When you leave your OMERS employer, we're here to help you through the process. You will receive a Your OMERS Pension Options form from OMERS.
Your OMERS pension is an important asset in your financial, retirement and estate planning. Review the information available in the Your OMERS Pension Options form carefully. You can also consult the Member Handbook and omers.com for more information about the OMERS Plan. For specific financial advice, we recommend consulting an independent financial adviser.
Return the Your OMERS Pension Options form to OMERS as soon as you have made your decision about what to do with your pension and remember to keep track of the applicable deadlines to make your decision.
Police and firefighters
If your employment change results in achange, see this section.
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.
Depending on your circumstances, the following options are available:
Keep your pension in the OMERS Plan until you retire
This option is always available and gives you a future stream of OMERS Plan retirement income for life.
Combine your current and future OMERS pension
If you go to work for another OMERS employer anywhere in Ontario, you may be eligible to elect to combine your OMERS memberships from your former and current employers. Note that if your termination date with your former employer is after your enrolment date with your new employer, OMERS may not be able to combine your old and new member records (see our Dual Membership FAQ).
Begin to receive your OMERS pension
If you have reached your early retirement birthday at the time you stop working with an OMERS employer, you may already be eligible to begin to receive your OMERS pension. See below for more details.
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 commuted value (CV) of your pension
The commuted value (CV) 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 CV 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. See below for more details.
Elect a cash refund of the commuted value of your pension if your pension is less than 4% of $66,600*
You may take a cash refund of the commuted value of your benefit if the annual pension you have earned is less than 4% of $66,600*. This is often referred to as a “small pension”. You may also make a tax-deferred transfer of the cash refund to your RRSP.
*The year’s maximum pensionable earnings (YMPE) in the year you leave your OMERS employer. The YMPE for 2023 is $66,600, and 4% of $66,600 is $2,664.
Early Retirement Birthday
your 55th birthday if youris 65; or
your 50th birthday if your normal retirement age is 60.
If you leave your OMERS employer before your early retirement birthday, the CV option (option #5 above) is available. On or after your early retirement birthday, you are eligible for retirement options only; the CV option is not available unless you are eligible for option #6 above.
It is important to remember that as of January 1, 2013, benefit calculation changes affect you if you leave your OMERS employer before your early retirement birthday. Read more in the Member Handbook under the heading “Benefit calculation changes”.
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 many police and firefighters), you may leave your pension benefit with OMERS for a future secure pension. This will provide you with a guaranteed source of income for life when you retire as well as survivor benefits.
If you are not eligible to retire when you leave your OMERS employer, you also have the one-time option to transfer the commuted value (CV) of your pension into a locked-in retirement savings vehicle (such as a locked-in retirement account or “LIRA”).
It is important that you make an informed decision when considering your pension options at the time you receive Your OMERS Pension Options form and that you review the documents you receive carefully.
IMPORTANT: Your CV option has an expiry date which will be listed on the Your OMERS Pension Options form. If you do not elect the CV option by the expiry date set out in the Your OMERS Pension Options form, this option will no longer be available to you unless you have a small pension.
OMERS will continue to offer an option to transfer the value of your benefit to another defined benefit registered pension plan under limited circumstances.
Returning to OMERS and buying service
Electing a CV transfer (including a CV transfer of a small pension) will affect when you can buy back previous service in the OMERS Plan. If you later rejoin OMERS, you will have to wait five years from when you received your CV before you can buy back the service associated with the CV payment.
A Commuted Value (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. See below for more information about how a CV is determined.
A CV of a small pension can be refunded in cash, less tax, or transferred to a non-locked-in RRSP. As noted above, a refund of the CV of a small pension will continue to be available upon request before retirement unless your membership in OMERS becomes active again. Please note that the CV will be recalculated if an election is not received by the expiry date. This means that the CV could be higher or lower in the future, depending on the prevailing actuarial assumptions including interest rates at the date of recalculation.
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 will no longer be an OMERS member and will be responsible for the investment of your CV. This means that you will forfeit all rights to OMERS pension benefits and any future benefit improvements. You cannot reverse your decision.
If you elect the CV option, once you are eligible to start drawing down your CV including any future investment income, you may do so 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 important decision:
How much future retirement income will you need for your lifetime, and will you be able to generate it through investments?
Will there be money left over for your spouse or loved ones if you die?
Are you comfortable with taking on investment earning fluctuations?
What are the investment fees and expenses you will be paying?
Will your CV be subject to any taxes in the year that you transfer it?
Your CV, taxes and income options
The Income Tax Act (ITA) sets a maximum amount of CV you can transfer on a tax-sheltered basis (e.g., to a LIRA). The maximum transfer value is based on your attained age and the earned pension amount in the OMERS Plan. If the CV of your pension exceeds the ITA maximum transfer value, OMERS will refund the excess to you as a one-time cash payment, less applicable withholding taxes.
Once you reach the minimum OMERS retirement age, you can use your LIRA funds to purchase a life annuity from a licensed financial institution or transfer the finds into a life income fund (LIF). LIFs and annuities are available through many financial institutions and can have many different features. Shop around and carefully review your options and the benefits that would have been provided to you under the OMERS Plan.
You may also choose to transfer your CV to purchase an annuity directly from a licensed annuity provider. Please note that certain ITA requirements apply that require the annuity being purchased to be not “materially different” than the benefits that would have been provided to you under the OMERS Plan.
When looking for an annuity, 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 purchase.
When reviewing your options, it is also important to remember that the cost of generating future monthly retirement income for your lifetime and for your survivors, if applicable, can be greater than the amount of your CV. Keep in mind that investment earnings can fluctuate, and you will likely be paying transaction fees and expenses for your investments.
Remember the following when you review your options (including with an adviser):
Look at your options – leaving your pension in OMERS or transferring your CV out of the OMERS Plan (to either invest or purchase an annuity).
Consider the regular, future retirement income you will receive from OMERS when you retire and the applicable inflation protection. The OMERS pension is payable for your lifetime and includes a 662/3% pension for an eligible surviving spouse and survivor benefits for eligible dependent children. What would an alternative investment provide?
Consider the impact of taxes if your CV exceeds the ITA maximum transfer value. In this case, you are taxed on the excess amount, which you must take in cash. While you may be eligible to transfer some of this amount to a personal RRSP if you have available contribution room, 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 been paid as a pension from the OMERS Plan.
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.
Under the OMERS Plan terms, your CV cannot be less than your total required contributions plus interest (not including any refund of your excess contributions, additional voluntary contributions, or contributions made towards certain supplementary benefits).
It is also important to note that your CV reflects other OMERS Plan provisions, including survivor benefits, early retirement subsidies (where applicable) and inflation protection. For example, where full inflation protection is provided (i.e., for benefits earned prior to January 1, 2023), the CV calculation includes an assumption for what the full inflation rate will be in the future. Inflation protection that is not guaranteed is not included when determining CVs.
December 1, 2020 Change to Canadian Institute of Actuaries (CIA) Standards for Calculating Commuted Values
The Canadian Institute of Actuaries (CIA) publishes standards for how CVs are calculated for registered pension plans in Canada. In January 2020, the CIA revised these standards. The revised standards apply for calculations with an effective date on or after December 1, 2020 where a CV is a payment option. 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:
Interest Rates, determined on a monthly basis
Government of Canada bond yields plus fixed spread adjustment of 90 basis points
Government of Canada bond yields plus a spread determined from provincial and corporate bond yields
The age that produces the greatest value from the Plan
50% at the age that produces the greatest value from the Plan and 50% at the earliest age the member is entitled to an unreduced lifetime pension from the Plan
The revised CV standards could result in a decrease to a member’s calculated CV when compared to previous 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.
Did you know?
If you’re age 55 (or 50 for many police and firefighters), you can start your pension.