin receiving an OMERS Plan disability orpension.
You return to work other than on an OMERS-approved rehabilitation program.
You leave your employer and elect a termination benefit from the OMERS Plan.
You reach your normal retirement date.
Disability pension
If you becomeas defined by the OMERS Plan, you can begin a disability pension. Your disability pension is an unreduced early retirement pension calculated using the “OMERS Plan Pension Formula.”
The disability pension can begin on the later of:
the first day of the fifth month after you become totally and permanently disabled; or
the first of the month following the month you elect a disability pension, if you have been on a disability waiver.
Note: If you are on disability waiver immediately before beginning an OMERS Plan disability pension, the waiver benefit ends when your pension begins, and you will no longer accruein the OMERS Plan.
The disability pension continues until:
you reach your normal retirement date, and your disability pension becomes an OMERS Plan normal retirement pension; or
you no longer meet the definition of totally and permanently disabled; or
you return to work, other than on an OMERS-approved rehabilitation program.
OMERS and Workers Safety Insurance Board (WSIB)
The maximum you can receive from WSIB and the OMERS Plan combined is 85% of your contributory earnings immediately before you were disabled. If you exceed the limit, your OMERS Plan disability pension will be reduced until you reach your normal retirement age, or until WSIB stops.
Shortened Life Expectancy
If, because of an illness or other condition, your life expectancy is less than two years, you may be able to withdraw the cash value of your pension. Once you receive this shortened life expectancy benefit, no further benefit is payable from the OMERS Plan to you, your survivors,or estate.
If you have an eligible spouse, they must provide their written consent for you to withdraw the funds.
Benefit Calculation Changes
Starting January 1, 2013, benefit calculation changes affect you if your employment ends and you are not yet eligible for anpension. That is, if you have not reached your early retirement birthday (55th birthday for65, or 50th birthday for normal retirement age 60), your benefit will be calculated in two parts:
The benefit based on pre-2013includes preretirement indexing (inflation protection) and early retirement subsidies (including the OMERS Plan).
The benefit based on post-2012 credited service does not include pre-retirement indexing or early retirement subsidies (including the OMERS Plan bridge benefit).
These changes apply only if you leave your OMERS employer before your early retirement birthday.
Inflation protection (pre-retirement indexing)
Pre-retirement indexing is the inflation protection we apply to your benefit from the date you leave your OMERS employer to the date your pension begins.
The pre-2013 portion of your benefit will include inflation protection, whether you leave your benefit in the OMERS Plan or transfer the commuted value out. The post-2012 portion of your benefit will not include pre-retirement inflation protection.
Early retirement subsidies
Early retirement subsidies affect your benefit calculation for service earned after 2012 and the amount of the OMERS Plan bridge benefit.
As of January 1, 2013, your benefit will be calculated in two portions: pre-2013 and post-2012.
The pre-2013 portion:
You may eventually qualify for an unreduced pension for the pre-2013 portion, or if not, your early retirement pension will be reduced by 5% per year you’re short of the 90 Factor or 85 Factor, 30 years of service, or your normal retirement age. (This is the “subsidized” reduction.)
The OMERS Plan bridge benefit will be included in the pre-2013 portion.
The post-2012 portion:
This portion no longer includes a possible unreduced early retirement pension. When you eventually begin your pension, the post-2012 portion will be reduced on an actuarial-equivalent basis (an “unsubsidized” reduction).
If your normal retirement age is 65, the OMERS Plan bridge benefit will not be included in the post-2012 portion.
If your normal retirement age is 60, a five-year portion of the bridge benefit (from age 60 to 65) will be included in the post- 2012 portion.
Taking a Leave
Generally, if you take a leave of absence that has been authorized by your employer, you may buy the service for the time you are away and convert it into. This includes both leaves protected by employment standards legislation, for example, pregnancy and parental leaves, and family medical and personal emergency leaves, and non-protected leaves authorized by your employer. The cost of buying the service depends on the type of leave.
For more information on purchasing a leave, including the cost and purchase deadline, visit omers.com or contact Member Services.
Leaving Your OMERS Employer
Depending on your age and the amount of your pension, options when you leave your OMERS employer include:
1.Keep your pension with OMERS
Keeping your pension with OMERS gives you a future stream of retirement income for life.
2.Combine your current and future OMERS pension
If you go to work for another OMERS employer, you may be able to combine your entire pension record under a single membership with your new OMERS employer.
3.Start your OMERS pension
On/after your, you can elect and begin to receive your OMERS Plan retirement pension.
4.Transfer your pension out of OMERS to another pension plan
If you go to work for a non-OMERS employer, you may be able to transfer your OMERS Plan pension into your new employer’s defined benefit registered pension plan (RPP).
5.Transfer the of your OMERS Plan pension to a prescribed savings vehicle, such as a locked-in retirement account
You are eligible to transfer the CV of your pension if you leave an OMERS employer and you have not yet reached your early retirement birthday. But there is a limit to the amount of time you have to transfer your CV after you leave your employer.
If you decide to transfer your CV, you have six months from the date you leave your OMERS employer to elect to do so. If you rejoin the OMERS Plan after making this transfer, you have to wait five years from when you transferred out your CV before you can buy back the associated service.
6.Cash refund (or a tax-deferred transfer to your RRSP) of the CV of your OMERS Plan benefit
If the annual pension you’ve earned is less than 4% of the CPP earnings limit, you may be eligible for a cash refund (or a tax-deferred transfer to your RRSP) of the CV of your OMERS Plan benefit.
Notes:
Effective July 1, 2012, as permitted by law, OMERS elected to be excluded from providing “grow-in” provisions for certain terminating members.
If you file a grievance/legal proceeding for termination of employment, with the intention of being reinstated, the CV option (#5 above) is still available. If you are reinstated, you may repay the benefit to OMERS to re-establish your benefit.
Why your early retirement birthday matters
On/after your early retirement birthday, you are eligible for retirement options – you can retire and begin your OMERS Plan pension – but the CV option (option #5 above) is no longer available. See “Benefit Calculation Changes,” for more details.
Retirement
Normal retirement date
Your normal retirement date is:
age 65 if youris 65 (NRA 65); or
age 60 if your normal retirement age is 60 (NRA 60).
Your OMERS Plan pension begins the first of the month following the month you retire.
You can continue to work and earnin the OMERS Plan past your normal retirement date. However, your OMERS Plan pension must begin on December 1 of the year in which you reach 71, whether or not you are still working, and you will no longer make contributions.
Early retirement
You can elect and begin to receive anpension on/ after your.
There are two types of early retirement pensions: unreduced and reduced.
Unreduced early retirement pension
An unreduced early retirement pension is calculated without a reduction.
You qualify for an unreduced early retirement pension if you have:
30 years or more of service; or
the “90 Factor” if your normal retirement age is 65 or the “85 Factor” if your normal retirement age is 60.
The 90 Factor is:
your age + service* = 90 or more
The 85 Factor is:
your age + service* = 85 or more
Reduced early retirement pension
If you don’t qualify for an unreduced pension, you can still retire but your pension will be reduced by a 5% reduction factor as follows. The reduction factor is pro-rated for part years.
If your normal retirement age is 65, your OMERS Plan pension is reduced by 5% per year multiplied by the least of:
65 minus your age when you retire;
90 Factor minus your current age-plus-service* factor; or
30 years minus your years of service*.
If your normal retirement age is 60, your OMERS Plan pension is reduced by 5% per year multiplied by the least of:
60 minus your age when you retire;
85 Factor minus your current age-plus-service* factor; or
30 years minus your years of service*.
*≠
Returning to Work After Retirement
If you go back to work for an OMERS employer in a position that requires that you enrol, you will be re-enrolled in the OMERS Plan (and your pension will stop) unless you specifically elect to continue receiving your pension and not re-enrol.
If you re-enrol in the OMERS Plan, your pension will stop and you will resume as a continuing member so long as your was less than 35 years as of December 31, 2020.
When you subsequently retire, all your credited service and earnings are combined and your pension is recalculated.
Divorce and Separation
Effective January 1, 2012, OMERS and other registered pension plan administrators in Ontario were required to comply with updated rules related to the valuation and division of the pension benefit in the event of a member's divorce and separation.
More information on the rules is available on the Divorce and Separation section of omers.com or on FSRA's website at www.fsrao.ca.
What Happens to Your Pension When You Die
OMERS Plan survivor benefits are paid according to a set order of entitlement that complies with the Ontario Pension Benefits Act. This order cannot be changed, for example, by a will.
Important! If you joined the OMERS Plan from one of the consolidated City of Toronto plans listed below, and require information on survivor benefits, please contact Member Services at +1 416.369.2670 or +1 866.369.2670.
The Corporation of the City of York Employee Pension Plan (York Plan)
The Toronto Civic Employees' Pension Plan (Civic Plan)
The Metropolitan Toronto Police Benefit Fund (Police Plan)
The Metropolitan Toronto Pension Plan (Metro Plan)
If you die before retirement
Order of entitlement to survivor benefits:
Spouse – Yourcan choose a survivor pension or cash refund.
Children – If there is no pre-retirement spouse, a children’s pension will be paid to any(ren) for as long as they are eligible.
Designated beneficiary – If there is no pre-retirement spouse or eligible dependent child(ren), your designated beneficiary(ies) on file may be entitled to a cash refund.
Estate – If there is no pre-retirement spouse, eligible dependent child(ren), or designated beneficiaries, a cash refund may be paid to your estate.
See “Explanation of Survivor Benefits” below for details on survivor pension, children’s pension, cash refund and residual refund.
Additional refunds
In addition to the OMERS Plan survivor benefits, the following refunds may be payable in the event of death before retirement.
50% Rule Refund
When you leave your employer, retire or if you die before your pension
starts, a test is applied to ensure that your contributions on or after
January 1, 1987 do not exceed 50% of the commuted value (CV) of
your pension over the same period. Any excess contributions will be
refunded to you, your beneficiary or your estate.
Special refund
When the CV of your OMERS Plan pension is greater than the amount needed to fund the survivor benefit for your eligible dependent child(ren), the difference is paid as an OMERS Plan special refund. It is paid to your living designated beneficiaries on file or, if none, to your estate.
If you die after retirement
Order of entitlement to survivor benefits:
Spouse – Your(orif there is no eligible retirement-date spouse) will receive a survivor pension.
Children – If there is no retirement-date spouse or post-retirement-date spouse, a children’s pension will be paid to any eligible dependent child(ren) for as long as they are eligible.
Designated beneficiary – If there is no retirement-date spouse, post-retirement-date spouse or eligible dependent child(ren), your designated beneficiary(ies) on file may be entitled to a residual refund.
Estate – If there is no retirement-date spouse, post-retirement date spouse, eligible dependent child(ren) or designated beneficiaries, any residual refund may be paid to your estate.
Explanation of survivor benefits
Survivor pension
An OMERS Plan survivor pension equals:
66 2/3% of your lifetime pension*
plus a further 10% for each eligible dependent child, up to a total of 100% of the pension you earned.
The survivor pension is guaranteed for life (it does not stop if your spouse remarries) and is indexed for inflation. It does not include the OMERS Plan.
Children’s pension
An OMERS Plan children’s pension equals:
66 2 /3% of your lifetime pension*; or
the survivor’s pension the spouse was receiving at their date of death (less any entitlement for eligible children). A children’s pension is divided equally among the eligible children and is paid to, or on behalf of, each child. When a child is no longer eligible, the benefit is redistributed among the remaining eligible children. It is indexed to inflation, and it does not include the OMERS Plan bridge benefit.
In the case of a surviving child being a minor, benefits of $10,000 or less can be paid to the adult who has custody of the child; benefits over $10,000 are subject to Guardianship of Property rules.
* For death before retirement, this is 66 2 /3% of the lifetime pension you earned to the date of death or to the date you left your OMERS employer. For death after retirement, this is 66 2 /3% of the lifetime pension you were receiving at the date of death.
Cash refund (pre-retirement death only)
The cash is paid in a lump-sum and equals:
the commuted value (CV) of the pension you earned since January 1, 1987; plus
any contributions you made before 1987, plus interest to the date of your death.
A spouse can transfer the cash refund to a non-locked-in registered retirement savings arrangement.
Residual refund (post-retirement death only)
The residual refund is the total of your OMERS Plan contributions plus interest, minus any pension paid to you and/or your survivors.
Note:
After about five years of retirement, most members have received pension payments equal to their contributions plus interest, so there may not be a residual refund.
Naming a designated beneficiary
Only the OMERS Plan member can name a beneficiary or beneficiaries. An executor, estate trustee, power of attorney for property or survivor cannot name or change your designated beneficiary(ies).
Did you know that you can update your beneficiary quickly and easily online? Visit myOMERS today to get started.
Retire With a Bigger OMERS Plan Pension
If you belonged to another pension plan or you worked for an OMERS employer but were not in the pension plan or had an unpurchased leave or cashed out your OMERS pension, you may be able to transfer or buy back that service and convert it to OMERS Plan credited service. This will increase your pension and may allow you to retire earlier without a reduction.
How do I increase my pension?
Transfers
OMERS can accept transfers from most Canadian public and private sector registered pension plans, which may enable you to bring your pension from your previous employer into the OMERS Plan.
Contact Member Services to find out if your pension can be transferred.
Buy-backs
A buy-back allows you to purchase certain past service from your previous or current employer, which increases the amount of service on your record. This added service can help you increase your total pension amount and may be able to help you retire sooner without a reduction to your pension.
If you are unsure if you have service you can buy back, ask yourself the following questions:
Did you work for another OMERS employer?
Did you cash out a pension from a previous employer post-1991?
Did you have an unpurchased waiting period?
Did you take a leave period (e.g., parental leave) with your current OMERS employer but didn’t purchase the period before the deadline?
Did you transfer service from another pension plan into the OMERS Plan that resulted in a shortfall? (i.e., where the amount transferred in didn’t buy the same amount of service in the OMERS Plan)
If you answered “yes” to any of those questions, you may be able to buy back that service.
If you rejoin the OMERS Plan after transferring the commuted value (CV) of your pension out of the OMERS Plan, you will have to wait five years from when you transferred your CV before you can buy back the associated service.
If you think you have service that you can buy back, visit myOMERS and use the Buy-back Costing tool to find out how much it would cost or contact Member Services.
Invest in the OMERS Fund with AVCs
OMERS offers Additional Voluntary Contributions (AVCs), which can increase your savings.
Similar to RRSPs in some ways, AVCs are administered as part of the OMERS Primary Pension Plan but separate from your OMERS Plan defined benefit pension. Funds in an AVC account are invested in the globally diverse OMERS Fund and earn the.
There are two ways to contribute to an AVC account:
Transfer funds from a registered retirement savings vehicle, for example, an RRSP
Automatic contributions by pre-authorized debit or payroll deduction through your employer*, from as low as $40 a month or $20 biweekly (active members only).
Everyone has their own unique retirement goals. AVCs could help you reach yours. Learn more about AVCs.
To open an AVC account, visit myOMERS.com.