YOUR OMERS PENSION - Legislative Assembly of Ontario · investors a portfolio of infrastructure assets including a nuclear power plant, marine ports, a satellite company, oil and

YOUR OMERS PENSIONA handbook for members with a normal retirement age of 60

Printed March 2011

Disponible en français

IMPORtaNt!

This handbook is a summary of the defined benefit provision

of the OMERS Primary Pension Plan for members with a

normal retirement age of 60. In this booklet, we refer to the

OMERS Primary Pension Plan as the “OMERS Plan.”

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 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 Plan

text, the OMERS Act, 2006 and Plan text will govern.

OMERS Primary Pension Plan Registration Number: 0345983

addItIONal VOlUNtaRY CONtRIbUtIONS (aVCs)

The additional voluntary contribution provision is part of the

OMERS Primary Pension Plan (“Primary Plan”) and is subject

to the conditions established by the OMERS Administration

Corporation pursuant to Section 47 of the Primary Plan. The

Primary Plan and such related conditions may be amended

in the future in accordance with the OMERS Act, 2006 and

the Pension Benefits Act (Ontario).

YOUR INfORMatION IS SECURE

Personal information is collected for pension

administration purposes by OMERS under the authority

of Section 35 of the OMERS Act, 2006. OMERS does not

share your personal information with any other person

other than for purposes of pension plan administration,

and your provision of personal information is consent to

use it for those purposes. The collection, use, retention

and destruction of personal information are subject to

our Privacy Policy at www.omers.com. Any questions

regarding the collection of personal information should

be directed to OMERS Client Services at 1-800-387-0813.

WElCOME tO OMERS

OMERS exists for one purpose: to provide lifetime

retirement income for our 409,000 members across

Ontario. Your OMERS membership is backed by some

of the best pension and investment professionals in

Canada – all working toward providing you with

competitive benefits at a reasonable cost.

This handbook covers the defined benefit provision of

your OMERS Plan membership.

For information about the AVC option, see the booklet

Consider the AVC Option and the Terms of Participation.

YOUR OMERS PlaN

OMERS is one of Canada’s largest pension plans – operated by and for employees of more than 930 municipalities, school boards, libraries, police and fire departments, and other local agencies across Ontario.

OMERS is a defined benefit pension plan that is funded by equal contributions from employers and members, and by OMERS investment earnings.

In 2010, OMERS Sponsors Corporation approved contribution rate increases and benefit changes. • Information about current contribution rates is on page 8. Further contribution rate increases are scheduled for 2012 and 2013.

• Information about benefit changes (effective 2013) for members who leave their employer before they are eligible for an early retirement pension is on page 42.

addItIONal VOlUNtaRY CONtRIbUtIONS (aVCS)

As of January 1, 2011, OMERS accepts additional voluntary contributions (AVCs). The AVC option is a new retirement savings and investment opportunity, and as part of the OMERS Plan, it is exclusive to OMERS members. Information about the AVC option is in the guide, Consider the AVC Option and the Terms of Participation, available at www.omers.com, or contact OMERS Client Services at 1-800-387-0813.

GREat ValUE

An OMERS Plan pension is an important factor in helping you to enjoy a financially secure retirement. It will provide you with regular monthly payments when you retire as an OMERS Plan member. These continue for the rest of your lifetime.

Together with government retirement benefits and personal savings, your OMERS Plan pension is a key source of your retirement income.

Being an OMERS Plan member is great value for your money. OMERS provides:• a lifetime pension benefit, based on your earnings and

years of service• early retirement options • a “bridge” benefit when you retire (payable until you

reach age 65)• inflation protection• options if you leave your employer• excellent survivor benefits• disability benefits.

OMERS Plan contribution rates are competitive within the public sector and represent excellent value for the future. In fact, an OMERS Plan member’s contributions plus interest are typically repaid in the first three to five years of retirement. OMERS Plan contributions also lower your taxable income.

The contributions you make, together with matching contributions from your employer, fund about 30% of the OMERS Plan pension benefit you receive when you retire. The balance (about 70%) is paid by the investment earnings of the OMERS Fund.

HOW dOES OMERS HElP fUNd MY bENEfItS?

OMERS is one of the largest investors in Canada. Our highly skilled investment team manages a diversified global portfolio of stocks and bonds, as well as real estate, infrastructure and private equity investments.

Five investment entities operate under the OMERS Worldwide brand:• Oxford Properties Group, which oversees and manages

real estate for OMERS and on behalf of its co-owners and investment partners;

• borealis Infrastructure, which has developed with other investors a portfolio of infrastructure assets including a nuclear power plant, marine ports, a satellite company, oil and gas pipelines and health-care diagnostic services;

• OMERS Private Equity, which manages global funds as well as direct interests in private companies;

• OMERS Capital Markets, which is responsible for a portfolio of fixed income and equity investments in financial markets around the world; and

• OMERS Strategic Investments, which was established to support and extend the global reach of Oxford, Borealis and OMERS Private Equity.

For more information on OMERS investments, please visit www.omers.com.

1T A B L E O F C O N T E N T S

Section 1 at Your Service 3

There are many ways to reach us 4

Section 2 Membership 5

When do I join the OMERS Plan? 6

When do I become entitled to a benefit? 6

What happens if I previously participated in the OMERS Plan? 7

What happens if I previously participated in another pension Plan? 7

Section 3 Contributions 8

How we calculate the contributions you make 9

OMERS Plan contributions and the CPP 10

35-year limit 10

Section 4 Service 11

What is credited service? 12

What is eligible service? 14

Increasing your credited service 14

tablE Of CONtENtS

2 Y O U R O M E R S P E N S I O N

Section 5 Retirement 18

What can I do to prepare for retirement? 19

When can I retire? 19

What if I continue to work past age 60? 20

What if I return to work after I retire? 20

When is my pension paid? 20

OMERS and the CPP 21

The building blocks of an OMERS plan pension 22

Early retirement pensions 24

Section 6 Inflation Protection 25

How is my pension protected against inflation? 26

How does OMERS inflation protection work over the long term? 26

Section 7 disability benefits 27

What if I become disabled? 28

Disability waiver (earn pension while on disability) 28

Disability pension (receive pension while permanently disabled) 29

Section 8 leaving Employment 31

What are my options? 32

When do my pension benefits become “locked in”? 34

Commuted value during grievance 34

Section 9 Survivor benefits 35

What happens if I die before retirement? 36

What happens if I die after retirement? 38

Section 10 OMERS and Income tax 40

Contributions to OMERS 41

Does being an OMERS member affect my RRSP room? 41

Section 11 temporary benefit Calculation Changes 42

Benefit calculation changes 43

Inflation protection (pre-retirement indexing) 43

Early retirement subsidies 44

Section 12 Glossary 45

3A T Y O U R S E R V I C E

OMERS is the pension leader because our team

consists of experienced pension professionals. Whether

you reach one of our Client Services representatives,

attend one of our many presentations around the

province, or sign in to our secure website, myOMERS,

you’ll be getting the information you need to fully

understand and make the most of your OMERS Plan

membership. And, you can take comfort in our quick

service turnaround – whether it’s processing a benefit

or answering your questions.

Section 1 at YOUR SERVICE


tHERE aRE MaNY WaYS tO REaCH US

PhoneMonday to Friday, 8 a.m. to 5 p.m.

416-369-2444

1-800-387-0813

fax416-369-9704

1-877-369-9704

MailOne University Ave.

Suite 800

Toronto ON M5J 2P1

Email [email protected]

(en français ou en anglais)

Webwww.omers.com

myOMERS – the key to your pensionSign up to view your pension information online, including your annual

Pension Report, and try out our online tools – the Buy-back Estimator and

Retirement Income Estimator.

Visit www.omers.com and click on

5M E M B E R S H I P

Section 2 MEMbERSHIP

This is where it all begins. Here is some basic

information for new members as well as people who

are considering joining the OMERS Plan. In this

section, you’ll find details about our membership

criteria and when members become entitled to an

OMERS Plan benefit.


WHEN dO I jOIN tHE OMERS PlaN?

Full-time employees join the OMERS Plan immediately when they are hired.

Non-full-time employees join immediately or when they become eligible.

full-time employeesIf you’re a permanent, full-time employee, you join the OMERS Plan on the date

you are hired 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 employeesYou’re a non-full-time employee if you work less than a full workweek, or less than a

full year, or on a fixed-length, non-permanent contract basis. (This includes 10-month,

contract or seasonal workers.)

If you don’t work full-time, 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.

If you don’t have to join the OMERS Plan as a condition of employment, you 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 year’s maximum pensionable earnings (YMPE) –

the Canada Pension Plan (CPP) earnings limit.

Once you become a member, you remain in the OMERS Plan as long as you work for

your current OMERS employer. This applies even if your work hours or income fall

below the eligibility requirements, or if your work status changes to or from full-time.

WHEN dO I bECOME ENtItlEd tO a bENEfIt?

You begin to earn a pension, and you become entitled to a pension benefit,

immediately when you join the OMERS Plan.

7M E M B E R S H I P

WHat HaPPENS If I PREVIOUSlY PaRtICIPatEd IN tHE OMERS PlaN?

If you left your pension benefit in the OMERS Plan when you left your previous

OMERS employer, you have the option to merge your previous service with the

service you are currently earning.

WHat HaPPENS If I PREVIOUSlY PaRtICIPatEd IN aNOtHER PENSION PlaN?

You may be able to transfer into the OMERS Plan from another public or private

sector registered pension plan. This would bring your previous service into the

OMERS Plan and increase the OMERS Plan pension you’re beginning to earn.

(See “Increasing your credited service,” page 14.)


Section 3 CONtRIbUtIONS

Your OMERS Plan pension is partially funded by the

contributions you make, and by matching contributions

made by your employer. The balance is paid for by

OMERS investment earnings.

9C O N T R I B U T I O N S

HOW WE CalCUlatE tHE CONtRIbUtIONS YOU MakE

You and your employer contribute equally to the OMERS Plan – based on your

earnings. We use your regular “contributory” earnings – excluding additional

amounts such as overtime pay and most one-time, lump-sum payments – to calculate

your contributions.

In turn, we use these same contributory earnings when we calculate your OMERS

Plan pension. The earnings we use may differ from what your employer reports for

income tax purposes on your T4.

Periodically, contribution rates are adjusted to reflect the actual cost of the benefits

you earn and to keep the OMERS Plan fully funded.

OMERS Plan contribution rates in 2011 are:

8.9% on earnings up to $48,300*

14.1% on any earnings over $48,300*

* You contribute to the Canada Pension Plan (CPP) up to the year’s maximum pensionable earnings (YMPE) – the CPP earnings limit ($48,300 in 2011).

OMERS Plan contribution examples for 2011

EarningsOMERS Plan contributions every two weeks(matched by your employer)

$50,000 $176.75

$75,000 $312.33

$100,000 $447.91

You and your employer’s matching contributions help to fund your pension. Your

benefit is based on a formula that takes into account your earnings and years of

service. (See “How we calculate your OMERS Plan pension,” page 22.)


OMERS PlaN CONtRIbUtIONS aNd tHE CPP

As the table shows on page 9, you pay less on earnings up to the YMPE ($48,300

in 2011), and a higher amount on earnings above this limit. This is the CPP earnings

limit – you contribute to CPP up to this limit. The OMERS Plan contribution rate is

lower up to the CPP earnings limit because OMERS and CPP are designed to work

together to provide combined pension benefits at an affordable cost. (See “The

building blocks of an OMERS Plan pension,” page 22.)

35-YEaR lIMIt

If you reach 35 years of credited service – the maximum service in the OMERS Plan –

you and your employer stop making contributions to the OMERS Plan. Your employer

will continue to report your annual earnings for OMERS to use in the calculation of

your “best five” earnings (see page 23).

11S E R V I C E

Section 4 SERVICE

Your years of service are a key component of your

OMERS Plan pension. While you work for an OMERS

employer, you earn service in the OMERS Plan.

You may also have other types of service that could

help to increase your OMERS Plan pension or help

you to retire sooner.


WHat IS CREdItEd SERVICE?

Credited service is the number of years and months of paid service you have in

the OMERS Plan. The maximum amount of credited service a member may have

is capped at 35 years.

We use your years of credited service and your earnings to calculate your pension.

Credited service includes periods of time for which: • you contributed to the OMERS Plan (and have not had a refund of contributions); • you earned pension during a contribution holiday (an OMERS Plan surplus period

when contributions are not required); • you purchased leaves or previous service; • you transferred funds from another pension plan; and • you earned pension while on an OMERS-approved disability leave from your

OMERS employer.

Credited service does not include service for which your contributions were refunded.

full-timeIf you work full-time, you earn one year of credited service for every full year

you work.

full-time credited service exampleMelinda works a standard 40-hour full-time schedule. She earns $70,000.

We calculate Melinda’s credited service for one year as follows:

2,080 hours = 1 year

Melinda has earned one year of credited service. We record her earnings for that year as $70,000.

13S E R V I C E

Non-full-timeIf you don’t work full-time, 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 – giving you the equivalent of full-time earnings.

Non-full-time credited service exampleMike works 20 hours a week, compared to Melinda’s standard 40-hour full-time

schedule (see page 12). Mike earns $35,000, which is half of Melinda’s annual salary

rate of $70,000 for her position.

We calculate Mike’s credited service for one year as follows:

1,040 hours ÷ 2,080 hours = 0.5 years

Mike has earned half a year of credited service.We record his annualized earnings for that year as $70,000.

When we calculate Mike’s pension, we use his credited service and the average of his

annualized earnings – to ensure that his pension is accurate and fair.


WHat IS ElIGIblE SERVICE?

Eligible service is service with any OMERS participating employer that isn’t credited

service. Although this doesn’t increase your normal retirement pension, it can help

bring you closer to an unreduced early retirement pension. We add your eligible

service to your credited service when we calculate your early retirement pension

factor. (See “Early retirement pensions,” page 24.)

Examples include:• summer-student work with an OMERS employer;• service that was refunded when you left an OMERS employer;• unpurchased pregnancy/parental leave since December 1990 (not other types of

unpurchased leave); and• unpurchased waiting periods.

You may be able to purchase some eligible service, converting it into credited service.

(See “Increasing your credited service,” below).

tell us if you have eligible serviceYour credited service and any eligible service is listed on your annual Pension Report.

If you think you have eligible service that is not on your OMERS Plan record, let us

know as soon as possible.

INCREaSING YOUR CREdItEd SERVICE

You may have some OMERS Plan service or other service that doesn’t currently count

as credited service. If so, you may be able to purchase this service and convert it into

credited service. This would increase your pension and it may also help you to retire

earlier without a reduction.

transferring service from another pension planYou may have belonged to another registered pension plan before you joined

the OMERS Plan. If you still have a benefit remaining in that plan, you may be

able to transfer the service into the OMERS Plan, which will increase your OMERS

Plan pension.

OMERS has transfer agreements with many other public sector pension plans.

In addition, OMERS can accept transfers from private sector pension plans.

15S E R V I C E

OMERS also has provisions enabling you to purchase past periods of employment in

private sector pension plans.

buying leave periodsAs an OMERS Plan member, you may buy the service you didn’t earn during leave

periods such as: • pregnancy/parental leave;• authorized leave of absence (including compassionate and reservist leave);• emergency, family medical, and organ donor leave periods;• reservist leave period of postponement; and • self-funded leave.

When you return from a leave period, you have the option of buying all, some or

none of the service for that period. Your employer will provide you with your options

and will calculate the cost for you.

Should I buy a leave period?It’s up to you. Weigh the cost of purchasing the leave period against how much it

will increase your OMERS Plan pension. If you prefer, talk to your employer and/or

a professional financial adviser.

For an estimate of what your pension will be – with and without the service purchase –

please contact us.

Purchase deadline: You have until December 31 of the year following the

year in which your leave ended. After that, you can purchase the service as a

buy-back, at a cost reflecting the present-day value of the future benefit. This is

typically more expensive. (See “Purchasing previous service,” page 16.)

If you buy a leave period before the purchase deadline, your contributory earnings

will count towards your “best five” earnings. (See “Key components of your pension

calculation,” page 23.)


Purchasing previous servicePurchasing previous service (a “buy-back”) also increases your credited service,

which increases your pension and may help you to retire earlier without a reduction.

You may be able to purchase some or all of your:• shortfall in transferred service – when the amount you transferred into the OMERS

Plan didn’t buy the same amount of OMERS Plan service;• leaves you didn’t purchase before the purchase deadline; • eligible service with an OMERS employer – including a waiting period or previously

refunded service;• waiting period or refunded service with the registered pension plan of another

Canadian public sector employer; or• post-1991 waiting period or post-1991 refunded service with the registered

pension plan of a Canadian private sector employer.

17S E R V I C E

To purchase these types of service, you pay the present-day cost reflecting the full

value of your additional future pension benefit. You can buy past service any time –

as long as you’re still working for an OMERS employer, or within 30 days after the

date you leave your employer or retire.

The OMERS Plan offers several buy-back payment options: • You can pay the full cost of the buy-back in one lump sum (by personal cheque,

transfer from an RRSP/LIRA, transfer from another registered pension plan, or

retiring allowance); or • You can arrange to pay over 12, 24 or 36 months through a monthly payment

plan; or • You can pay using a combination of a lump sum for a portion of the buy-back and

the monthly payment plan for the balance.

OMERS monthly payment plan can make it easier to manage a buy-back than

paying in one lump sum. Payments are made through monthly pre-authorized debit

withdrawals from your bank account. Service is credited as your monthly payments

are received.

keep in mind...Payment options depend on the service you wish to purchase.

Purchase deadline: The cost of the past service you want to buy will remain in

effect for six months (or up to 30 days after the date you leave your employer,

if this happens first). After that, we must recalculate the cost, which increases

with your age and your salary, and reflects the increasing value of the benefit.

buy-back EstimatorIf you are a registered myOMERS user, you can get a quick estimate of the cost of

buying service using the online Buy-back Estimator in myOMERS at www.omers.com.

Service purchases and income taxPurchasing leave periods or past service can affect your RRSP room. The Income Tax

Act governs the service you can buy and the methods of payment. It also determines

whether a maximum purchase limit applies and whether contributions lower your

taxable income.


Section 5

REtIREMENt

This is what you’re working towards: your life after

work. OMERS has both normal and early retirement

options. Find out how we bring together your OMERS

Plan service and earnings – the two key components

used to calculate your OMERS pension – to provide

you with retirement income for life.

19R E T I R E M E N T

WHat CaN I dO tO PREPaRE fOR REtIREMENt?

• Visit www.omers.com for comprehensive information about retirement planning

to help you prepare for your life after work.• If you are a registered myOMERS user, try the Retirement Income Estimator to help

you predict what your retirement income will be from the OMERS Plan and

government benefits.• You can also contact OMERS Client Services directly for information.

WHEN CaN I REtIRE?

Most OMERS members have a normal retirement age of 65. Some police and

firefighter members have a normal retirement age of 60.

Many of our members choose to retire early, before their normal retirement age.

Normal retirement dateYour normal retirement date is the last day of the month in which you reach age 60.

Your OMERS Plan pension begins the first day of the month following the month

you retire.

Your employer will advise OMERS of your planned retirement, and will ask you to

complete the necessary forms to begin your pension.

Early retirement dateYou can retire any time up to 10 years before your normal retirement age. This means

from age 50, you can begin to receive an OMERS Plan pension regardless of how

much service you have.


WHat If I CONtINUE tO WORk PaSt aGE 60?

If you continue to work for an OMERS employer past your normal retirement date,

your active membership in the OMERS Plan will continue. However, you must start

receiving your pension by December 1st of the year in which you reach age 71. At

that time, your monthly OMERS Plan pension will begin whether or not you are still

working, and you will no longer make contributions.

WHat If I REtURN tO WORk aftER I REtIRE?

Some members return to work after they have retired and started to receive their

OMERS Plan pension.

If you begin working 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 OMERS, your status as an active member will continue until the

earliest of the following dates:• November 30th of the year in which you turn 71;• the day you reach 35 years of credited service; or• the day you subsequently retire.

When you subsequently retire, we will combine all your credited service and earnings

and recalculate your pension.

This is an important decision. If you return to work for an OMERS employer, we will

contact you to provide more information.

WHEN IS MY PENSION PaId?

OMERS Plan pensions are paid in equal monthly instalments, deposited in your bank

account on the first banking day of the month. OMERS is one of the few pension

plans that do this; most pay pensions for a month at the end of that month.


OMERS aNd tHE CPP

Your OMERS Plan pension is designed to work with the Canada Pension Plan (CPP)

to help provide stable, combined retirement income at a reasonable cost. Here’s how:

• While you work, you pay a lower OMERS Plan contribution rate on the portion of

your earnings on which you also contribute to CPP (up to $48,300 in 2011). This

reduces the combined cost of your OMERS Plan and CPP contributions. Here are

OMERS Plan contribution rates for 2011:

8.9% on earnings up to $48,300*

14.1% on any earnings over $48,300*

* You contribute to CPP up to the year’s maximum pensionable earnings (YMPE) – the CPP earnings limit ($48,300 in 2011).

• When you retire, your OMERS Plan and CPP pensions provide you with retirement

income. For example, if you retire with 35 years of OMERS Plan credited service,

your combined OMERS Plan and CPP pensions could be 70% or more of your

“best five” years of earnings. After tax, this percentage would be even higher.


tHE bUIldING blOCkS Of aN OMERS PlaN PENSION

Your OMERS Plan pension has two components: a lifetime pension, plus a bridge

benefit that is paid if you retire early and is paid until you reach age 65.

How the OMERS Plan lifetime pension worksAll OMERS Plan members are entitled to receive a lifetime pension, regardless of

when they retire. This is paid for life,

and indexed to increase with inflation

every year.

Members who retire before age 65

will also receive an OMERS Plan bridge

benefit until they reach age 65.

How the OMERS Plan bridge benefit worksThis temporary benefit supplements your OMERS Plan lifetime pension until age 65,

when it is expected your CPP pension

will take over.

The bridge benefit: • will not necessarily be the same

amount as your CPP pension; and • continues to be paid to age 65 even

if you start your CPP pension early

(from age 60).

How we calculate your OMERS Plan pension

Your OMERS Plan lifetime pension + bridge benefit to age 65

2% x credited service (years) x “best five” earnings

less OMERS Plan bridge benefit at age 65

0.675% x credited service (years) xlesser of

“best five” earnings or AYMPE (see page 23)

Equals your OMERS Plan lifetime pension from age 65

OMERSlifetime pension

CPP(unreduced) IN

CO

ME

$

AGE 65

retirement

OMERSbridge bene�t

OMERSlifetime pension

CPP(unreduced)

INC

OM

E $

AGE 65

retirement

AGE 60


key components of your pension calculation “best five” earnings – this is the annual average of the 60 consecutive months during

which your earnings were at their highest. It does not include any overtime pay or

most lump-sum payments.

It may, however, include earnings from a period of service that was transferred in

from another registered pension plan. If you have less than five years of credited

service, we use your actual service to calculate your average earnings. We may

include partial years at the beginning and end of the 60 consecutive months so your

best five earnings could span more than five calendar years.

Note that your employer reports your contributory earnings annually. We calculate

your earnings for a single month by dividing your reported annual earnings by your

total months of credited service reported for that year.

Credited service – this is the number of years you have earned in the OMERS Plan

(including any service you purchased).

aYMPE – this is the five-year average of the year’s maximum pensionable earnings

(YMPE). You contribute to the CPP up to this earnings limit.

keep in mind...There are factors that can affect your OMERS Plan pension amount. For example:• Maximum pension – The Income Tax Act limits how much pension we can pay

from the OMERS Plan. In 2011, this limit is $2,552.22 per year of post-1991

credited service (reached only if your annual earnings exceed $143,163.00). We

pay any pension amount in excess of this limit through a Retirement Compensation

Arrangement – a special fund for this purpose.• Cap on incentive pay (starting in 2011) – If incentive pay is a large percentage

of your earnings, for pension purposes your earnings will be capped at 150% of

contributory earnings calculated before incentive pay. Incentive payments made in

2011 but attributed to a previous calendar year would not be affected.

“Incentive pay” means 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.


EaRlY REtIREMENt PENSIONS

You can retire early if you are within 10 years of your normal retirement age: at least

age 50.

There are two types of OMERS Plan early retirement pension: unreduced

and reduced.

Unreduced early retirement pensionYou qualify for an unreduced pension if you are at least age 50 and: • you have 30 years or more of service; or • your age + service = 85 or more (the “85 Factor”).

An unreduced pension means that your early retirement pension is calculated without

a reduction.

To determine whether you are eligible for an unreduced early retirement pension,

we look at the total of your credited service plus any eligible service.

Reduced early retirement pension (with maximizer provision)If you don’t qualify for an unreduced pension, you may still retire early (from age 50

on) with an early reduced pension.

In this case, OMERS looks at how close you are to your normal retirement age, early

retirement factor (85 Factor), or 30 years of service. This three-point test maximizes

your benefit.

We use a 5% reduction factor, per year, because you are receiving your pension for

a longer period of time.

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 actual years of service.

The 5% per year reduction is pro-rated for part years.

Note: Starting January 1, 2013, benefit calculation changes will affect you if your

employment ends and you are not yet eligible for an early retirement pension (i.e.,

not within 10 years of your normal retirement age). Please see “Temporary benefit

calculation changes,” on page 42, and “Leaving employment/What are my options?”

on page 32.

25I N F L A T I O N P R O T E C T I O N

Section 6

INflatION PROtECtION

Inflation protection is a feature of the OMERS Plan

pension. A pension that is indexed to inflation, like

OMERS, helps retired members keep pace with the

rising cost of living, and adds to your retirement

income security.


HOW IS MY PENSION PROtECtEd aGaINSt INflatION?

Each year, OMERS increases pensions by 100% of the increase in the Canadian

Consumer Price Index (CPI) – up to a maximum increase of 6%. This is measured by

taking the monthly average of the CPI for the 12-month period ending in October

of the year before the increase date. This figure is compared to the monthly average

of the CPI for the 12-month period ending in October of the previous year. OMERS

increases pensions by the percentage difference.

The maximum increase in any year is 6%. If the CPI is greater than 6%, we carry the

excess forward. This can be used in later years when the CPI increase isn’t as high.

OMERS pensions are increased each year on January 1. The increase is pro-rated for

pensions that began within the previous year.

HOW dOES OMERS INflatION PROtECtION WORk OVER tHE lONG tERM?

An OMERS Plan pension of $15,000 today, with an inflation assumption of 2% per

year, would be worth the following in the future, to keep pace with rising prices:

Today $15,000

10 years $18,285

15 years $20,188

20 years $22,289

25 years $24,609

30 years $27,170

A pension that didn’t offer inflation increases would still be $15,000.

Note: Starting January 1, 2013, benefit calculation changes will affect you if your

employment ends and you are not yet eligible for an early retirement pension (i.e.,

not within 10 years of your normal retirement age). Please see “Temporary benefit

calculation changes,” on page 42, and “Leaving employment/What are my options?”

on page 32.

27D I S A B I L I T Y B E N E F I T S

Section 7 dISabIlItY bENEfItS

OMERS isn’t just about your life after work – it’s

also about protecting your pension when you can’t

work. We have disability options to help your pension

continue to grow – free of charge – or to help provide

you with income.


WHat If I bECOME dISablEd?

If you are totally disabled:• you may continue to earn OMERS Plan credited service while you remain disabled,

without paying OMERS contributions (this benefit is called a “disability waiver of

contribution”); or • you may be eligible to receive a disability pension, if you are totally and

permanently disabled.

dISabIlItY WaIVER (EaRN PENSION WHIlE ON dISabIlItY)

A disability waiver enables you to continue to earn credited service without contributing

to the OMERS Plan. The OMERS Plan covers the cost of the contributions both you and

your employer would normally make. As well, we will increase the earnings used to

calculate your pension, by the lower of the annual increase in the Average Industrial

Wage (AIW) or the Consumer Price Index (CPI).

The 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 contributions.

The waiver continues until: • you are no longer considered to be totally disabled;• you elect to receive a termination benefit;• you begin to receive a disability pension;• you return to work other than on an OMERS-approved rehabilitation program; • you reach your normal retirement date; • you retire; or• you die.

Qualifying for the disability waiverTo be eligible for the disability waiver, you must meet the definition of totally disabled

in the OMERS Plan, which means that: • you are incapable of doing your own job during the first 24 months of physical

or mental disability; and, thereafter,• incapable of doing any work for which you are, or may reasonably become,

qualified by education, training, or experience.

29D I S A B I L I T Y B E N E F I T S

At any time after your disability waiver benefit begins, you may elect a disability

pension, provided you meet the eligibility requirements. If you are not eligible for

a disability pension, you may be eligible for an early retirement pension. (See “Early

retirement pensions,” page 24.)

dISabIlItY PENSION (RECEIVE PENSION WHIlE PERMaNENtlY dISablEd)

If you become totally and permanently disabled, you may be eligible for a disability

pension instead of a disability waiver.

The disability pension can begin on the later of:• the first day of the fifth month after you become totally and permanently disabled

(normally the end of your disability qualifying period); or • the first of the month following the month you elect a disability pension, if you

have been on the disability waiver.

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 (you may,

at that time, be eligible for an early retirement pension); or• you return to work, other than on an OMERS-approved rehabilitation program.

Qualifying for the disability pensionTo be eligible for the disability pension, you must meet the definition of totally and

permanently disabled in the OMERS Plan, which means that: • you are suffering from a physical or mental impairment;• this prevents you from engaging in any occupation or performing any work for

compensation or profit for which you are, or may reasonably become, qualified

by education, training, or experience; and • which can be expected to last the rest of your lifetime.

How is the disability pension calculated?We use your best five earnings and credited service in the standard OMERS Plan

retirement pension formula to calculate the disability pension (see page 22). Your

disability pension is an unreduced early retirement pension, and it includes the

OMERS Plan bridge benefit until you reach age 65.


OMERS and WSIb limitThere is a limit to the combined disability benefits you can receive from the

Workplace Safety and Insurance Board (WSIB) and the OMERS Plan. The limit is 85%

of your regular contributory earnings immediately before you were disabled. If you

exceed the limit, we must reduce your OMERS Plan disability pension until you reach

your normal retirement date, or until your WSIB benefit stops.

If you become entitled to a WSIB benefit after your pension begins, or if the

amount you are receiving changes (except for cost of living increases), please notify

OMERS immediately.

OMERS and CPP disability pensionThe OMERS Plan disability pension is not affected by any amount that you may

receive from the CPP.

31L E A V I N g E M P L O Y M E N T

Section 8

lEaVING EMPlOYMENt

The reality is that many people change jobs during

their work life. If you leave your OMERS employer,

OMERS offers you a wide range of choices for what

to do with your future pension benefit.


WHat aRE MY OPtIONS?

If you leave your employer and you are not yet eligible for an early retirement

pension (i.e., not within 10 years of your normal retirement age), your employer will

advise OMERS. We’ll send you a Benefit application form with details of your benefit

options. These may include some or all of the five choices outlined below.

Important! Starting in 2013, if you leave your employer and are not eligible for early

retirement, your benefit will be calculated in two parts:• The benefit based on pre-2013 credited service includes pre-retirement indexing

and early retirement subsidies.• The benefit based on post-2012 credited service does not include pre-retirement

indexing or early retirement subsidies.

Please read “Temporary benefit calculation changes” on page 42, for more details

about the changes to the calculation, pre-retirement indexing, and early retirement

subsidies.

1. transfer your benefit to another OMERS employerIf you go to work for another OMERS employer anywhere in Ontario, you may elect

to combine your OMERS memberships – from your former and current employers.

2. transfer your benefit to another registered pension planIf your new employer is another Canadian employer with a registered pension plan,

you may be able to transfer all, or part, of your OMERS Plan credited service to your

new employer’s plan.

OMERS has specific transfer agreements with a number of Canadian public sector

employers’ pension plans. We also have the general ability to transfer pensions to

other registered pension plans in Canada that agree to accept the transfer. For a

current listing of our transfer agreements, and for more information, please visit

www.omers.com.

3. keep your pension with OMERSYou can elect to keep your pension with OMERS as a deferred pension. This gives you

a future stream of OMERS Plan retirement income for life. Your OMERS Plan pension

is inflation-protected, and it includes early retirement options and excellent survivor

benefits.

33L E A V I N g E M P L O Y M E N T

4. transfer your commuted value to a locked-in retirement account

The commuted value of your OMERS Plan pension is the estimated amount of money

you would have to put aside today, to grow with tax-sheltered investment earnings,

to provide you with a future benefit similar to the OMERS pension you’ve earned.

You may choose to transfer your commuted value to: • a locked-in retirement account (LIRA) – this is done as a lump-sum payment to your

financial institution; or• an insurance company to purchase an annuity (providing regular income payments

to you upon retirement); or• another registered pension plan in Canada that can accept the transfer.

5. Elect a cash refund (if your benefit is not locked in)If any portion of your contributions plus interest to your termination date is not

locked-in, you may elect a cash refund of that portion. You may also be able to

transfer the cash refund to your RRSP.


WHEN dO MY PENSION bENEfItS bECOME “lOCkEd IN”?

Under Ontario law, when your OMERS Plan pension is locked in, you must use it as

future retirement income. You cannot cash it out, except in very rare cases.

locking-in ruleYour pension benefit earned after December 31, 1986, becomes locked in when you

have two years (24 months) of OMERS Plan membership (including any service you

purchased or transferred into the OMERS Plan).

Any portion of your OMERS Plan pension benefit that is locked in cannot be cashed

out. If you leave your employer, you will have several options: • keep your pension in the OMERS Plan as a deferred pension; • transfer your commuted value to a locked-in retirement account (LIRA); • transfer your commuted value to another registered pension plan; or • use your commuted value to buy an annuity (available through an insurance

company – it provides regular income payments to you upon retirement).

COMMUtEd ValUE dURING GRIEVaNCE

As of September 1, 2010: If you file a grievance/legal proceeding for termination

of employment, with the intention of being reinstated, you will have the option

of taking a commuted value (CV) benefit. This is in addition to the options of

transferring out your benefit, or starting your OMERS retirement pension.

35S U R V I V O R B E N E F I T S

Section 9 SURVIVOR bENEfItS

Excellent survivor benefits are a key feature of the

OMERS Plan. In the event of your death, OMERS

offers a range of benefits to your spouse, children,

or beneficiaries. This section outlines survivor benefits

that apply before and after retirement.


When an OMERS Plan member dies, survivor benefits are paid according to a

specified order of entitlement that follows the provisions of the Ontario Pension

Benefits Act. Your will cannot change this order, but it does help us to direct any

benefit entitlement to your beneficiary or estate, if you do not have an eligible

spouse or children.

For definitions and more detailed explanations of terms used throughout this

section, please see the glossary, page 45.

WHat HaPPENS If I dIE bEfORE REtIREMENt?

Relationship to you type of benefit

1. Your eligible spouse is first in line for survivor benefits.

Your eligible spouse’s options are:

Spousal pension equal to:• 66 2/3% of the lifetime pension (after the bridge

benefit ends) you earned to the date of death or the date you left your OMERS employer; plus

• a further 10% for each eligible child up to a total of 100% of your lifetime pension.

This pension:• is indexed to inflation;• is guaranteed for life; it does not stop if your surviving

spouse remarries;• does not include the OMERS Plan bridge benefit; and• does not include any pension for a period of credited

service covered by both another plan of your employer and OMERS.

OR

Cash refund or transferThe cash refund (minus income tax) or transfer to a non-locked-in registered retirement savings plan is paid in a lump sum and equals: • the commuted (present-day) value of the pension

you earned since January 1, 1987; plus • any contributions you made before 1987, plus

interest to the date of death; minus • any benefits we previously paid to you, or on behalf

of you.

Note: If your spouse is also your beneficiary, the cash refund may include any 50% Rule refund payable.

37S U R V I V O R B E N E F I T S37 Y O U R O M E R S P E N S I O N


2. If you do not have an eligible spouse, we will pay a survivor pension to any eligible dependent children for as long as they qualify.

Children’s pension equal to:• 66 2/3% of the lifetime pension you earned to the date

of death or the date you left your OMERS employer.

This pension:• is divided equally among your eligible children and

is paid to each child (or to whoever has guardianship of Property for the children). When a child is no longer eligible, we redistribute the pension among your remaining eligible children;

• is indexed to inflation; • does not include the OMERS Plan bridge benefit; and • does not include any pension for a period of credited


Note: In addition to the children’s pension, there may be a 50% Rule refund payable to your beneficiary.

3. If you do not have an eligible spouse or children, your beneficiary on file with OMERS may be entitled to a refund of the commuted value of your pension.

• The commuted value refund is paid in a lump sum (minus income tax) and equals:

– the commuted (present-day) value of the pension you earned since January 1, 1987; plus

– any contributions you made before 1987, plus interest to the date of your death; minus

– any benefits previously paid to you, or on your behalf.

• There may also be a 50% Rule refund payable.• OMERS needs to have your beneficiary’s name on file. • A person with Continuing Power of Attorney for

Property cannot change your designated beneficiary.

4. If you have no beneficiary on file with OMERS, we will pay the refund of the commuted value of your pension to your estate.

See description in 3 (above).

benefits for a minor child: 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.

38 Y O U R O M E R S P E N S I O N 38S U R V I V O R B E N E F I T S

WHat HaPPENS If I dIE aftER REtIREMENt?


1. Your eligible spouse is first in line for a survivor pension.

Spousal pension equal to:• 66 2/3% of the lifetime pension (after the bridge

benefit ends) you were receiving at the date of death; plus

• a further 10% for each eligible child up to a total of 100% of your lifetime pension.

This pension: • is indexed to inflation;• is guaranteed for life; it does not stop if your surviving

spouse remarries; • does not include the OMERS Plan bridge benefit; and • does not include any pension for a period of credited


2. If you do not have an eligible spouse, we will pay a survivor pension to any eligible dependent children for as long as they qualify.

Children’s pension equal to the greater of:• 66 2/3% of the lifetime pension you were receiving

at the date of death; or • the survivor pension your spouse was receiving at

their date of death, less any additional amount that was being paid for the eligible children.

This pension:• is divided equally among your eligible children and

is paid to each child (or to whoever has guardianship of Property for the children). When a child is no longer eligible, we redistribute the pension among the remaining eligible children;

• is indexed to inflation; • does not include the OMERS Plan bridge benefit; and • does not include any pension for a period of credited


39S U R V I V O R B E N E F I T S


3. If you do not have an eligible spouse or children, your beneficiary on file with OMERS may be entitled to a residual refund.

• The residual refund (minus income tax) is the total of your OMERS contributions with interest, minus any pension paid to you and/or your survivors.

• OMERS needs to have your beneficiary’s name on file.• A person with Continuing Power of Attorney for

Property cannot change your designated beneficiary.

Note: After five years of retirement, most members have received pension payments equal to their contributions plus interest, so there may not be a residual refund.

4. If you have no beneficiary on file with OMERS, we will pay any residual refund to your estate.

See description in 3 (above).

benefits for a minor child: 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.


Section 10 OMERS aNd INCOME taX

Being an OMERS member brings with it some tax

implications. For instance, the contributions you

make to the OMERS Plan lower your taxable income,

and the benefit you earn reduces your RRSP room.

41O M E R S A N D I N C O M E T A x

CONtRIbUtIONS tO OMERS

Your regular contributions to the OMERS Plan lower your taxable income. Your

employer reports your contributions to the Canada Revenue Agency (CRA) on a T4

slip each year. Amounts you contribute to buy a leave period or past service may also

be used to lower your taxable income.

dOES bEING aN OMERS MEMbER affECt MY RRSP ROOM?

Yes. A pension adjustment (PA) reflects the deemed value of the pension you earned

as an OMERS Plan member during the preceding year. Your employer reports your

PA in box 52 of your T4 slip.

The Canada Revenue Agency uses your PA in their formula to calculate your new RRSP

contribution room for the current year:

18% xprevious year’s earned income

(up to a maximum)–

previous year’s PA (up to a maximum)

(but not less than $0)

After you file your tax return, the Canada Revenue Agency sends you a Notice of

Assessment, which includes a statement of your RRSP contribution room for the year.

You may make an RRSP contribution up to this amount, or carry it forward, within

limits, for use in a future year.


Section 11 tEMPORaRY bENEfIt CalCUlatION CHaNGES

Important information: Starting January 1, 2013, if

your employment ends and you are not yet eligible for

an early retirement pension, i.e., not within 10 years of

your normal retirement age, changes in how benefits

are calculated will affect you.

43B E N E F I T C A L C U L A T I O N C H A N g E S

bENEfIt CalCUlatION CHaNGES

Starting January 1, 2013, benefit calculation changes will affect you if your

employment ends and you are not yet eligible for an early retirement pension. To be

eligible for an early retirement pension, you must be within 10 years of your normal

retirement age (age 50 for normal retirement age 60).

If you are not eligible for early retirement, your benefit will be calculated in two parts:• The benefit based on pre-2013 credited service includes pre-retirement indexing

(inflation protection) and early retirement subsidies (including the OMERS Plan

bridge benefit).• The benefit based on post-2012 credited service does not include pre-retirement

indexing or early retirement subsidies.*

INflatION PROtECtION (PRE-REtIREMENt INdEXING)

Pre-retirement indexing is the inflation protection we apply to your benefit from the

date you leave your employer until the date your pension begins.

The pre-2013 portion of your benefit will have this pre-retirement inflation

protection, whether you leave your benefit in the OMERS Plan (as a deferred pension)

or transfer the commuted value out of the OMERS Plan.

The post-2012 portion of your benefit will not have this pre-retirement inflation

protection.

Inflation protection after pension payments begin remains unaffected.

*Please read the “Note” on page 44 about the bridge benefit.


EaRlY REtIREMENt SUbSIdIES

The elimination of “early retirement subsidies” will affect your benefit calculation for

service earned after 2012, and the amount of your OMERS Plan bridge benefit.

Currently, if you leave your employer before you are eligible for early retirement,

you may eventually become eligible for an unreduced early retirement pension,

when your age + service = 85 (the “85 Factor”), or if you have 30 years of service.

Otherwise, the early retirement pension is reduced. If you retire early, you also receive

OMERS bridge benefit until you reach age 65.

(More about the bridge benefit is on page 22. Early retirement pensions [reduced and

unreduced] are covered in greater detail on page 24.)

Starting January 1, 2013, your benefit will be calculated in two portions:• 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 85 Factor, 30 years of service, or your normal

retirement age. (This is the “subsidized” reduction.)• OMERS 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 (“unsubsidized” reduction).

• Note: If you retire at age 60, you would receive OMERS bridge benefit until age

65, for five years after your normal retirement age. This five-year portion of the

bridge benefit will still be included in your post-2012 portion. For example, if you

start your pension before age 60, the bridge benefit for post-2012 service will be

actuarially equivalent to the bridge benefit otherwise payable from age 60.

45g L O S S A R Y

Section 12 GlOSSaRY

50% Rule refund – if, when you leave your employer, retire or die, the contributions

you made since January 1, 1987, plus interest, are greater than 50% of the

commuted value of your pension earned from January 1, 1987, we will refund the

excess to you, your beneficiary or estate.

average Year’s Maximum Pensionable Earnings (aYMPE) – the five-year average of

the year’s maximum pensionable earnings (YMPE).

“best five” earnings – used to calculate your pension, this is the annual average of

the 60 consecutive months during which your earnings were at their highest.

Credited service – the number of years and months of paid service you have in the

OMERS Plan (including any service you purchased).

disability pension – a pension payable to eligible members who are totally and

permanently disabled.

disability waiver – a benefit that enables eligible members who are totally disabled

to continue to earn credited service without having to make contributions to the

OMERS Plan. Employers don’t have to make their matching contributions, either.

Early retirement date – the date when you become eligible to receive an OMERS

Plan pension, regardless of how much service you have. You reach this date when

you are within 10 years of your normal retirement age – age 50.


Eligible dependent child – OMERS considers an eligible child to be: • a natural child; or • a legally adopted child; or • a person whom a member has demonstrated a settled intention to treat as a child

of his or her family (except under an arrangement where the child is placed for

valuable consideration in a foster home by a person having lawful custody).

At the time of the member’s death the eligible child must be dependent on the

member for support and:• 18 years or younger in the year of the member’s death; or • under age 25* and a full-time student; or • totally disabled.

* If the member died before January 1, 2005, the eligibility period ends at age 21.

Eligible service – service with any OMERS participating employer that isn’t credited

service. It is added to your credited service to calculate your early retirement

pension factor.

Eligible spouse – the surviving spouse of a deceased member may be eligible

for a benefit if he or she was either the legal spouse or the common-law spouse

of the member.

Legal spouse – OMERS considers a “legal spouse” to be one who is legally

married to the member.

Common-law spouse – OMERS considers a common-law spouse to be one

who has lived together with the member in a conjugal relationship:• continuously for a period of not less than three years; or• in a relationship of some permanence if they are the natural or adoptive

parents of a child, both as defined in the Family Law Act (Ontario).

On and after April 23, 1998, OMERS considers a same-sex spouse to be

eligible if the common-law or legal spouse criteria are met.

Living separate and apart – whether two persons are “living separate and

apart” is often complicated to assess. It is a question of both fact and law

and must be determined on a case-by-case basis. The determination may

require the assistance of a lawyer.

47g L O S S A R Y

Pre-retirement – OMERS considers the surviving legal or common-law spouse

of a deceased member to be the eligible spouse if:• the member and the spouse were not living separate and apart at the date

of the member’s death; and • the spouse did not waive rights to survivor benefits from the OMERS Plan.

Post-retirement – determining the eligible spouse of a retired member

is more complex. Please see survivor definitions at www.omers.com or

contact OMERS Client Services.

locked-in (pension) – under Ontario law, when your OMERS Plan pension is locked

in, you must use it as future retirement income. You cannot cash it out, except in very

rare cases. Your pension benefit earned after December 31, 1986, becomes locked in

when you have two years (24 months) of OMERS Plan membership (including any

service you purchased or transferred into the OMERS Plan).

Maximum pension – the Income Tax Act limit to how much pension we can pay from

the OMERS Plan. In 2011, this is $2,552.22 per year of post-1991 credited service.

The limit is reached only if your annual earnings exceed $143,163.00.

Normal retirement date – the last day of the month in which you reach age 60.

OMERS Plan bridge benefit – a temporary benefit that supplements the OMERS

Plan lifetime pension until age 65.

OMERS Plan lifetime pension – the pension all OMERS Plan members are entitled

to receive, regardless of when they retire. It is paid for life.

Unreduced early retirement pension – you qualify for an unreduced pension

if you are at least age 50 and: • you have 30 years or more of service; or • your age + service = 85 or more (the “85 Factor”).

Year’s Maximum Pensionable Earnings (YMPE) – the Canada Pension Plan (CPP)

earnings limit ($48,300 in 2011).

NOtES

XX-COC-XXXXFPO

Documents

YOUR OMERS PENSION - Legislative Assembly of Ontario · investors a portfolio of infrastructure assets including a nuclear power plant, marine ports, a satellite company, oil and