- 24-month costing window
A member’s 24-month costing window for buybacks is 24 months from the date:
- a leave of absence ended
- the member joined the PSPP (or in some cases, the OPSEU Pension Plan, the Agricorp Plan, the TVO Plan, or the Ontario Northland Plan)
- a legal strike, lockout, or temporary layoff due to legal strike or lockout ended
- the member received notification of a shortfall resulting from transferring pension credit into the PSPP
OPB may occasionally establish other buyback costing windows.
- Actuarial costing
This buyback costing method determines the amount of money we would need to set aside today to fund the additional pension benefits to which a member would be entitled at retirement if they completed the buyback. The calculation takes into account a number of factors, including the member’s age, pension credit and salary, and uses the actuarial assumptions and standards in place on the date of calculation, including assumptions about salary increases and mortality. Generally, actuarial cost increases over time.
- Annual salary
- Your regular salary. It does not include overtime pay, payment in lieu of benefits or any other payments determined by OPB not to be part of a member’s salary.
- Average annual salary
Regular members: the average of the member’s annual salary for their best 60 consecutive months of PSPP membership.
OPP officers: the average of the member’s annual salary for their best 36 consecutive months of PSPP membership.
OPP civilians: the average of the member’s annual salary for their best 48 consecutive months of PSPP membership.
Associate judges: For service as an Associate Judge, the average of their annual salary for their best 36 consecutive months of PSPP members. For all other service, their best 60 consecutive months.
If you have not been a PSPP member for the applicable number of months, your entire membership will be used.
If you transfer pension credit into the PSPP from another plan, your period of membership in the other plan will be combined with your PSPP membership to determine your average annual salary.
- Average year's maximum pensionable earnings (YMPE)
- The average of the Year's Maximum Pensionable Earnings (YMPE) for the member's final three calendar years of PSPP membership.
- See Designated beneficiary.
- Canada Pension Plan (CPP)
A mandatory earnings-related pension plan for workers in Canada.
- Canada Revenue Agency (CRA)
- The federal government department responsible for administering the federal Income Tax Act and related regulations.
- CPP Integration
Refers to how the PSPP and CPP work together during your working years, early retirement, and after age 65. Your PSPP pension consists of:
- a lifetime pension, paid from your retirement date for your lifetime; and
- an early retirement bridge benefit, paid from your retirement date to age 65.
At age 65, the early retirement bridge benefit ends. The bridge benefit is intended to supplement your retirement income until age 65 when you are eligible for an unreduced CPP pension.
CPP Integration = 0.7% of the Average YMPE or your average annual salary, whichever is less x Your pension credit
(to a maximum of 35 years)
- Commuted value (CV)
A lump-sum that represents the present day dollar value of your accrued pension.
- Consumer Price Index (CPI)
- A standard measure of the Canadian cost of living that the federal government publishes each month.
- Cost of living adjustment (COLA)
An adjustment made to a pension to protect the buying power of the pension against inflation.
The PSPP’s annual COLA is calculated by dividing the average Consumer Price Index (CPI) for the 12-month period ending in September of the previous year by the average CPI for the 12-month period ending in September of the year before the previous year. The maximum COLA in any year is 8% with any excess being carried forward to future years.
- See pension credit
- Deferred pension
A pension a member can collect at a later date, provided they leave their pension credit in the Plan when they end their membership.
- Deferred Profit Sharing Plan (DPSP)
- A registered savings plan used by an employer to share profits with employees. Employer contributions are allocated to employee accounts based on a formula. Funds are tax-sheltered until paid out of the plan.
- Designated beneficiary
A named beneficiary who may be eligible to receive a benefit from the PSPP when a member dies.
- Disabled dependant child
A member’s child, who:
- is found by OPB to have a continuing mental or physical disability, and
- was, by reason of that disability, financially dependent on the member at the time of their death.
A disabled dependant child is considered an eligible child under the Plan and may qualify for a survivor pension on the member’s death.
- Early unreduced retirement date (EURD)
- The earliest date a member qualifies for an unreduced pension before age 65.
- Early retirement
- Retirement before age 65.
- Early retirement bridge benefit
- The early retirement bridge benefit is a benefit paid to members who retire between the ages of 55 and 65. It is payable until age 65 when you are eligible for an unreduced CPP pension. The early retirement bridge benefit equals 0.7% of the Average Year’s Maximum Pensionable Earnings (YMPE) or your average annual salary, whichever is less multiplied by your pension credit (to a maximum of 35 years).
- Eligible child
An eligible child is a member’s child who is under age 18, or 18 or older and attending school on a continuous, full-time basis (up to 5 years at post-secondary school). An eligible child also includes a disabled dependant child.
- Eligible spouse
A member’s eligible spouse qualifies for a survivor pension or other benefit from the PSPP after the member’s death. The definition of “eligible spouse” depends on whether death occurs before or after retirement.
A member’s spouse at the date of their death is their eligible spouse.
A member’s spouse on the first day of the month when their pension starts is their eligible spouse.
If a member establishes a spousal relationship after retirement, the post-retirement spouse is not eligible for a survivor pension unless the member applies and is approved for this benefit.
For members who retired before 1988, the above definition does not apply. Contact OPB for details.
- Employment information
- Refers to data that includes your age, earnings, whether you are applying for an Immediate Pension, any Leaves of Absence, and your service credit.
- Estate trustee
- This is the person with legal authority to manage a member's estate, including any executor named in your will.
- Family Law Value
- The Family Law Value is the value of the pension benefits earned during a spousal relationship calculated in accordance with strict rules under the Ontario Pension Benefits Act. For more information about spousal relationship breakdown, please read Separation or Divorce on our website.
- Financial Services Regulatory Authority of Ontario (FSRA)
- FSRA is the regulator of pensions in Ontario. Its role is to ensure pension plans in the province are administered in accordance with the Ontario Pension Benefits Act.
- Grow-in benefits
- Grow-in benefits allow eligible members whose employment is terminated by their employer and who meet a 55-point test to start their pension at their early unreduced retirement date (EURD). The benefits are not available where the member’s employment is terminated due to wilful misconduct, disobedience, or wilful neglect of duty.
- Immediate reduced pension
Or Immediate Pension, is a pension that starts before age 65 and is subject to an age reduction. With the age reduction, pension is reduced by 5% for each year (and pro-rated for a partial year) the member is under 65. For example, a pension starting at age 60 is reduced by 25% (5% x 5 years under 65).
Requirement: Member must be age 55 or older and not eligible for an immediate unreduced pension (subject to small pension rules).
- Insured benefits
Medical, dental and basic life insurance benefits provided in retirement to members who satisfy certain eligibility requirements.
OPP members may qualify for insured benefits from the Ontario Provincial Police Association (OPPA). Contact OPPA for more information at 1-800-461-4282.
- ITA limits
- The Income Tax Act has a number of rules that govern the purchase of pension credit, including the amount of buyback payment that is tax deductible; for details, please refer to "Tax considerations" in Understanding your pension credit (PDF).
- Life Income Fund (LIF)
- A type of Registered Retirement Income Fund (RRIF) that can hold locked-in pension funds. Funds in a LIF must be used to provide retirement income. Legislation sets the minimum and maximum amounts the account holder can withdraw every year.
- Lifetime pension
- The portion of a member’s PSPP pension paid from the date they retire (including early retirement) for their lifetime.
- Locked-In Retirement Account (LIRA)
- A type of Registered Retirement Savings Plan (RRSP) where the funds are subject to pension legislation. The funds must be used to purchase a life annuity or be transferred to a Life Income Fund (LIF) or a Locked-In Retirement Income Fund (LRIF) by the end of the year during which the account holder reaches age 71.
- Locked-In Retirement Income Fund (LRIF)
- A type of Registered Retirement Income Fund (RRIF) that can hold locked-in pension funds. Funds in an LRIF must be used to provide retirement income. Legislation sets the minimum and maximum amounts the account holder can withdraw every year.
- Long-Term Income Protection (LTIP)
- LTIP is an income replacement benefit provided by the employer’s insurance carrier to employees who have been deemed unfit for work by a qualified physician. Members in receipt of LTIP can continue to earn pension credit. Please read Changes in your life on our website for more details on earning pension credit while on LTIP.
- Long Term Income Protection
- Marital status
The marital status we have on record for you. If this is not correct, please contact OPB.
If you have an eligible spouse (as defined by the Plan) when you start collecting your pension from the PSPP, that pension will include a joint and survivor pension. The joint and survivor pension which is required by law under Ontario's Pension Benefits Act means your eligible spouse will be entitled to a lifetime pension after you die, equal to 60% of your pension. To help offset the cost of paying this survivor pension to your spouse, the pension you receive will be actuarially reduced.
An increased survivor pension will reduce the pension you receive during your lifetime. If your spouse predeceases you or your spousal status changes, you will continue to receive the reduced pension. The reduction takes into account your age and your spouse's age when your pension starts.
You and your spouse can waive some or all of the 60% joint and survivor pension. If you both waive the joint and survivor pension, the pension you receive will not be reduced to cover the cost of paying a pension to your eligible spouse after your death.
- Minimum purchase required to qualify for Early Unreduced Retirement
- The minimum amount of pension credit you need to purchase to qualify for an early unreduced pension that starts before age 65 and is not subject to an age reduction.
- Minimum purchase required to qualify for Post-retirement Insured Benefits
The amount of pension credit you need to purchase to qualify for post-retirement insured benefits.
- If you're a regular full-time employee, when you retire you will be entitled to receive medical, dental and basic life insurance benefits if you satisfy the eligibility requirements.
- If you're a seasonal or regular part-time employee, you must have continuous employment with pension credit in each of your qualifying years to be eligible for insured benefits. Buying back pension credit can help you reach the amount of pension credit you need to qualify for insured benefits in retirement. The Minimum purchase required to qualify for Post-retirement Insured Benefits information does not display in your estimate if you are an unclassified, seasonal or regular part-time employee since special calculations apply. If this applies to you and you want to know if you can purchase pension credit to qualify for post-retirement insured benefits, please contact OPB directly for more information.
- OPP/OPPA members receive insured benefits from the Ontario Provincial Police Association (OPPA). Contact OPPA for more information at 1-800-461-4282
Please note: In 2014 the Government of Ontario announced changes to the post-retirement insured benefits (medical, dental and basic life insurance coverage) it offers to the Ontario Public Service. These changes came into effect January 1, 2017. For more information about eligibility for insured benefits and these changes, please read Government of Ontario announces changes to post-retirement insured benefits (PDF).
- MOPPS (Major Ontario Pension Plans) Agreement
- An agreement that facilitates transfer among participating pension plans for employees who move among the larger Ontario public sector employers.
- Non-Ontario Public Services (non-OPS) employer
- An employer that is not a ministry, agency, board, commission or organization of the Government of Ontario.
- Normal Retirement Date
- The member’s 65th birthday. Members can continue to participate in the PSPP past age 65, but under the federal Income Tax Act they must start receiving their PSPP pension by the end of the year they turn 71.
- Old Age Security (OAS)
- Is a federal benefit available to eligible residents of Canada who are 65 years of age and over.
- Ontario Public Service (OPS) employer
- A ministry, agency, board, commission or organization of the Government of Ontario that is designated by law as an employer for the purposes of the PSPP.
- Past Service Pension Adjustment (PSPA)
- A measure of the increase in the value of a member's pension resulting from a past service event such as a transfer or a buyback. A PSPA will reduce the member's RRSP contribution room and must be approved by the Canada Revenue Agency (CRA).
- Pension adjustment (PA)
- The estimated value of the pension earned by a member in a calendar year in accordance with a formula in the federal Income Tax Act. The PA is related to the Plan’s pension formula but does not represent the real value of the member’s benefit. The PA in a calendar year reduces the member’s RRSP contribution room in the following calendar year, e.g., the PA for 2021 reduces the member’s RRSP contribution room in 2022.
- Pension Benefits Act (PBA)
- The legislation that sets out the rules and minimum standards for pension plans registered in Ontario.
- Pension credit
- The period of time for which a member contributes to the PSPP. It includes credit bought back or transferred in from another pension plan and any period when the member receives LTIP benefits and the employer makes both member and employer contributions.
- Pension formula:
Annual pension before age 65: 2% x average annual salary x pension credit
At age 65 the pension above is reduced by the following formula: 0.7% x (lesser of average annual salary and Average YMPE) x pension credit up to 35 years
- Projected annual salary increase
- Select the rate by which you anticipate your annual salary to increase until your retirement. The default for this increase is set at 2%. Remember to click the Update Salary button to display your projected salary at retirement.
- Projected salary at retirement
- This tool will estimate your projected salary at retirement using your salary information and the projected annual salary increase you selected. Your projected salary at retirement, and your best 5 years salary - different rules may apply for members of OPP/OPPA - are used to calculate your pension benefit.
- Reciprocal Transfer Agreement (RTA)
- An agreement between the PSPP and another registered pension plan that allows for the transfer of pension credit between the plans.
- Reduced pension
A pension that starts before age 65 and is subject to an age reduction. With the age reduction, a member’s pension is reduced by 5% for each year the member is under 65 (and pro-rated for a partial year). For example, a pension starting at age 60 is reduced by 25% (5% x 5 years under 65).
A member must be age 55 or older to receive a reduced pension (subject to small pension rules). Note that there is no age reduction where a member is eligible for an unreduced pension.
- Registered Pension Plan (RPP)
- A pension plan that is registered under the federal Income Tax Act.
- Registered Retirement Income Fund (RRIF)
- A registered retirement vehicle designed to provide a constant flow of retirement income. Legislation sets the minimum amount the account holder must withdraw every year.
- Registered Retirement Savings Plan (RRSP)
- A registered personal retirement savings plan. Contributions to an RRSP are tax-deductible. Tax on investment income earned on the funds is deferred until the funds are withdrawn. Withdrawals must commence in the year the account holder reaches age 71.
- Residual balance or residual benefit
- The difference between the member’s total contributions, plus interest, and the total pension and survivor pension payments made from the PSPP.
- Retirement Compensation Arrangement (RCA)
- The RCA provides supplementary benefits for those members whose accrued pension from the PSPP exceeds the maximum allowed under the federal Income Tax Act (ITA). For more information, visit the RCA page .
- Retirement option
The Plan provision under which a member retires. The retirement options are:
Normal Retirement (unreduced) At age 65 Factor 90 (unreduced) Age + pension credit = 90+ 60/20 provision (unreduced) Age 60 + with 20+ years of pension credit OPP 50/30 provision (unreduced) OPP officer age 50+ with 30+ years of pension credit OPP Factor 85 provision (unreduced) OPP civilian with age + pension credit = 85+ Reduced Pension (reduced) Age 55, 5% reduction per year before age 65
- The amount of money paid to a member and computed by reference to the hours, days, weeks or other periods of time for which the member is employed that is pensionable under the PSPP. Salary does not include overtime pay or any payment to the member in lieu of a benefit or any payment determined by OPB not to be part of a member's salary.
- Small pension
When a member’s employment ends, their pension is considered a small pension if, in the year their employment ended:
- their annual pension is equal to or less than 4% of the Year's Maximum Pensionable Earnings (YMPE), or
- the commuted value of their pension is less than 20% of the YMPE.
If a member has a small pension and they:
- do not qualify for insured benefits in retirement, they will receive a lump-sum payment from the Plan
- do qualify for insured benefits, they will have the option of a pension or a lump-sum payment from the Plan.
Under the PSPP, a “spouse” is either of two persons who,
- are married to each other, or
- are not married to each other and are living together in a conjugal relationship,
- continuously for a period of not less than three years, or
- in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act.
- Survivor pension
A pension paid to an eligible spouse or eligible child after a member's death. Survivor pensions are payable for an eligible spouse's lifetime or until the child no longer meets the age, educational, or disability requirements. Survivor pensions receive annual cost-of-living adjustments every January.
For more information on death benefits, please read our booklet, Planning today for tomorrow (PDF).
- Total Justices of the Peace service credit
- The projected total pension credit in years and months earned, including any past service purchased, while serving as a Justice of the Peace. This credit takes into account your date of appointment and membership while contributing to the PSPP. The Supplemental Pension Plan for Justices of the Peace provides benefits in addition to the PSPP, based on the eligible Justices of the Peace service credit.
- Transfer Agreement
- Includes reciprocal transfer agreements and the transfer provisions in the Plan and the OPSEU Pension Plan that allow for transfers between the two plans.
- Unreduced pension
A pension that is not subject to an age reduction. A member can receive an unreduced pension at age 65 or under one of these early retirement provisions if they have the required combination of age and pension credit.
Factor 90 Age + pension credit = 90+ 60/20 age Age 60 + with 20+ years of pension credit OPP 50/30 OPP officer age 50+ with 30+ years of pension credit OPP Factor 85 OPP civilian with age + pension credit = 85+
- Year's Maximum Pensionable Earnings (YMPE)
- A salary limit used to determine an employee’s contributions to the Canada Pension Plan (CPP) contributions. Canada Revenue Agency (CRA) sets this rate each year. For 2022, the YMPE is $64,900.