Merging Previous and Current OMERS Service

Now that you have returned to work for an OMERS employer, you must decide whether to merge the service you earned before with what you're earning now. Merging your previous and current service may or may not help you to retire with more pension – it's an important decision. 

In this information page, we cover some of the issues you should consider before making your decision to merge your service or not, and we tell you what to do if you want to proceed. 

Some background facts…

$56,440 – the current five-year average (2016-2020) of the Canada Pension Plan’s (CPP) annual earnings limit. You contribute to the CPP up to its earnings limit ($58,700 in 2020).

Will your present earnings grow more than inflation?

Your deferred pension may grow to match inflation increases every year. If your present earnings are growing enough:

• to equal or better than guaranteed inflation protection, and
• to make up for the higher bridge benefit when you retire,

it may be better to merge your previous and current service, and to have these earnings apply to both.
 

How long do you intend to work?

If you merge your service, and then work for less than 60 months (this time), we'd have to use some of your earlier earnings to make up the difference when we calculate your overall pension. If your earnings now are higher, this could reduce the pension you're earning now and increase the pension you earned before. The net result for you could vary.
 

Is it worth paying back your 50% Rule refund?

When you left your previous employer and elected to leave (defer) your pension in OMERS, you were entitled to a refund of any excess contributions you made. If you want to merge your earlier and current service – to combine your OMERS pensions – you must pay back your 50% Rule refund (if any), with interest. Will the amount you pay back to merge your service be offset by an increase to your overall pension? It depends on your personal circumstances and the factors we've discussed, above.

You can repay your 50% Rule refund in one of two ways:
 

1. Transfer of RRSP funds (not tax-deductible)

If you want to repay your 50% Rule refund using RRSP funds, ask the financial institution that holds your RRSP for a Form T2033. Complete the sections you are instructed to and return the T2033 along with your 50% Rule repayment form to your employer. 

The transfer of RRSP funds must be in the exact amount required to repay your 50% Rule refund. (We can't accept any overpayment.)
Note: The amount you transfer from your RRSP is not tax-deductible, since it's going straight into OMERS (from one tax-sheltered plan to another).
 

2. Cash (tax-deductible)

If you use cash, the entire amount you pay is tax-deductible. However, there are different rules for repaying the portion of the 50% Rule refund that relates to service from 1987-1989. 

You make your cheque payable to OMERS. OMERS will provide you with an income tax receipt, which you must file with your income tax return to get the deduction.

If you don't merge your service, each period will be kept separate and will be based on an average of your highest earnings during each period. Your earnings from the earlier period may not be as high, and your combined pension may be less than if it were merged. You keep your 50% Rule refund.