“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

His “best five “earnings = $74,000 2007 - 70,000 His “best four” earnings = $75,000
2008 - 72,000
2009 - 74,000
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

* We use the Supplemental Plan credited service in both lines of the formula because the top-up pension is based on the period of supplemental coverage. Any credited service in the Primary Plan outside the supplemental period would not be included in the top-up pension. For example, a member has 10 years of Primary Plan credited service and 5 years of Supplemental Plan credited service. To calculate the member's top-up pension, we would use 5 years of Supplemental Plan credited service in both lines of the above formula.

“Best four” earnings – example calculation

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
$40
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*
$44,400
Supplemental Plan: Joe's top-up pension
+ $40 
Joe's total pension to age 65
$44,440
per year
Primary Plan: Joe's lifetime pension from age 65**
$35,802
Supplemental Plan: Joe's top-up pension
+ $40 
Joe's total pension from age 65
$35,842 
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 $8,598. 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.