General Information – Past Service

This section is about purchasing credited service in 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) the early retirement requirements 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.