Divestment Pension Transfers Question & Answers
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Information Surrounding Pension Transfers for Divested OPSEU Members
OPSEU members who are still working and who may have pension contributions with more than one pension plan (OPT, HOOPP and/OMERS) have been sent, or will be sent over the next two months, information packages about their eligibility to combine their pensions in their current pension plan. This opportunity is being offered on a one time basis only.
This option is not currently available to members who are retired or terminated. We are hopeful that it will be made available in 2015, however, this has not yet been confirmed.
Employees from the former Brockville Psychiatric Hospital and the former Hamilton Psychiatric Hospital who are still working should receive a letter indicating that their elections are being put on hold while OPSEU is working with OPT and HOOPP regarding some potential additional options. This group will receive further information about their options as it is available. Please consult with your local union stewards, executive and/or president for further details.
Below are Questions and Answers you might have. Part A is applicable to all affected members. Part B is only applicable for members who have a pension with the OPTrust.
This package provides general information only. Please contact the pension plan(s) directly for more detailed information and explanations concerning individual circumstances. In addition, members are strongly encouraged to seek independent financial advice.
Information applicable to all affected (Part A)
Why am I receiving a package of information?
A number of years ago, when your job was divested, your pension was split between two pension plans. This may be a disadvantage to you when you retire. First, you may have two different eligibility dates for retirement, in addition, the amount of pension you will receive, could be less.
The Government of Ontario has enacted legislation that will allow a transfer from your original pension plan, into your current pension plan. Because of this legislation, you are receiving the current package of information that gives you the information you need to make a decision. This is a one-time opportunity and only allows you to transfer your service to your current pension plan; the legislation does not allow you to transfer service into your original pension plan. You must make you decision by the due date as this is a one-time opportunity.
What do I have to decide?
You are being given the opportunity to amalgamate your entire pension into one plan. Currently, your pensions are split between two plans. You must weigh all of the information that is given and decide which situation is best for you. Is it best for you to keep your pensions separate or to transfer all of your service and have it in your current pension plan? It may be best for you to consult with an independent financial advisor to make this decision. An independent financial advisor is someone who will look at your entire financial picture, including what you are hoping to do when you retire, and give you advice on what is best to do in your situation. Because this person is independent they are not employed by a bank, or other financial services company, trying to sell you something such as an RRSP. In order to receive their advice, you will likely have to pay for their services. To find someone who is a registered financial advisor, refer to the Financial Advisors Association of Canada’s website (http://www.advocis.ca/home.html) and click on “Find an Advisor”.
What if I don’t make a decision, or don’t respond?
If you do not respond by the due date, your pension will remain as it is now, split between the two pension plans. This means that when you retire, in order to receive a full, unreduced pension, you must retire after BOTH eligibility dates given to you by the pension plans. Once retired, you will receive two pensions, one from each pension plan. Following retirement, there will be different rules regarding inflation protection, the pension your spouse will receive, and guarantees for how long your beneficiaries will receive a pension (if applicable).
If I decide to not do anything right now, can I change my mind in the future?
No, this is a one-time opportunity. You must respond by the due date listed on your transfer package. If you do not respond, your pension will remain split between the two pension plans. You will not have a future opportunity to do this transfer.
Why are we not being given the opportunity to transfer back to the original pension plan?
While this is something that labour may have advocated for, the Government of Ontario did not take this advice when enacting the legislation. Under the legislation in the Pension Benefits Act of Ontario, the transfer is only allowed one way into your current pension plan.
Is it best to transfer my service into one plan?
There is no right answer to this question, and this answer is entirely based on your particular situation. It is likely a very good idea to get independent financial advice. An independent financial advisor is someone trained to look at your entire financial picture, including what you would like to do in retirement, and give you advice on what might be best for your particular situation.
All of my colleagues are doing one thing, should I do the same thing?
Not necessarily. It is very important for you to look at your particular circumstances and make the decision best for you. If your decision happens to be different than most of your colleagues, that’s ok. Everyone’s situation is different and it is important to do what is best for you, and that may be different than what is best for others.
Can I transfer some of my service, but still leave some in my original plan?
No. You can transfer either all or none of your service.
In my transfer package, there is a “top up”, what is this?
This is an amount that the new pension plan needs in order to establish all of your service in their plan.
Why is there a “top up”?
Your original pension plan is holding a certain amount of money in trust for you to pay your pension when you retire. This amount is based on your average salary at the date of divestment, age, marital status and all of the different benefits of that particular pension plan. Your current pension plan has different benefits, and your pension is based on your current salary. They have calculated an amount they need to pay your pension based on ALL of your years of service rather than those just from the date of divestment. If it turns out that your current pension plan needs more than your prior pension plan is holding for you, then there is a “top up” required to establish all of your service in your current plan. The top up is the difference between the amount your current pension plan needs and the amount your prior pension plan is holding in trust for you.
Do I have to pay the “top up”?
No. You can choose to pay the top up, but it is not mandatory. If you choose not to pay the top up, your pension will be based on lesser years of service, and will therefore be a lesser amount. Your information package advises you the amount of your monthly pension if you choose to pay the top up and if you choose not to pay the top up.
Can I pay part of “top up”?
Yes. If you pay for only part of the top up, your pension will be more than if you pay none, but less than if you pay the whole top up.
Can I transfer money from my RRSP to pay for the “top up”?
Can I pay for the “top up” in the future, if I decide not to pay for it now?
Please contact your current pension plan for details as rules will differ between the plans.
I was divested from the Victoria Order of Nurses and work for a CCAC. Can I transfer my pension from the VON Pension Plan to HOOPP?
Under the current transfer agreement no, however, the pension plans are working on a separate agreement for those of you in this situation. Stayed tuned for information likely in the new year regarding a transfer agreement.
I believe I should be eligible, but haven't received an information package yet. What should I do?
Contact your current pension plan to ensure they have your correct mailing address. Information packages are being sent to those eligible by the end of October. If you haven't received information by then, contact your current pension plan to see why you haven't received information.
If you work for the Royal Ottawa Health Centre (previously Brockville Psychiatric Hospital) or St. Joseph's Care Group - Hamilton (divested from Hamilton Psychiatric Hospital) and are represented by OPSEU, we have asked HOOPP to delay sending you information, because we are looking at additional options for you. Please contact your local stewards, executive or president for information regarding this.
Information applicable to those who have pensions with the OPSEU Pension Trust only (Part B)
If I transfer my service out of the OPSEU Pension Plan will I still have access to the post-retirement benefits offered by the Government of Ontario when I retire?
No. The post-retirement benefits are only available if you are receiving a pension from the OPSEU Pension Plan and you meet the other eligibility criteria. If you transfer your service out of the OPSEU Pension Plan, you will no longer be eligible for the benefits.
Earlier this year I heard about an announcement by the government that will change the cost and eligibility for benefits for Government of Ontario employees – does this affect me?
Yes, assuming the changes announced are implemented. The changes announced do affect all of the members of the OPSEU Pension Plan. If someone begins to receive a pension after 2016, then they will have to pay for 50% of the cost for the benefits. As to the eligibility criteria, if you currently qualify for the benefits, if you leave your pension with the OPSEU Pension Plan, you will continue to qualify for the benefits under the changes announced. The eligibility criteria will change for those who don’t qualify for benefits before 2017 only. Assuming you already qualify, the changes announced regarding eligibility will not affect you.
If I retire after 2016, how much will the benefits cost?
The cost of the benefits changes each year. Based on the current premiums, someone who chooses single benefits will have to pay $800 per year (approximately $70 per month); for someone who chooses family benefits the cost is $1,500 per year ($125 per month).
Is there anything that can be done to counter the attack of the government on the benefits? I worked hard for these benefits and I feel that I earned them as part of my compensation.
The changes that were announced earlier this year have not yet been enacted into legislation; the government solely announced their intention to legislate the change. OPSEU has asked all affected members to write to the premier about their discontent; if you haven’t already done so, we would encourage you to do this now. In addition, OPSEU is consulting legal counsel and we plan to fight the changes if the government moves to enact the legislation. However, we believe in hoping for the best and planning for the worst. So in this decision, and planning for your retirement, we are advising you to plan to pay 50% of the cost.