Pension Formula (NOT APPROVED)

Integrating the pension formula with the new “Year’s Additional Maximum Pensionable Earnings” (YAMPE)

As a defined benefit (DB) pension plan, OMERS provides a secure and predictable retirement income based on your years of service and earnings history. That’s not changing. However, the SC Board is looking to update the pension formula in response to changes to the Canada Pension Plan (CPP). 

Current

  • 1.325% of your best five years (60 consecutive months) of pensionable earning up to the Year’s Maximum Pensionable Earnings (YMPE)
Plus
  • 2.0% of your best five years (60 consecutive months) of pensionable earnings above the YMPE
Multiplied by 
  • Your years of credited* service

The YMPE is an amount set by the federal government each year to determine maximum CPP contribution and benefit levels. In 2018, the YMPE is $55,900.

Proposed

  • 1.325% of your best five years (60 consecutive months) of pensionable earning up to the Year’s Additional Maximum Pensionable Earnings (YAMPE)
Plus
  • 2.0% of your best five years (60 consecutive months) of pensionable earnings above the YAMPE
Multiplied by 
  • Your years of credited* service

The YAMPE represents the additional contribution and benefit levels introduced under the enhanced CPP. 

*Credited service: Paid service (years and months) you have in the OMERS Plan.

Rationale

Because the OMERS Plan is integrated with the CPP, and the CPP will be steadily increasing contribution rates and benefits starting next year, the new formula better integrates with the new CPP and will help to keep overall contribution levels from increasing too dramatically.
 
Pension benefits earned for service before the effective date will be based on the current formula. Pension benefits for service after the effective date will be based on the updated formula. Members can expect to earn more with the combined pension (OMERS plus CPP) under the updated formula.

Next: Modify the early retirement subsidies

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