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Meet Sandeep

Sandeep joined OMERS at age 28 • Part-time employee • Works 20 hours/week • Earns $31/hour • Pay period contributions (matched by employer): $111.60 • Normal retirement age of 65 • Works 30 years with his OMERS employer • Retires at age 58 Annual pension from age 62-65: $39,743 Annual pension from age 65 onward: $26,330 Total pension received by age 80: $700,000

Overview of Sandeep's expected monthly pension

Sandeep’s estimated annual OMERS lifetime pension plus bridge benefit when he retires at age 58 is $39,743. This is a combination of the lifetime pension that Sandeep receives after retirement for his lifetime and the bridge benefit he receives from his retirement date to age 65. This calculation is explained in further detail below, including assumptions about Sandeep’s earnings.

By age 80, Sandeep’s estimated total pension received would be $700,000 (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 Sandeep 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, Sandeep will make contributions each pay period based on his gross contributory earnings and the YMPE per pay period.

In Sandeep’s case, his employer uses a bi-weekly payroll cycle with 26 pay periods over the calendar year. This means that Sandeep earns $1,240 per pay period in gross contributory earnings ($31 x 40 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 Sandeep’s per-pay-period gross contributory earnings are less than the YMPE per pay period, his contributions per pay period (and his employer’s contributions on his behalf) are $111.60 (9.0% x $1,240).

Sandeep’s per-pay-period contributions would change as his 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 Sandeep would receive after he retires from employment with his OMERS employer.

In this example, Sandeep is eligible for an unreduced early retirement at age 58 when he has 30 years of service and he chooses to stop working and retire at that time. Once Sandeep stops working, he is eligible to start his pension and chooses to do so. If Sandeep retired before he was eligible for an unreduced pension, his 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, Sandeep’s annualized contributory earnings are $64,480. For the purpose of calculating Sandeep’s annual pension at retirement, let’s assume Sandeep’s annualized contributory earnings have grown to $139,627 by age 58 and his “best five” earnings are $132,475.

Credited service

Sandeep earns 0.50 years of credited service in each year worked with his OMERS employer (20 hours ÷ 40 hours x 12 months). At the end of 30 years, this is 15 years of credited service (0.50 x 30 years).

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

2% x credited service (15 years) x “best five” earnings ($132,475) = $39,743

Once Sandeep turns 65, his bridge benefit stops being paid and he continues to receive his lifetime pension for the rest of his life.

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

Sandeep’s lifetime pension plus bridge benefit:
2% x credited service (15 years) x “best five” earnings ($132,475) = $39,743

Then subtract Sandeep’s bridge benefit:
0.675% x credited service (15 years) x lesser of “best five” earnings or AYMPE* ($132,475)

Which equals: $39,743 - $13,413 = $29,330

*The OMERS bridge benefit is calculated using Sandeep’s credited service and the lesser of his “best five” earnings and the five-year average of the YMPE (AYMPE) when he ends employment with his OMERS employer. Sandeep’s assumed AYMPE at the end of his employment is $133,200 so his “best five” earnings are used in the calculation above.