When you leave your OMERS employer, we're here to help you through the process. You will receive a Your OMERS Pension Options package from OMERS.
Your OMERS pension is an important asset in your financial, retirement and estate planning. Review your options carefully. For specific financial advice, we recommend consulting an independent financial advisor.
Return the options form to OMERS as soon as you have made your decision about what to do with your pension.
Your Options When Leaving
If you leave your job with an OMERS employer, you have to decide what to do with the OMERS pension you've built up.
These will include some of the six options as follows:
Keep your pension in the OMERS plan until you retire
This gives you a future stream of OMERS Plan retirement income for life.
Transfer your benefit to another OMERS employer
If 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.
Begin to receive your OMERS pension
You may already be eligible to begin to receive your OMERS pension.
Transfer your OMERS benefit to another registered pension plan
If your new employer is another Canadian employer with a registered pension plan, you may be able to transfer all, or part, of your OMERS Planto your new employer’s plan.
Transfer the (CV) of your pension
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 savings vehicle such as a locked-in retirement account (LIRA) or for the purchase of an annuity from a licensed annuity provider.
Elect a cash refund of the commuted value of your pension if your pension is less than 4% of $58,700*
You can take a cash refund of the commuted value of your benefit if the annual pension you have earned is less than 4% of $58,700*. You may also make a tax-deferred transfer of the cash refund to your RRSP.
*Year’s maximum pensionable earnings (YMPE) in the year you leave your OMERS employer – YMPE for 2020 = $58,700, 4% of $58,700 = $2,348
Early Retirement Birthday
your 55th birthday if youris 65; or
your 50th birthday if your normal retirement age is 60.
Options available when you leave your OMERS employer change on your early retirement birthday.
If you leave your OMERS employer before your early retirement birthday, you are eligible for termination options. This means the CV option (option #5 above) is available. On/after your early retirement birthday, you are eligible for retirement options only – the CV option is not available.
In addition, starting January 1, 2013, benefit calculation changes will affect you if you leave your OMERS employer before your early retirement birthday.
Benefit calculation changes
Starting January 1, 2013, benefit calculation changes will affect you if you leave your OMERS employer before your early retirement birthday.
If you have not yet reached your early retirement birthday when you leave your OMERS employer, 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).
The benefit based on post-2012 credited service does not include pre-retirement indexing or early retirement subsidies.
The benefit calculation changes do not affect you if you leave your OMERS employer:
before January 1, 2013; or
on/after January 1, 2013 and you leave your OMERS employer on/after your early retirement birthday.
Sam has a normal retirement age of 60, 18 years of pre-2013 credited service and 4 years post-2012 credited service and his "best five" earnings used to calculate his pension is $75,000.
His early retirement birthday is March 10 when he turns age 50.
Annual pension amounts include lifetime pension plus bridge benefit to age 65.
1Early retirement subsidies on ALL service.
2Early retirement subsidies only on pre-2012 service.
As an OMERS member who recently left/or may leave your OMERS employer prior to being eligible to retire (age 55 for most members, and age 50 for most police and firefighters), you can leave your pension benefit with OMERS for a future secure pension. This will provide you with a guaranteed source of income for life, and survivor benefits, when you retire.
You also have the option to transfer the Commuted Value (CV) of your pension into a locked-in retirement account (a LIRA, also known as a locked-in RRSP), if you are under the minimum eligible retirement age.
On August 23, 2017, the OMERS Sponsors Corporation (SC) made some changes. These changes include a time limit to transfer the Commuted Value for members who leave their OMERS employer before they are eligible to retire and want to take a CV. The CV information in your Pension Options Form is subject to this Plan change.
This Plan change:
does not affect you if you want to keep your pension with OMERS until you retire and continue to be an OMERS member with a guaranteed source of income for life and survivor benefits
does not affect you if you are entitled to a Commuted Value of small pension and are eligible to take a refund of the value of your OMERS pension
does not affect you if you are transferring your benefit to another defined benefit pension plan
A CV is the present-day value of a future pension benefit. This means it’s 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.
OMERS focus is on long-term Plan sustainability. These changes were made to help streamline administration and avoid a negative impact on the Plan, thereby strengthening sustainability.
If you left your OMERS employer before August 23, 2017, and you do not elect the CV by the date indicated in your final, requested Pension Options Form, the CV option will no longer be available to you.
If you left your OMERS employer on or after August 23, 2017, but before June 30, 2019, you have until December 31, 2019 to elect the CV option. From January 1, 2020 onward, the CV option will no longer be available to you.
If you leave your OMERS employer on or after June 30, 2019, the CV option will only be offered to you once. If you do not elect the CV by the date indicated in your Pension Options Form, the CV option will no longer be available to you.
An OMERS pension provides financial security through a guaranteed source of income, as well as survivor benefits. If you take the CV of your benefit out of OMERS, you are responsible for its investment, and you forfeit all rights to OMERS pension benefits and any future benefit improvements. You can’t reverse your decision.
You will receive whatever amount of income the CV produces in future, including any income generated by its investment – either as monthly payments from an annuity, or as periodic withdrawals from a Life Income Fund (LIF).
A few things to consider when making this decision:
How much future retirement income will you need for your lifetime and will you be able to generate it yourself through investments?
Will there be money left over for your spouse or loved ones if you die?
Are you comfortable with taking on investment earnings fluctuations?
How much investment fees and expenses will you be paying?
Will your CV be subject to excess taxes when you transfer it?
Important Information About Commuted Values
In January 2020, the Canadian Institute of Actuaries (CIA) revised its standards for calculating commuted values (CVs). The revised standards will apply for calculations with an effective date on or after December 1, 2020 where a CV is a payment option. The CIA publishes standards for how CVs are calculated for registered pension plans in Canada. As a registered pension plan, the OMERS Primary Pension Plan (the “Plan”) must comply with these standards when calculating CVs. These changes do not have an impact on a member's pension calculation.
What is changing?
The key modifications to the standards that will impact a member’s CV calculation include changes to the following assumptions:
The revised CV standards could result in a decrease to a member’s calculated CV when compared to current standards. However, the exact impact of the changes to a member’s CV will depend on the member’s situation (e.g., age and how much service the member has) and market conditions at the time of the calculation.
The table below will help you better understand the estimated impact on a CV calculation performed under the upcoming change compared to the current standards for a particular age range:
* CV calculations may be applicable to:
termination events and payment options for members who are not within 10 years of their normal retirement age (NRA) (e.g., before age 50 for NRA 60, before age 55 for NRA 65); and
other events such as: small pension calculations, marriage breakdown applications, pre-retirement deaths, shortened life expectancy applications, and certain transfers out to other pension plans.
Please note the following:
The estimated CV impacts shown above reflect interest rates in effect for October 2020 (as we do not yet know what interest rates will be during, or, after December 2020). The actual impact will depend on the interest rates in effect at the time of your calculation.
The table above is intended for illustrative and general information purposes only and is not intended to provide specific financial or other advice. It should not be relied upon in that regard. If you are considering transferring your CV from the Plan, we encourage you to seek independent financial advice before deciding if this option is right for you.
The defined age ranges were modeled based on a variety of member scenarios (that may be different than yours) to best estimate potential impacts to CV calculations as a result of these standard changes.
Additional information about your Pension Options Form
Your CV will not be recalculated once the CV option is no longer available to you. Due to the Plan change, you may become ineligible for the CV option before your early retirement birthday.
A CV is calculated using standards, as required under the Ontario Pension Benefits Act. These standards, which are set by the Canadian Institute of Actuaries, take into consideration factors including future interest and mortality rates, and inflation. These factors change over time, which is why the Actuarial Standards Board periodically makes changes to the standards to better reflect the current economic value of these benefits. A CV is not determined by investment returns on the pension plan’s assets.
CV option and amount guarantee
If you are entitled to a CV, this option will appear in your Pension Options Form when your employment ends. Your CV transfer option and amount is guaranteed up to the expiry date indicated in your Pension Options Form.
After the expiry date, the CV option may no longer be available, but you may be eligible for other pension options. It is important that you make an informed decision when considering your pension options.
Your CV, taxes and income options
The Income Tax Act (ITA) sets a maximum amount of CV you can transfer, tax-sheltered, to a LIRA. The maximum transfer value is specific to each person, and is based on age and the pension amount. If the CV of your pension exceeds the ITA maximum transfer value, we will refund the excess to you in cash (and withhold income tax).
Once you reach the minimum OMERS retirement age, you can use your LIRA funds to purchase a life annuity or a LIF from an insurance company, bank, or other financial institution.
Your CV amount may be large, but so is the cost of generating future monthly retirement income for your lifetime and, potentially, for your surviving spouse. You will be responsible for the investment of your CV. Keep in mind that investment earnings can fluctuate, and you will likely be paying transaction fees and expenses for your investments.
Life income funds and annuities are sold by a variety of financial institutions and may have many different features. Shop around and carefully check out what you are buying. When you ask for an annuity quote, list the features you have in the OMERS Plan, and the features you want, and compare the annuity quote with the amount of your CV. You may find that features that come standard with your OMERS pension cost extra through an annuity. Since you have a limited window to elect the CV option, it is important to start the process as soon as possible.
Consider enlisting the services of an independent financial adviser – one who will work for you and who will not benefit from your commuted value transfer.
With their help:
Look at your options – leaving your pension in OMERS or transferring your CV out of the Plan (to invest and then perhaps buy an annuity when you retire).
Consider the regular, future retirement income you will receive from OMERS when you retire – that it is payable for your lifetime, that it is fully protected against inflation, and that it includes a 66 2/3% pension for your surviving spouse. What would an annuity provide?
Consider also that if your CV exceeds the ITA maximum transfer value you are taxed on the excess amount, which you must take in cash. The tax amount can be high, and this could make it less likely that your CV will produce a pension equivalent to what you would have earned in OMERS.
Did you know?
If you’re age 55 (or 50 for police and firefighters), you can start your pension.