You contribute approximately 10 per cent of your regular salary to the OPSEU Pension Plan (the Plan). You do not make pension contributions on overtime pay and bonuses.
Your pension contributions are tax deductible and reduce your taxable income.
Your employer matches the pension contributions you make.
The Canada Revenue Agency requires your employer to calculate and report a Pension Adjustment on your T4 each year, which reduces your registered retirement saving plan (RRSP) contribution room in the following year.
Increasing your pension
Your pension is calculated based on your years of pension service and the average of your best five sequential years of salary. While you are working, your pension will increase if:
You transfer in pension service from another pension plan or you buy back service for a period when you worked for your employer but did not contribute to the Plan (e.g. when you took an unpaid leave of absence, were on a contract or worked on a casual basis). Please refer to the Employment Changes for more information.
You continue to earn more pension service as your salary increases.
Who pays for what?
Both you and your employer contribute to the Plan. These contributions are invested, and it’s the investment returns that pay for your pension. Because this is a defined benefit plan, contributions do not directly determine the amount of your pension; they are pooled with the contributions of other members and invested together.
Employer contributions
Employers make pension contributions for all members of the Plan. Your employer contributes the same amount as you.
Employee contributions
Your contributions to the Plan are based on your salary (this means your regular salary and does not include overtime pay or bonuses). As long as you continue to receive your regular salary, you continue to make contributions to the Plan. Your contributions to the Plan also continue during a paid leave of absence and during temporary part-time work arrangements, unless you elect to make contributions on your reduced hours only.
Just as the calculation of your benefits takes into account that you will receive benefits from CPP, contributions to the Plan are based on a formula that takes into account that you make contributions to CPP at the same time.
Example: Member annual contributions The example below shows that your contributions to the Plan are separated into two parts (9.4 per cent and 11 per cent). It shows how your contributions to the Plan and CPP are integrated. You contribute a smaller amount to the Plan on the portion of your salary up to the Year’s Maximum Pensionable Earnings (YMPE) because you also make contributions to CPP on that portion of your salary. Under the Plan’s current contribution formula, this is how your contributions are calculated: 9.4 per cent of your salary up to the YMPE plus 11 per cent of your salary above the YMPE
Salary: $70,000 YMPE: $66,600 9.4% of your salary up to the YMPE contributions to the fund: .094 x $66,600 = $6,260.40 plus 11% of your salary above the YMPE contributions to the fund: .11 x [$70,000 − $66,600] = $374 Total member contributions* to the fund: $6,260.40 + $374 = $6,634.40 * All calculations use the 2023 YMPE. Actual contributions will vary depending on the YMPE set by CPP annually.
Contributions to CPP
You make CPP contributions on the portion of your salary between the Year's Basic Exemption (YBE) and the YMPE. For 2023, the YBE is $3,500 and the YMPE is $66,600. So based on the example, the portion of salary used for determining the 2023 CPP contribution is $63,100 ($66,600 – $3,500). On this amount you will pay 5.95 per cent of your salary to CPP in 2023.
Tax status of contributions
The regular contributions you make to the Plan from your earnings are tax deductible, which means they reduce the amount of employment income you pay taxes on. They are deducted from your pre-tax income and your employer will report them on your income tax slip (T4).
Note: Contributions to CPP are integrated with your contributions to the OPSEU Pension Plan. This means you contribute a smaller amount to the Plan on the portion of your salary up the YMPE because you also make contribution to CPP on that portion of your salary.
