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Meet Nazia

Nazia joined OMERS at age 27 • Seasonal employee, works three months/year • Works 32 hours/week • Earns $15.89/hour • Pay period contributions (matched by employer): $92 • Normal retirement age of 65 • Works 35 years with her OMERS employer • Retires at age 62 Annual pension from age 62-65: $10,026 Annual pension from age 65 onward: $6,642 Total pension received by age 90: $200,000

Overview of Nazia’s expected monthly pension

Nazia’s estimated annual OMERS lifetime pension plus bridge benefit when she retires at age 62 is $10,026. This is a combination of the lifetime pension that Nazia receives after retirement for her lifetime and the bridge benefit she receives from her retirement date to age 65. This calculation is explained in further detail below, including assumptions about Nazia’s earnings.

By age 90, Nazia’s estimated total pension received would be $200,000 (excluding any inflationary increases provided in accordance with the OMERS Plan terms). Note that additional benefits may be payable after a member’s death. These benefits are explained in the Member Handbook and our Planning for Loved Ones page.

Let’s look at the details below.

In 2022, OMERS Plan contributions for members like Nazia who have a normal retirement age of 65 are equal to 9.0% of contributory earnings up to the(YMPE) and 14.6% of contributory earnings over the YMPE.

As noted above, Nazia will make contributions each pay period based on her gross contributory earnings and the YMPE per pay period.

In Nazia’s case, her employer uses a bi-weekly payroll cycle with 26 pay periods over the calendar year. This means that Nazia earns $1,016.96 per pay period in gross contributory earnings ($15.89 x 64 hours in the pay period).

The YMPE per pay period is calculated by dividing the YMPE for the year by the number of pay periods in the year. For 2022, this is $2,496 ($64,900 ÷ 26).

Since Nazia’s per-pay-period gross contributory earnings are less than the YMPE per pay period, her contributions per pay period (and her employer’s contributions on her behalf) are $91.53 (9.0% x $1,016.96).

Nazia’s per-pay-period contributions would change as her contributory earnings per pay period change.

OMERS pension formula

OMERS lifetime pension + bridge benefit [2% x credited service (years) x "best five earnings"] - OMERS bridge benefit [0.675% x credited service (years) x lesser of "best five" earnings or AYMPE*] = OMERS lifetime pension from age 65 *Five-year average of the year's maximum pensionable earnings (YMPE)

Let’s calculate the annual lifetime pension plus bridge benefit Nazia would receive after she retires from employment with her OMERS employer.

In this example, Nazia is eligible for an unreduced early retirement at age 57 when she has 30 years of service but Nazia chooses to keep working with her OMERS employer until age 62. Once Nazia stops working, she is eligible to start her pension and chooses to do so. If Nazia retired before she was eligible for an unreduced pension, her lifetime pension and bridge benefit would be reduced for early retirement. To learn more about reduced and unreduced early retirement pensions, please refer to the Retirement section of the Member Handbook.

“Best five” earnings

Remember that OMERS uses annualized contributory earnings when determining the “best five” earnings for non-full-time (NFT) members. In 2022, Nazia’s annualized contributory earnings are $24,407. For the purpose of calculating Nazia’s annual pension at retirement, let’s assume Nazia’s annualized contributory earnings have grown to $60,400 by age 62 and her “best five” earnings are $57,290.

Credited service

Nazia earns 0.25 years of credited service in each year worked with her OMERS employer (3 months/12 months). At the end of 35 years, this is 8.75 years of credited service (0.25 x 35 years).

Nazia’s lifetime pension plus bridge benefit to age 65 is calculated as follows:

2% x credited service (8.75 years) x “best five” earnings ($57,290) = $10,026

Once Nazia turns 65, her bridge benefit stops being paid and she continues to receive her lifetime pension for the rest of her life.

This is how we calculated Nazia's lifetime pension after the bridge benefit stops being paid:

Nazia’s lifetime pension plus bridge benefit:
2% x credited service (8.75 years) x “best five” earnings ($57,290) = $10,026

Then subtract Nazia’s bridge benefit:
0.675% x credited service (8.75 years) x lesser of “best five” earnings or AYMPE* ($57,290) = $3,384

Which equals: $10,026 - $3,384 = $6,642

*The OMERS bridge benefit is calculated using Nazia’s credited service and the lesser of her “best five” earnings and the five-year average of the YMPE (AYMPE) when she ends employment with her OMERS employer. Nazia’s assumed AYMPE at the end of her employment is $152,200 so her “best five” earnings are used in the calculation above.