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Supplemental Plan

The OMERS Supplemental Plan for Police, Firefighters and Paramedics (the "Supplemental Plan") offers optional benefits for members of the police sector, firefighters and paramedics. As an OMERS employer, you may offer a benefit to a specific class or classes of employees. Supplemental benefits will “top up” the pension that a member already earns in the OMERS Primary Pension Plan (the "Primary Plan").


General information


What members are eligible for Supplemental Plan benefits?

Members of the police sector, firefighters and paramedics are eligible for some or all of the benefits.

What benefits will be available?

As of July 1, 2008, four supplemental benefits are available:

  • 2.33% accrual rate

  • “Best four” earnings

  • “Best three” earnings

  • Enhancedfactors (80/85 Factor)

How many benefits can be provided?

One benefit can be provided by the employer at a time. Once a supplemental benefit is set up, no further supplemental benefits can be provided for the covered class of employees for at least 36 months.

What are the current contribution rates?

Contribution Rates for Supplemental Plan Benefits

Effective January 1, 2017

Members with a normal retirement age of 60

Members with a normal retirement age of 65

Benefit

Supplemental Plan contribution rate

Primary Plan rebound rate*

Supplemental Plan contribution rate

Primary Plan rebound rate*

2.33% accrual

2.25%

0.30%

1.85%

0.30%

80/85 Factor

0.35%

none

0.25%

none

“Best three” earnings

0.60%

none

0.45%

none

“Best four” earnings

0.35%

none

0.30%

none

What factors affect contribution rates?

The current contribution rates for the Supplemental Plan are based on an assumption of 5,000 members. The long-term viability of the plan requires membership to match or exceed assumptions.

Contribution rates are set by the OMERS Sponsors Corporation and may change.

Rates include administrative costs as well as rebound costs to ensure that all administration and operating costs of the Supplemental Plan are paid entirely by members of that plan and are not subsidized in any way by the Primary Plan.

Will a member in the Supplemental Plan continue to earn a pension in the Primary Plan?

Yes. A member of the Supplemental Plan will continue to earn an OMERS pension in the Primary Plan.

How do Supplemental Plan benefits work with the Primary Plan?

Supplemental benefits will top up the pension that a member already earns in the Primary Plan. For the period during which the member participates in the Supplemental Plan, the supplemental top-up pension equals the difference between the primary and supplemental pensions. For example, all members earn a pension based on a 2% formula in the Primary Plan. A member with the 2.33% supplemental benefit may earn an additional 0.33% pension for the period of time during which the member participates in the Supplemental Plan.

Are supplemental benefits available to other members (non-police force, non-firefighter, non-paramedic)?

The benefits are not available to other OMERS members outside of these groups. The OMERS Act, 2006 requires that a Supplemental Plan is developed to offer optional benefits to members in the police sector, firefighters and paramedics. Providing supplemental benefits to other members would require approval by the Sponsors Corporation and agreement by employers.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Setting Up Coverage

Only an employer can establish Supplemental Plan coverage.

When an employer sets up Supplemental Plan coverage for a class or classes of employees:

  • The benefit applies to all members identified within the class of employees being covered – a member within the class may not “opt out” of the benefit.

  • The benefit is earned on a go-forward basis and funded by member and employer contributions. These contributions are in addition to contributions required for the Primary Plan. (The coverage starts on the effective date as specified in the agreement between the employer and OMERS or the member's enrolment date, if later.)

  • OMERS will provide costing information for members who have past service available to purchase:

    • Past service isin the Primary Plan that a member earned before the coverage start date of their supplemental benefit.

    • The past service cost is the present value of the future benefit being purchased and is paid by the member. More details about past service purchases.

    • The costings include past service on OMERS records at the time the statement is produced. Past service not yet posted to a member's record (e.g., current year service) can be purchased once it appears on the member's Pension Report.

Retroactive coverage

A Supplemental Plan coverage start date may be retroactive to an earlier period in the year or to a previous year. When this occurs:

  • The employer must deduct retroactive contributions for each member who was anof the class of employees for which coverage is being provided. If the member is not currently part of the class, but was during some or all of the retroactive period, the applicable retroactive contributions must be deducted in a lump sum. Retroactive contributions must be remitted to OMERS immediately.

  • The retroactive contributions must be based on the contributory earnings and Supplemental Plan contribution rate that was in effect for each year in the retroactive period.

  • When there is retroactive coverage and the benefit is the 2.33% accrual rate, OMERS will calculate a past service pension adjustment (PSPA) for the retroactive period and report it to the Canada Revenue Agency (CRA). The CRA will subtract the PSPA from each member's RRSP room and notify the member if there isn't enough RRSP room. In this case, the member would contact OMERS to discuss their options. If there isn't enough room and the member does not free up RRSP room, the coverage start date for that member would change.

Note: PSPA reporting only applies to the 2.33% accrual rate benefit; it does not apply to other Supplemental Plan benefits. 

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Available Benefits

Effective July 1, 2008, four Supplemental Plan benefits are available.

Primary Plan (benefits provided to all OMERS members)

Supplemental Plan benefit (pays the difference between the Supplemental Plan and the Primary Plan benefits)

Accrual rate

2.0%

2.33%

Earnings used in the pension formula

“Best five”

“Best three”

Earnings used in the pension formula

“Best five”

“Best four”

Early retirement Factor(available to members within 10 years of normal retirement age)

  • for members with a normal retirement age of 60

85 Factor*

80 Factor

  • for members with a normal retirement age of 65

90 Factor*

85 Factor

Definition of terms


Accrual Rate

The accrual rate is the percentage used in the pension formula.

Earnings used in the pension formula

“Best five" earnings is the annual average of a member's highest 60 consecutive months –best five years – of contributory earnings. “Best three” earnings is the annual average of a member's highest 36 consecutive months of contributory earnings. “Best four” earnings is the annual average of a member's highest 48 consecutive months of contributory earnings. 

Note: Contributory earnings do not include any overtime pay or non-recurring payments.

Early retirement factor

The Factor is the member's age plus service (plus eligible service): 

For example, if a member has 30 years of service and is 55 years old, the member's Factor is 30 + 55 = 85 Factor. 

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Benefit Eligibility

An employer can enter into an agreement with OMERS to provide a Supplemental Plan benefit for a class or classes of employees. The following outlines eligibility for each benefit.

Supplemental Benefit

Eligibility for Benefit

Police & Firefighters

Paramedics

Police Civilians

2.33% accrual rate

Yes

Yes

No

80 Factor (for members with a normal retirement age of 60)

Yes*

No^

No

85 Factor (for members with a normal retirement age of 65)

Yes*

Yes

Yes

“Best four” earnings

Yes

Yes

Yes

“Best three” earnings

Yes

Yes

Yes

Police and firefighters

Police officers, firefighters (and paramedics starting in 2021) will be eligible for all of the benefits identified above based on their normal retirement age (NRA).

Note: The OMERS Act, 2006 refers to the Police Services Act, the Fire Protection and Prevention Act and the Ambulance Act to define members of the police sector, firefighters and paramedics.

Police civilians

Police civilians working for a police force will be eligible for:

  • “Best four” earnings

  • “Best three” earnings

  • the 85 Factor

Police civilians are not eligible for the 2.33% formula (due to federal law) and are not eligible for the Factor 80 (due to their normal retirement age of 65).

Paramedics

Paramedics will be eligible for any of the benefits based on their NRA. Paramedics currently have a normal retirement age of 65 under the Primary Plan. Starting 2021, an employer may set up NRA 60 for all or a class of paramedics. 

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


How the Pension Is Calculated

A Supplemental Plan pension tops up the pension the member earns in the Primary Plan. 

Three of the supplemental benefits are intended to increase the amount of pension: the 2.33% accrual, and the “best three” and “best four” earnings. The 80/85 Factors may increase a member'spension provided the member takes an immediate pension. A "stacked provision" occurs when a member has coverage for more than one Supplemental Plan benefit for some or all of their.
 
When calculating the pension, the minimum value guaranteeand maximum pension limit must also be taken into consideration.


“Best Four” Earnings Formula

This benefit replaces the “best five” earnings used to calculate the pension for the period of supplemental service. (In most cases, this increases the pension.) The benefit acts as a top-up – it pays the difference between the supplemental benefit (“best four” earnings) and the Primary Plan (“best five” earnings) benefit.

Note: “Best five" earnings is the annual average of a member's highest 60 consecutive months – best five years – of contributory earnings. “Best four” earnings is the annual average of a member's highest 48 consecutive months – best four years – of contributory earnings.

Example of “best five” versus “best four” earnings

Joe's salary increases each year on January 1

2007 - 70,000

2008 - 72,000

His “best five “earnings = $74,000

2009 - 74,000

His “best four” earnings = $75,000

2010 - 76,000

2011 - 78,000

Note: It's possible that the “best four” earnings are less than or equal to the “best five” earnings. In this case, there would be no “best four” Supplemental Plan top-up pension. The minimum value guarantee would apply and the member's Supplemental Plan contributions plus interest may be refunded.

The “best four” Supplemental Plan benefit is calculated as follows:

2.0%

x

Supplemental Plan credited service* number of years (maximum 35 years)

x

“best four” earnings

Less

2.0%

x

Supplemental Plan credited service* number of years (maximum 35 years)

x

“best five” earnings

Equals the “best four” estimated Supplemental Plan pension

“Best four” earnings – example calculation

In 2020, Joe retires early (at age 58) with an unreduced pension. He has 30 years of credited service, including two years earned under the “best four” earnings supplemental benefit. Joe’s “best five” earnings are $74,000. His “best four” earnings are $75,000.

Joe’s “best four” Supplemental Plan pension

2.0%

x

2.0 years

x

$75,000

=

$3,000

Less

2.0%

x

2.0 years

x

$74,000

=

$2,960

Equals Joe's “best four” Supplemental Plan lifetime pension of $40 per year

2 years of Supplemental Plan credited service gives Joe a “top-up” of $40 on his future annual pension.

Primary Plan: Joe's lifetime pension plus bridge benefit to age 65* is $44,400 per year

Supplemental Plan: Joe's top-up pension is $40 per year

Joe's total pension to age 65 is $44,440 per year

Primary Plan: Joe's lifetime pension from age 65** is $32,971 per year

Supplemental Plan: Joe's top-up pension is $40 per year

Joe's total pension from age 65 is $33,011 per year

*Primary Plan: Joe's lifetime pension plus bridge benefit to age 65:

2% x 30 years of credited service x $74,000

**This assumes a bridge benefit of $11,429.More about how we calculate an OMERS pension

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


“Best Three” Earnings Formula

This benefit replaces the “best five” earnings used to calculate the pension for the period of supplemental service. (In most cases, this increases the pension.) The benefit acts as a top-up – it pays the difference between the supplemental benefit (“best three” earnings) and the Primary Plan (“best five” earnings) benefit.

“Best five" earnings is the annual average of a member's highest 60 consecutive months – best five years – of contributory earnings. “Best three” earnings is the annual average of a member's highest 36 consecutive months – best three years – of contributory earnings.

Example of “best five” versus “best three” earnings

Suzanne's salary increases each year on January 1.

2007 - 70,000

2008 - 72,000

Her “best five “earnings = $74,000

2009 - 74,000

Her “best three” earnings = $76,000

2010 - 76,000

2011 - 78,000

The “best three” Supplemental Plan benefit is calculated as follows:

2.0%

x

Supplemental Plan credited service

number of years (maximum 35 years)

x

“best three” earnings

Less

2.0%

x

Supplemental Plan credited service

number of years (maximum 35 years)

x

“best five” earnings

Equals the “best three” Supplemental Plan pension

“Best three” earnings – example calculation

In 2020, Suzanne retires early (at age 58) with an unreduced pension. She has 30 years of credited service, including two years earned under the “best three” earnings supplemental benefit. Suzanne’s “best five” earnings are $74,000. Her “best three” earnings are $76,000.

Suzanne’s “best three” Supplemental Plan pension

2.0%

x

2.0 years

x

$76,000

=

$3,040

Less

2.0%

x

2.0 years

x

$74,000

=

$2,960

Equals Suzanne's “best three” Supplemental Plan pension of $80 per year

2 years of Supplemental Plan credited service gives Suzanne a top-up of $80 on her future annual pension.

Primary Plan: Suzanne's lifetime pension plus bridge benefit to age 65* is $44,400 per year

Supplemental Plan: Suzanne's top-up pension is $80 per year

Suzanne's total pension to age 65 is $44,480 per year

Primary Plan: Suzanne's lifetime pension from age 65** is $32,971 per year

Supplemental Plan: Suzanne's top-up pension is $80 per year

Suzanne's total pension from age 65 $33,051 per year

*Suzanne's lifetime pension plus bridge benefit to age 65 under the Primary Plan is 2% x 30 years of credited service x $74,000

**This assumes a bridge benefit of $11,429.More about how we calculate an OMERS pension

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics


2.33% Accrual Rate – formula

The “2.33%” Supplemental Plan benefit is a top-up pension – it pays the difference between the Supplemental Plan rate (2.33%) and the Primary Plan rate (2%) for the period of supplemental service.

The “2.33%” Supplemental Plan benefit is calculated as follows:

2.33%

x

Supplemental Plan credited service*

number of years (maximum 35 years)

x

“best five” earnings

Less

2.0%

x

Supplemental Plan credited service*

number of years (maximum 35 years)

x

“best five” earnings

Equals the “2.33%” Supplemental Plan lifetime pension

2.33% accrual rate – example calculation

In 2020, Jim retires early (at age 58) with an unreduced pension. He has 30 years of credited service, including two years of 2.33% Supplemental Plan coverage. Jim’s “best five” earnings are $70,000.

Jim’s “2.33%” Supplemental Plan pension

2.33%

x

2.0 years

x

$70,000

=

$3,262

Less

2.0%

x

2.0 years

x

$70,000

=

$2,800

Equals Jim's “2.33%” Supplemental Plan lifetime pension of $462 per year

2 years of Supplemental Plan credited service gives Jim a top-up of $462 on his future annual pension.

Primary Plan: Jim's lifetime pension plus to age 65* is $42,000 per year

Supplemental Plan: Jim's top-up pension is $462 per year

Jim's total pension to age 65 is $42,462 per year

Primary Plan: Jim's lifetime pension from age 65** is $30,571 per year

Supplemental Plan: Jim's top-up pension is $462 per year

Jim's total pension from age 65 is $31,033 per year

*Jim's lifetime pension plus bridge benefit to age 65 under the Primary Plan is

2% x 30 years of credited service x $70,000

**This assumes a bridge benefit of $11,429.More about how we calculate an OMERS pension

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


80 Factor and 85 Factor

The enhancedfactors allow members to retire with an unreduced pension earlier or with less of a reduction. The benefit acts as a top-up – it pays the difference between the Supplemental Plan and the Primary Plan benefit for the period of supplemental service.

The 80 Factor is available to members with aof 60 in the Primary Plan. A member has an 80 Factor when their age plus service (plus) equals at least 80.

The 85 Factor is available to members with a normal retirement age of 65 in the Primary Plan. A member has an 85 Factor when their age plus service (credited service plus eligible service) equals at least 85.

Important: The 80 or 85 Factor replaces the 85 or 90 Factor when determining any early retirement top-up pension. This benefit is only available if the member elects an immediate early retirement pension.

The top-up pension depends on the member's individual circumstances at retirement. A member could retire with an unreduced pension earlier or with less of a reduction. In some cases, there may not be a top-up pension. For example, in the following cases there would be no top-up pension:

  • the member defers their pension (i.e., the member does not take an immediate early retirement pension when they stop working);

  • the member is already entitled to an unreduced early retirement pension under the Primary Plan (see OMERS Primary Pension includes a 30-year provision for early retirement” below);

  • the member retires on their.

If there is no benefit payable, the minimum value guaranteewould apply and the member's Supplemental Plan contributions plus interest may be refunded.

OMERS Primary Plan includes a 30-year provision for early retirement

Members can retire with an unreduced pension when their service (credited plus eligible service) equals 30 years provided they meet the minimum age requirement.

An unreduced pension is based on a member's earnings plus service, and there is no reduction.

Minimum age requirement

The minimum age requirement for early retirement is:

  • age 55 or older for members with a normal retirement age of 65

  • age 50 or older for normal retirement age 60.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Maximum Pension Limit

The Income Tax Act limits how much pension we can pay from OMERS registered pension plans (RPPs). In 2020, this limit is $3,092.22 per year of post-1991 service.

  • For the 2.33% accrual rate, the benefit payable from the Supplemental Plan will start to be affected when the earnings used in the pension formula become higher than $149,050.

  • For the 2.33% accrual rate, the "best three" and "best four" earnings benefits, the benefit payable from the Supplemental Plan will be affected when the earnings used in the pension formula exceeds $173,650.

If the earnings used in the benefit formula exceed the limit, there may be no benefit payable from the Supplemental Plan. If there is no benefit payable, the minimum value guarantee would apply and the member's Supplemental Plan contributions plus interest may be refunded.

The Primary Plan includes a retirement compensation arrangement (RCA) to provide pension benefits exceeding the maximum pension limit. The Supplemental Plan does not have an RCA as the cost would be prohibitively high.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Minimum Value Guarantee

The Supplemental Plan benefit includes a minimum value guarantee – this ensures the total benefits paid from the plan (to the member or on the member's behalf) will be at least equal to the member's Supplemental Plan contributions plus interest, minus any contributions previously refunded. If the member's benefit is less than their Supplemental Plan contributions plus interest, OMERS will refund contributions plus interest.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Stacked Provision

A "stacked provision" occurs if a member has coverage for more than one Supplemental Plan benefit for some or all of their. This could only occur in 2011 at the earliest (assuming an employer provides coverage in 2008) as only one supplemental benefit can be provided every 36 months. 

If a member has a stacked provision, the Supplemental Plan top-up pension will take into account each Supplemental Plan benefit and its respective credited service. 

Example: 
If a member has coverage for 2.33% and the “best three,” the benefits are combined for the period in which both benefits were provided.

The stacked (2.33% + "best three" earnings) Supplemental Plan pension is calculated as follows:

2.33%

x

Supplemental Plan credited service*

number of years (maximum 35 years)

x

“best three” earnings

Less

2.0%

x

Supplemental Plan credited service*

number of years (maximum 35 years)

x

“best five” earnings

Equals the stacked (2.33% + “best three” earnings) Supplemental Plan pension

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Service Purchases

Can members purchase service in the Supplemental Plan?

Yes, some types of service may be purchased, provided that the member is active in the class to which the coverage applies. Purchasing service can increase the amount of pension and/or allow the member to retire earlier. 
In this section, you'll find information about past and ongoing service purchases:

  • Past service isin the Primary Plan the member earned before the Supplemental Plan coverage start date.

  • Ongoing service purchases are leave periods occurring after the Supplemental Plan coverage start date.


General Information – Past Service

This section is about purchasingin the Supplemental Plan for the period prior to the date a member's supplemental coverage starts. Essentially, a member can “top up” all of their Primary Plan credited service in the new Supplemental Plan benefit.

Background

  • When an employer provides coverage for a class or classes of employees, OMERS will provide detailed past service Supplemental Plan costing(s) for each member who has service available to purchase.

  • Purchasing the past service is optional – a member can purchase all, some or none of the service. If they purchase a portion of the past service, they can buy more later, but the cost will likely change.

  • The cost of the service is the present-day cost reflecting the full value of the additional future pension.

  • The cost to purchase past service will be different for each member. Factors affecting the cost of the service include:

    • the type of benefit,

    • actuarial assumptions,

    • the member's age and contributory earnings, and 

    • the member's existing service in the Supplemental Plan.

  • Once a cost is quoted it is guaranteed for six months (i.e., a member must act upon the quote within six months, for example, elect the purchase and set up amortized payments).

  • Costs will be recalculated in future for any service not purchased - costs vary significantly according to factors including a member's age, service, salary, assumed retirement age and actuarial assumptions (such as future inflation).

  • If a member chooses not to purchase some or all of the past service, we will assume the member has elected to preserve the right to purchase available past service in the future, under the terms of the Supplemental Plan and relevant legislation.

Making the Decision

  • Purchasing past service can increase a member's total pension and/or allow them to retire earlier with an increased pension.

  • For the 2.33% benefit, purchasing past service may increase the total pension paid. The same applies for the “best three” or “best four” earnings benefit provided the member's “best three” or “best four” earnings exceed their “best five” earnings.

  • Members can contact OMERS to request a pension estimate with and without the purchase once the employer provides coverage.

  • For the Factor 85/80 benefit, purchasing past service may allow a member to retire earlier with an increased total pension amount, provided the member takes an immediate pension. It depends on how much service the member already has in the plan. If the member already meets (or is close to) therequirements in the Primary Plan (i.e., already has 30 years of service or an 85 or 90 Factor), purchasing past service may not be beneficial.

  • The decision to buy past service is a personal one. It depends on many factors including when a member plans to retire, income, other assets, life expectancy, risk, and personal savings. There may also be tax considerations as the Income Tax Act (ITA) limits the benefit a member can receive for some periods of service. When establishing the limit, the member's Primary Plan benefit and Supplemental Plan benefit must be taken into consideration.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


General Information – Ongoing Service

Primary Plan service and any related ongoing Supplemental Plan service must be purchased together. They cannot be purchased separately. Therefore, anyoccurring after the Supplemental Plan coverage start date must be purchased in both the Primary and Supplemental Plans. 

For example, if a member purchases a leave period in the Primary Plan and they also have Supplemental Plan service for the related period, they must also purchase that related period in the Supplemental Plan. Similarly, to purchase a period in the Supplemental Plan, the related Primary Plan service must be purchased at the same time. 

Example: 

Tom takes a 10-month employer-approved leave. The leave begins after the start date of the Supplemental Plan coverage for his employee class. If he decides to purchase the leave period, he must purchase the service in the Primary Plan and Supplemental Plan. For this type of leave, he would pay the member and employer contributions, and the same purchase deadline would apply to both the Primary Plan and Supplemental Plan service. 

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Payment Schedule Options for Active Members

Important: See Tax implications for the tax deductibility and PSPA implications.

Members who purchase past service in the Supplemental Plan can pay for the purchase by:

 

1. Lump-sum Payment – Personal Cheque

  • Anmust pay OMERS directly (cheque made payable to OMERS).

  • Contribution will be receipt issued by OMERS.

  • Lump-sum payments can happen throughout the active member's career; however, a new cost for the past service will be calculated (based on current age and salary) each time.

  • Service is credited as lump-sum payment is received.

2. Transferring Funds From an RRSP

  • The RRSP must be in member's name.

  • Spousal RRSPs are not permitted.

  • As monies are already tax-sheltered, a tax receipt is not issued by OMERS.

  • Service is credited when RRSP monies are received.

3. Monthly Payment Plan Method (12-month plan, 24-month plan or 36-month plan)

  • Past service may be amortized for up to three years (members can amortize over 12, 24 or 36 months).

  • Pre-authorized debit withdrawal from the member's bank account the last business day of the month.

  • Service is credited as monthly payments are received.

  • If at the end of the amortization period (e.g., after three years) there is still service to purchase, a new cost is established (based on current age and salary) and a new amortization schedule can be set up.

  • Current amortization interest is 6% (may change in the future).

  • On an annual basis, a contribution receipt for monies received in the previous year will be issued by OMERS.

  • If member defaults on a payment, OMERS will contact the member to make arrangements for payment. If payment not received promptly, OMERS will cancel the amortization schedule.

  • New amortization schedule can be created in the future; however, a new cost for the past service will be calculated (based on current age and salary)

  • For the 2.33% accrual rate benefit, the past service pension adjustment 

     for the entire post-1989 purchase period must be received from the Canada Revenue Agency before payment starts (i.e., PSPA are not reported over the period of the payment schedule).

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Tax Implications

Important! Tax information may change without notice. Please consult the Canada Revenue Agency (CRA), or a tax specialist for current, accurate and detailed information.

Tax Deductibility

All, or a portion of, the amount a member pays to purchase Supplemental Plan past service may be tax-deductible. A member can't have a tax deduction if the member transfers money to Supplemental Plan from an RRSP or a registered pension plan to pay for the service because this money is already tax-sheltered. 

There are different sets of rules for tax-deductible contributions for:

  • pre-1990 service while the member is not a contributor to any pension plan;

  • pre-1990 service while the member was a contributor to a pension plan (note: most pre-1990 past service purchases would fall into this category); and

  • post-1989 service.

For pre-1990 past service purchases, the member may need to wait until retirement to claim this period for tax purposes. This is because there are Income Tax Act restrictions on the amount that can be deducted in any one calendar year.

Pre-January 1, 1990 Service While Not a Contributor

If the member buys a period of pre-1990 service from a calendar year during which the member made no contribution at all to any registered pension plan (other than the Canada Pension Plan), the following rules apply. 

The total amount the member may deduct is the member' total contribution (there is no limit). 

The contribution a member may deduct in any calendar year for the service purchase is the lesser of:

  • the total past service contributions; or

  • $3,500 multiplied by the number of eligible calendar years, including any part of a year that the member was not a contributor to a pension plan.

In any one calendar year a member may deduct the lesser of:

  • the contribution actually paid by the member or carried forward; or

  • $3,500.

A member may carry forward the balance for deduction in the following years until he or she has taken the total allowable deduction.

Pre-January 1, 1990 Service While a Contributor

If the member buys a period of service that occurred in a calendar year during which the member made a contribution to a registered pension plan (other than CPP), the following rules apply. 

The total amount the member may deduct is the member's total contribution (there is no limit).

The contribution a member may deduct in any calendar year for the service purchase is the lesser of:

  • the contribution actually paid by the member or carried forward; or

  • $3,500 minus the sum of:

    • the amount was deducted in that year (i.e., the year the deduction is made) for current service contributions; plus

    • the amount the member deducted in that year (i.e., the year the deduction is made) for past service contributions while not a contributor.

A member may carry forward the balance for deduction in the following years until the member has taken the total allowable deduction.

Loan Interest

The interest paid on money borrowed to buy past service is not tax-deductible.

Service after 1989

The full amount of the contribution is deductible in the year it is paid.

Past Service Pension Adjustments (Applies to 2.33% Supplemental Plan Benefit Only)

Each year since 1990, a member's employer has calculated the estimated value of the lifetime OMERS pension the member earned according to a formula established by the Canada Revenue Agency. The estimated value is called a Pension Adjustment (PA) and is reported by the employer each year on each member's T4. Canada Revenue Agency deducts the PA from the member's available RRSP room. 

If a member purchases any Supplemental Plan service related to the 2.33% accrual rate benefit and the service occurred after December 31, 1989, OMERS will calculate a PA for the past service and report it to the CRA. This is called a PSPA (past service pension adjustment).

A PSPA is reported for past service purchases related to the 2.33% accrual rate Supplemental Plan benefit only. A PSPA is not reported for past service purchases related to the 80/85 Factor, “best three” earnings, and “best four” Supplemental Plan benefits. 

The CRA will subtract the PSPA from the member's available RRSP contribution room, and will not allow the member to purchase service if the member does not have enough room for the PSPA. 

Paying for a past service purchase by RRSP reduces the PSPA reported to the CRA. PSPAs less than $50 don't need CRA approval.

The CRA may allow a member to exceed their available RRSP room by $8,000 leaving the member with a negative RRSP deduction limit. In this case, the member will not be able to make any RRSP contributions until their current (and possibly future) earnings restore their RRSP room to a positive value.

If a PSPA can't be approved, the CRA will send the member forms and instructions. The member can make a "qualifying withdrawal" or a "qualifying transfer" of RRSP money to create more RRSP room. The member can also decide to purchase less service, or none at all. 

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Funding and Contribution Rates


How is the Supplemental Plan funded?

The Supplemental Plan costs (including administration costs) are paid entirely by participating members and employers; the OMERS Act, 2006 does not permit cross-subsidization of costs of the Supplemental Plan by the Primary Plan. Members cover the cost of member contributions and pay for any service purchases. Employers cover the cost of employer contributions and pay for matching leave period contributions when required (for example, a pregnancy and parental leave that a member purchases).

Costs for supplemental benefits may include any related rebound costs identified by the OMERS actuary as affecting the Primary Plan – to avoid any subsidization of supplemental benefits by the Primary Plan.

What are rebound costs (Primary Plan)?

The 2.33% accrual rate benefit may influence (or encourage) a member's early retirement. This impact on the Primary Plan must be taken into consideration and Primary Plan contribution rates must be adjusted if necessary (i.e., rebound costs must be applied).

What are the Supplemental Plan contribution rates?

Contribution Rates for Supplemental Plan Benefits

Effective January 1, 2017

Members with a normal retirement age of 60

Members with a normal retirement age of 65

Benefit

Supplemental Plan contribution rate

Primary Plan rebound rate*

Supplemental Plan contribution rate

Primary Plan rebound rate*

2.33% accrual

2.25%

0.30%

1.85%

0.30%

80/85 Factor

0.35%

none

0.25%

none

“Best three” earnings

0.60%

none

0.45%

none

“Best four” earnings

0.35%

none

0.30%

none

Contribution Rates for Supplemental Plan Benefits

Effective July 1, 2008 to December 31, 2010

Members with a normal retirement age of 60

Members with a normal retirement age of 65

Benefit

Supplemental Plan contribution rate

Primary Plan rebound rate*

Supplemental Plan contribution rate

Primary Plan rebound rate*

2.33% accrual

2.75%

0.20%

2.35%

0.30%

80/85 Factor

0.95%

none

0.75%

none

“Best three” earnings

1.10%

none

0.90%

none

“Best four” earnings

0.85%

none

0.75%

none

Notes:

  • Employers match member contributions for ongoing service (effective from the coverage start date of the Supplemental Plan benefit).

  • Contributions are deducted from a member's regular earnings (regular earnings do not include additional amounts such as overtime pay and most one-time, lump-sum payments).

  • Supplemental Plan contributions are in addition to contributions required for the Primary Plan. More information about OMERS Primary Plan rates

  • Contribution rates are based on actuarial assumptions such as the number of participants, operational expenses and interest rates, and include administration fees. Contribution rates could be adjusted in the future to reflect the cost of the benefits earned.

  • Important! Contribution rates apply to future service. (Future service is service after the coverage start date of the Supplemental Plan benefit.) Past service costings are based on the present-day cost. (Past service isin the Primary Plan that a member earned before the coverage start date of the Supplemental Plan benefit.)

What factors affect contribution rates?

The current contribution rates for the Supplemental Plan are based on an assumption of 5,000 members. The long-term viability of the plan requires membership to match or exceed assumptions.

Contribution rates are set by the OMERS Sponsors Corporation and may change.

Rates include administrative costs as well as rebound costs to ensure that all administration and operating costs of the Supplemental Plan are paid entirely by members of that plan and are not subsidized in any way by the Primary Plan.

Does the Income Tax Act maximum pension apply?

Yes. If a member's annual salary rate exceeds the amount that generates the maximum pension allowable by the Income Tax Act (ITA), Supplemental Plan contributions will stop. A member would not earn a benefit in the Supplemental Plan during any period in which their benefit exceeds the ITA limit.

Note: The limit only affects Supplemental Plan contributions. The Primary Plan includes a Retirement Compensation Arrangement to provide pension benefits for those members with earnings exceeding the ITA limit. 

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.

Rate Change Notice

On August 25, 2011, the OMERS Sponsors Corporation (SC) adopted SC By-law #25 that establishes a new set of contribution rates for the Supplemental Plan for Police, Firefighters and Paramedics, to be effective retroactive to January 1, 2011.


Requesting a Cost Estimate

A cost estimate details the estimated future and past service costs as follows:

  • Future service costs – the estimated cost of Supplemental Plan contributions for future service by year, projected for each of the five years after the agreement is expected to begin (member and employer contributions are listed separately). Future service isearned on/after the expected Supplemental Plan agreement effective date.

  • Past service costs – the estimated member cost to purchase each member's eligible past service as of the agreement effective date. Supplemental Plan past service is credited service a member has earned in the Primary Plan as of the expected Supplemental Plan agreement effective date (i.e., credited service earned before the expected Supplemental Plan agreement date).

For associations and unions, the most effective route to request a cost estimate is through the employer. This is because:

  • The employer has more up-to-date salary information and therefore can provide a more accurate estimate.

  • There are no fees for OMERS processing if an employer requests a cost estimate.

  • The turnaround time for costs estimates is likely faster because there is less manual data entry.

Associations and unions can also request a cost estimate directly from OMERS  but the estimate will be less accurate and a $500 processing fee will be charged. If the association or union requests the estimate from the employer, there is no cost as processing is done by the employer – OMERS staff are not involved in processing the cost estimate.

Method 1: Employer Processes the Cost Estimate

Employer's Process:

  • Employer uploads class details and updated contributory earnings information and submits the request.

  • Processing normally takes about 1 to 3 days; however, the method the employer uses to process the request, the size of group and volume being processed on the system at one time will impact the timing.

  • Two reports are produced – one for the employer and one for the association or union:

    • The employer's version shows member identification for past service costs and contributory earnings used in future service contribution calculations.

    • The association or union version shows the same cost information but it does not provide members' identification and earnings information.

  • The employer provides a hardcopy of the report to the association or union.

  • OMERS will send an e-mail notification to the association or union when a cost estimate is submitted by an employer – this alerts the association or union to obtain the cost estimate report from the employer.

Method 2: Association or Union Requests Cost Estimate Directly from OMERS

  • For this method, it's not as easy to identify the member class or classes to include in the estimate – OMERS will do this through the member affiliation data that OMERS has on its records.

  • The costing will be less accurate for several reasons:

    • Contributory earnings could be two years out of date depending on whether data has been received for the previous year – OMERS will use projected earnings.

    • The association or union must provide one annual salary rate for all new hires.

  • Procedure:

    • The association or union completes Form 301 – Request for a Supplemental Plan cost estimate and mails the form with a cheque for $500 to OMERS (form will be available July 2008).

    • Processing normally takes one to three business days depending on volumes.

    • OMERS staff will send the association or union version of the cost estimate to the association or union.

    • OMERS will send an e-mail to the employer advising that the cost estimate was produced for the association or union.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.

File icon
Form 301 - Request for a Supplemental Plan cost estimate. .pdf
For Police, Fire or Paramedic Union or Association use only.
Download
(814 KB)

Supplemental Plan Forms

File icon
Form 161 - Past service purchase application form (Supplemental Plan) .pdf
Use this form to get a cost quote for purchasing Supplemental Plan past service.
Download
(673 KB)
File icon
Form 162 - Pre-authorized debit form (Supplemental Plan) .pdf
Use this form to change your existing Supplemental Plan past service pre-authorized debit instructions.
Download
(805 KB)
File icon
Form 301 - Request for a Supplemental Plan cost estimate (for Police, Fire or Paramedic Union or Association use only) .pdf
Use this form to request a Supplemental Plan cost estimate when it is not obtainable through the employer.
Download
(814 KB)

Request a Supplemental Plan Meeting

A representative of an employer group or of a union or association may complete the Request for a Supplemental Plan meeting form to have an OMERS representative contact them about setting up a Supplemental Plan meeting.

The meeting will give the group an overview of the Supplemental Plan then go into specifics about:

  • available benefits;

  • cost structure;

  • past service purchases; and

  • the resources OMERS has in place to help administer the Supplemental Plan.

There will be ample opportunities to ask questions.

Important!

The fee for a Supplemental Plan meeting is $500 payable to OMERS. The fee covers the costs of two OMERS staff presenting for two to three hours.

The reason there is a fee is that Supplemental Plan costs (including administration costs) must be paid for entirely by participating members and employers; the OMERS Act, 2006 does not permit cross-subsidization of costs of the Supplemental Plan by the Primary Plan.

Additional fees may apply if extra OMERS staff is needed, as well for the costs of travel and meeting facilities. (To minimize your costs, we recommend you look after the facilities and any refreshments.)

When we have received your request form along with your cheque, we will contact you to confirm your meeting details.

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.

File icon
Download Form 302 - Request for a Supplemental Plan Meeting .pdf
Download
(34 KB)

Presentations

OMERS has conducted and continues to be available to conduct Supplemental Plan presentations to interested employers, unions/associations and stakeholder groups. These presentations are for print and display purposes only.

File icon
Emergency Services Labour Forum - June 13, 2008 .pdf
Download
(468 KB)
File icon
Employer Information Session - Spring 2008 .pdf
Download
(750 KB)
File icon
Supplemental Plan OPFFA Information Session - April 8, 2008 .pdf
Download
(912 KB)
File icon
Supplemental Plan PAO Information Session - August 14, 2007 .pdf
Download
(924 KB)
File icon
Supplemental Plan Stakeholder Meeting - June 28, 2007 .pdf
Download
(176 KB)
File icon
Supplemental Plan Stakeholder Meeting - June 14, 2007 .pdf
Download
(390 KB)
File icon
Stakeholder Presentation - September 2005 .pdf
Download
(422 KB)

Supplemental Plan benefits are not automatically provided. Employers can set up Supplemental Plan coverage for a class or classes of members in the police sector, firefighters and paramedics.


Fact Sheet


OMERS Supplemental Plan Facts

An update on the OMERS Supplemental Plan for Police, Firefighters and Paramedics
May 2019

Supplemental Plan Overview

The OMERS Supplemental Plan for Police, Firefighters and Paramedics (the “Supplemental Plan”) was established in 2008. It offers optional benefits in accordance with section 11 of the OMERS Act, 2006.

Supplemental benefits are designed to enhance or “top up” the pension that a member already earns in the OMERS Primary Pension Plan (the “Primary Plan”).

An OMERS employer may offer a Supplemental Plan benefit to one or more specific classes of employees. The benefits are not automatic – Supplemental Plan participation would typically result from the collective bargaining process. If a class is covered, all individuals in that class must participate. One benefit can be provided by the employer at a time. Once a supplemental benefit is set up, no further supplemental benefits can be provided for the covered class of employees for at least 36 months from the effective date.

As at May 2019, there were no members in the Supplemental Plan. 

If you have immediate plans to establish a Supplemental Plan benefit, please see “Setup Considerations” below.

Supplemental Plan Basics

Benefits and eligibility

  • The Supplemental Plan can provide several types of “top-up” benefits to enhance the pension earned in the Primary Plan.

  • The available Supplemental Plan benefits are shown in the right-hand column of the table below.

  • Top-up benefits are available for all or a specified class of OMERS members who are members of a police force or who are employed as firefighters or paramedics as defined in applicable legislation*. Civilians (e.g., police civilians or those who do not fall into the applicable definitions) are not eligible for certain benefits (e.g., 2.33% accrual rate). 

  • For example, the "Best three" earnings as the top-up benefit would tend to enhance a member's pension because the average earnings used in the pension formula would generally be higher.

  • The selection of the 2.33% accrual rate also requires additional “rebound” contributions under the Primary Plan. 

*Section 2 of the Police Services Act, subsection 1(1) of the Fire Protection and Prevention Act, 1997, and subsection 1(1) of the Ambulance Act.

Primary Plan (benefits provided to all OMERS members)

Supplemental Plan benefit (pays the difference between the Supplemental Plan and the Primary Plan benefits)

Accrual Rate

2.0%

2.33%

Average Contributory Earnings Used in the Pension Formula

“Best five”

“Best three”

Average Contributory Earnings Used in the Pension Formula

“Best five”

“Best four”

Early Retirement Factor (available to members within 10 years of normal retirement age)

- for members with a normal retirement age of 60

85 Factor

80 Factor

- for members with a normal retirement age of 65

90 Factor

85 Factor

Contributions

  • Contributions are paid by participating members and matched by the employer. Supplemental Plan contributions are in addition to contributions made to the Primary Plan.

  • Contribution rates are set by the OMERS Sponsors Corporation and may change.

  • Contribution rates include administrative expenses as well as rebound contributions to the Primary Plan for certain Supplemental Plan provisions. This ensures that all administration expenses of the Supplemental Plan are paid entirely by members of that plan and their employers, and are not subsidized in any way by the Primary Plan.

Contribution Rates for Supplemental Plan Benefits Effective January 1, 2017

Members with a normal retirement age of 60

Members with a normal retirement age of 65

Benefits

Supplemental Plan contribution rate

Primary Plan rebound rate

Supplemental Plan contribution rate

Primary Plan rebound rate

2.33% accrual

2.25%

0.30%

1.85%

0.30%

80/85 Factor

0.35%

none

0.25%

none

“Best three” earnings

0.60%

none

0.45%

none

“Best four” earnings

0.35%

none

0.30%

none

  • For example, for an NRA 60 member with the 2.33% accrual, the employer and employee would each pay an additional 2.55% of the member’s contributory earnings, in addition to regular Primary Plan contributions. This 2.55% total is based on the Supplemental Plan contribution rate of 2.25% and a rebound contribution of 0.30% to the Primary Plan.

  • As another example, an NRA 60 member with the “Best three” earnings benefit, the employer and member would each pay an additional 0.60% of the member’s contributory earnings, in addition to Primary Plan contributions. No rebound cost applies.

Important!

  • Many financial and demographic assumptions affect contribution rates, including the number of participants and administrative expenses. Contribution rates could be adjusted in the future to reflect emerging trends. Current rates are based on an assumption of 5,000 participating members. It is important to note that in the event that participating membership is less than 5,000 in future, contribution rates may have to increase. One reason this can occur is that administration expenses, which are reflected in the rates, would be spread across a smaller group of participating members.  

  • Contributions start from the effective date of Supplemental Plan coverage.

Past service purchases

  • A member who participates in the Supplemental Plan has the option to “top up” any of their Primary Plan pastin the new Supplemental Plan benefit.

  • Once a benefit is established, OMERS will provide detailed past service Supplemental Plan cost(s) for each member who has service available to purchase.

  • Purchasing the past service is optional – a member can purchase all or some of the service. If they purchase a portion of the past service, they can buy more later if they remain in the covered class, but the cost will likely change.

  • The cost of the service is a present-day cost that reflects the full value of the additional future pension.

Supplemental Plan cost estimates:

A cost estimate provided by OMERS to an employer – via e-access – details the estimated future and past service costs as follows:

  • Future service costs - the estimated cost of Supplemental Plan contributions for future service by year, projected for each of the three years after the agreement is expected to begin (member and employer contributions are listed separately). Future service is credited service earned on and after the expected Supplemental Plan agreement effective date.

  • Past service costs - the estimated member cost to purchase each member’s eligible past service as of the agreement effective date. Supplemental Plan past service is credited service that a member has earned in the Primary Plan as of the expected Supplemental Plan agreement effective date (i.e., credited service earned before the expected Supplemental Plan agreement date).

For associations and unions, the most effective route to request a cost estimate is through the employer. This is because:

  • The employer has more up-to-date salary information.

  • There are no fees for OMERS processing.

  • The turnaround time for cost estimates is likely faster as there is less manual data entry.

Associations and unions can also request a cost estimate directly from OMERS but the estimate will be less accurate and a $500 processing fee will be charged. 

Steps to set up a Supplemental Plan benefit

Employers and member associations who are interested in the Supplemental Plan should first review the plan information online. 

Interested groups and employers can also ask OMERS to host a Supplemental Plan meeting (a fee applies). Hosting this information session will ensure that interested parties have an opportunity to ask questions and are fully aware of the Supplemental Plan provisions, cost considerations, and the steps required to offer the benefits and to enrol members.

OMERS can provide a cost estimate of Supplemental Plan future and past service costs on request – details are available online.

An employer proceeding to set up a Supplemental Plan benefit should:

  1. Review all information available online or through a Supplemental Plan meeting.

  2. Obtain a cost estimate (see information above) via e-access using the e-Form 301.

  3. Notify OMERS of their intent to adopt a bylaw or resolution and the timelines for implementation.

  4. Adopt a bylaw or resolution authorizing coverage.

  5. Enter into a Coverage Agreement with OMERS to set up coverage.

  6. Use the e-Form 300 – via e-access – to set up coverage for a class or classes of employees.

  7. Remit contributions as appropriate, including any retroactive contributions.

Subsequent to Supplemental Plan enrolment, OMERS will provide individual members the option and cost to purchase past service, where relevant.

Resources

For more information about the Supplemental Plan:

  • Contact OMERS Member Services at +1 416.369.2444 or +1 800.387.0813 (toll-free) from Monday to Friday between 8 a.m. and 5 p.m.

  • Request a Supplemental Plan meeting and/or cost estimate by submitting the applicable request form available on the website.

Download

File icon
Supplemental Plan Fact Sheet .pdf
Download the Supplemental Plan Fact Sheet for print purposes.
Download
(78 KB)