Case Studies

Case Study 1

Judd is working for a local municipality when he becomes a firefighter and his normal retirement age changes from 65 to 60. He is 45 years old and has 21 years of credited service in the OMERS Primary Pension Plan (OMERS Plan).

How does this affect Judd?

  • For future service, Judd’s employer would deduct contributions at the higher normal retirement age 60 rate.
  • For past service, OMERS would apply an adjustment (25% reduction or 5.25 years) due to the normal retirement age conversion.
    • Judd would now have 15.75 years of normal retirement age 60 credited service (21 – 5.25 = 15.75 years).
    • OMERS would send Judd a package detailing the service adjustment, the cost to restore the service adjustment and an election form and instructions. Judd can buy none, some, or all of the 5.25 years of service.
  • If Judd buys the service adjustment he will have 5.25 more years of normal retirement age 60 credited service.
  • If he doesn’t buy the service adjustment:
    • He will have 15.75 years of credited service plus 5.25 years of eligible service.
    • He can request an updated cost and buy the 5.25 years of service anytime before he retires.
    • The cost to buy the 5.25 years of service will change as Judd gets older:
      • Generally speaking, the cost will increase as he approaches the age he becomes eligible for an unreduced normal retirement age 60 pension (Note 1). At this point, the cost starts to decrease and reduces to zero around the age he is eligible for an unreduced normal retirement age 65 pension (Note 2).
      • The cost is based on a number of variables, including Judd’s age and salary and the actuarial assumptions in effect at the time the calculation is performed. A change to any of these variables may increase or decrease the cost.
    • If Judd is an active member when there is no cost to buy the service adjustment, OMERS automatically restores the credited service.
  • Buying the service adjustment is similar to buying insurance. If Judd buys the service adjustment, the credited service is added to his record immediately with the purpose of paying a higher benefit in the event of his death, retirement, disability or termination from his OMERS employer. However, if he continues to work to a point when the cost would have otherwise reduced to below what he paid or the cost may even reduce to zero, there would be no refund of his payment.

Case Study 2

Jane, a civilian working for the local police department, becomes a police officer and her normal retirement age changes from 65 to 60. She is 40 years old and has 11 years of credited service in the OMERS Plan.

How does this affect Jane?

  • For future service, Jane’s employer would deduct contributions at the higher normal retirement age 60 rate.
  • For past service, OMERS would apply an adjustment (25% reduction or 2.75 years) due to the normal retirement age conversion.
    • Jane would now have 8.25 years of normal retirement age 60 credited service (11 – 2.75 = 8.25 years).
    • OMERS would send Jane a package detailing the service adjustment, the cost to restore the service adjustment and an election form and instructions. Jane can buy none, some, or all of the 2.75 years of service.
  • If Jane buys the service adjustment she will have 2.75 more years of credited service.
  • If she doesn’t buy the service adjustment:
    • She will have 8.25 years of credited service plus 2.75 years of eligible service.
    • She can request an updated cost and buy the 2.75 years of service anytime before she retires.
    • The cost to buy the 5.25 years of service will change as Jane gets older:
      • Generally speaking, the cost will increase as she approaches the date she becomes eligible for an unreduced normal retirement age 60 pension (Note 3). At this point, the cost starts to decrease and reduces to zero around the date she is eligible for an unreduced normal retirement age 65 pension (Note 4).
      • The is based on a number of variables, including Jane’s age and salary and the actuarial assumptions in effect at the time the calculation is performed. A change to any of these variables may increase or decrease the cost.
    • If Jane is an active member when there is no cost to buy the service adjustment, OMERS automatically restores the credited service.
  • Buying the service adjustment is similar to buying insurance. If Jane buys the service adjustment, the credited service is added to her record immediately with the purpose of paying a higher benefit in the event of her death, retirement, disability or termination from her OMERS employer. However, if she continues to work to a point when the cost would have otherwise reduced to below what she paid or the cost may even reduce to zero, there would be no refund of her payment.

Note 1 Jane will have an 85 Factor unreduced normal retirement age 60 pension at age 57. 
Note 2 Jane she will have 30 years of service* and she will be eligible for an unreduced retirement age 65 pension at age 59. 
Note 3 Judd will have 30 years of service* and will be eligible for an unreduced normal retirement age 60 pension at age 54. 
Note 4 Judd will be eligible for an unreduced normal retirement age 65 pension at age 55. 
*Includes credited plus eligible service.