OMHRA Workshop Wednesday June 1, 2011

Transcription

1 OMHRA Workshop Wednesday June 1, 2011 Agenda Enrolments Bona Fide Retirement/Terminations Phased Retirement In the News 2 1

2 Enrolment Two types of members in OMERS Continuous full-time Other-than-continuous than full-time CFT OTCFT 3 Enrolment CFT Fills a continuing full-time position with the employer Regularly l works 52 weeks of the year (including paid vacation) Regularly works a normal full-time workweek (at least 32 hours per week) 4 2

3 Enrolment CFT includes Full-time, permanent, probationary, or regular employees who fill a continuing full-time position Employees with employment contracts who are paid directly by the employer and fill a vacant permanent full-time position 5 Enrolment CFT excludes Employees on limited, fixed-term contracts who are not filling a vacant permanent full-time position Employees hired for a limited period as replacements for full-time staff who are on an authorized leave period 6 3

4 Enrolment Case Study The City of Timmins, Director of Human Resources suddenly terminates their employment Bob is hired on a twelve-month contract to fill the position until a full recruitment process is completed 7 Enrolment Case Study Joe is hired by the Township of Stormont, Dundas & Glengarry to create an HRIS system Joe is on a fixed-term contract (working a 40 hour workweek) ending December 31,

5 Enrolment Case Study Anna is hired by the City of Windsor as a Payroll Clerk Anna is filling a permanent full-time position She is entitled to all benefits, including OMERS, once her three- month probationary period has been fulfilled 9 Enrolment OTCFT Any employee that does not satisfy the CFT definition is considered OTCFT for pension purposes OTCFT employees may include: Short-term, casual, temporary, seasonal, student, part-time or contract employees 10 5

6 Enrolment OTCFT To help, OMERS has created an info page OMERS Pension Plan enrolment for part-timetime employees (located on our website) This information page should be provided to all part-time employees upon hire 11 Enrolment OTCFT Mandatory enrolment for all (or a class) of OTCFT positions can be established by your Council/Board by passing a bylaw/resolution l Once the Pension Benefits Act (PBA) criteria is met, a member must be offered voluntary enrolment 12 6

7 Enrolment OTCFT PBA criteria state that OMERS membership must be offered if, in the two immediately preceding calendar years, the employee has either: 1. Worked at least 700* hours in each of two consecutive calendar years Or 2. Earned at least 35% of the YMPE in each of two consecutive calendar years Or 3. A combination of the above *Overtime hours/earnings are included 13 Enrolment OTCFT Meeting PBA criteria can include: Previous employment with any OMERS employer The hours a member would have worked while on pregnancy/parental leave Once enrolled, a member cannot opt out of OMERS 14 7

8 Enrolment OTCFT Employer s responsibilities: Make the initial offer 60 days in advance of eligibility Use Form 104 Offer of membership part-time employee (when the member first qualifies) Provide copy of Offer of OMERS Membership (parttime employees) booklet 15 Enrolment OTCFT Employer s responsibilities: Offer membership on an annual basis (standard letter and Form 104) 16 8

9 Enrolment Case Study Jack, a part-time employee of the City of Burlington, has the following employment history Years Hours Earnings YMPE %* $13,500 $42,100 32% $8,750 $43,700 20% $9,500 $44,900 21% $14,500 $46,300 31% $20,000 $47,200 42% $7,500 $48,300 16% * Earnings expressed as a percentage of the YMPE 17 Enrolment Case Study Grace is hired in a seasonal full-time position at the City of Niagara Falls Grace will be working 40 hours per week from May 1 to October 31 of every year Grace has a lay-off period from November 1 to April 30 each year 18 9

10 Enrolment Case Study The Regional Municipality of York needs to temporarily fill a full-time position due to a pregnancy/parental leave whose length is 12 months The successful candidate resigned from the City of Brockville, where the individual was a member of OMERS 19 Enrolment New hire with a prior Registered Pension Plan (RPP) May be able to transfer credited service and earnings from any RPP in Canada Canadian public and private DB or DC sector RPPs are eligible Notify OMERS via the e-form 102 (OMERS will contact the member directly) 20 10

11 Hire Date The date of hire reported on the e-form 102 should be the earliest date in the most recent period of continuous employment Leave periods that occurred between the date of hire and the date of enrolment must also be reported on the e-form Enrolment Omission Periods An omission period can occur if an employee or class of employees is not offered enrolment and/or enrolled when first eligible A true omission period exists if both of these are true: A pension adjustment was not reported in the year (post-1989) Contributions were not deducted in the year Section Failure to enrol an eligible employee (omission period) 22 11

12 Enrolment Omission Periods Member Cost contributions that would have been paid had member been contributing Employer Cost employer s share of missed contributions + interest accrued on both shares 23 Employed OMERS Retirees If an employer is hiring a retired member, enrol the member into the OMERS pension plan as soon as they are eligible OMERS will contact the member directly to inform them of their options Continue receiving their OMERS pension and not re-enrol in the plan or Stop their OMERS pension and re-enrol in the plan Section Re-employed retired members 24 12

13 Buy-backs Buy-backs Some OMERS active members have the ability to purchase past service in order to obtain additional credited service in OMERS 26 13

14 Where can this service come from? There are Three Buckets of purchasable service. OMERS Service Private Sector Service Public Sector Service 27 Where can this service come from? 1. OMERS Service Authorized leaves of absence with an OMERS employer that were not purchased Authorized leaves: pregnancy parental leave, broken service (legal strike), omission period Employment with an OMERS employer while the member was not a contributor to the Plan Previously refunded OMERS service 28 14

15 Where can this service come from? 2. Private Sector Service Effective March 1, 2010 Refunded Canadian private sector pension service. Post RPP Service only Defined Benefit (DB) or Defined Contribution (DC) Registered Pension Plans 29 Where can this service come from? 3. Public Sector Service Refunded service with a registered pension plan of another Canadian public sector employer (municipal, provincial or federal) Post 1991 RPP service only 30 15

16 Buy-back Payment Options Lump sum (cash payment) Member pays OMERS directly Contribution receipt issued by OMERS RRSP transfer RRSP must be in member s name 31 Buy-back Payment Options Monthly payment plan Arranged over 12, 24 or 36 months Pre-authorized withdrawal from member s bank account Transfer from an AVC account Transfer of a retiring allowance Combination of the above 32 16

17 Buy-back Quiz A City of Timmins member enrolled in OMERS in Feb They have the following past employment periods: Hired by the City of Timmins in May 2009 City of Toronto May 2002 to April 2009 (took OMERS refund) IBM (DC RPP) Apr to May 1991 (took a refund) Tree Planter in BC Apr to Oct City of Sarnia lifeguard in high school May 1985 to Aug (was not enrolled in OMERS) 33 Bona Fide Retirements and Terminations 17

18 Definition In general, a bona fide termination/retirement occurs when: An employee fully severs his or her employment relationship The employee has lost both seniority and benefits with their employer 35 Key Questions Some key questions to determine if a bona fide termination or retirement has occurred: Has a record of employment been issued? Did the employee receive a retiring allowance? Has a reasonable amount of time passed between termination and rehiring? 36 18

19 Key Questions Has the employee s seniority and/or compensation changed? Has the employee returned to the same job, schedule and reporting structure? Have the employee s benefits continued? Is the purpose of the retirement/termination to obtain pension benefits and continue working? 37 If you are still not sure OMERS recommends that you seek legal advice should you remain unclear as to whether a bona fide retirement or termination has occurred 38 19

20 Phased Retirement Phased Retirement Defined What is Phased retirement? Defined Benefit (DB) Pension plan feature Allows member to receive payments from the plan and to simultaneously accrue further benefits 40 20

21 Background Been on the pension industry s radar since 1997 Seen as a technique that was gaining interest, but not permitted by legislation under Income Tax Act (ITA) A potential means to address the demographic crisis retain experienced workers 41 Background - Federal Federal budget in the spring of 2007, introduced phased retirement Bill C-52 passed in 2007 amending the ITA to permit phased retirement Bill C-28 allowed phased retirement for members of federally regulated pension plans 42 21

22 Background - Provincial Ontario Expert Commission on Pensions released its final report in November 2008 Recommending PBA be amended to permit phased retirement Phased retirement introduced in Ontario Budget Spring 2009 Bill 236 tabled - December 2009 Waiting on proclamation and regulations 43 Changes to the Legislation Step one Income Tax Act (completed) Step two Provincial pension law changes (outstanding) 44 22

23 Legislation Federal Step one Amendments to Income Tax Regulation (ITR) Bill C-52 amended subsection 8503 of the Income Tax Act Regulations allowing member of a DB pension plan to receive and accrue benefit at the same time Up to 60% of accrued benefit 45 Legislation - Provincial Step two - enter Bill 236 Requirements: Must be at least age 60 or age 55 and entitled to unreduced pension Must not have reached normal retirement age Member must enter into a written agreement with employer 46 23

24 Legislation Provincial Conditions of Agreement must comply with pension plan provisions Payment cannot exceed 60% of accrued benefit Status: Waiting on proclamation and regulations to come into force 47 CPP Starting January 1, 2012 After 60, a Canadian can start receiving early CPP without ceasing employment Must continue paying CPP contributions Each year CPP amount payable is adjusted to account for additional contributions and service 48 24

25 OMERS Next Steps For phased retirement to become permissible, the following steps would have to occur: 1. As a Multi-Employer Pension Plan (MEPP) craft a program that would, in an even-handed way, address the needs of very diverse employer group while meeting legislative requirements e e CAS, hydro, school board, police and large city would each have very different needs 49 OMERS considerations 2. Sponsors Corporation (SC) approval in principle 3. SC Amendment of pension plan text 4. OAC administrative implementation System enhancements, forms, processes, etc

26 OMERS considerations NRA issues Bill 236 says age 55 is earliest age for phased retirement, this limits applications to NRA 60 groups 51 Many Unknowns Offered on an individual basis and/or by class of employees Phased Retirement could become subject to the collective bargaining process Assess any funding requirements and effect on the plan 52 26

27 Many Unknowns Phased Retirement is an employer driven transaction Based on individual agreements between employees and the employer The pension plan establishes broad rules in compliance with the ITR and PBA Regulations The employer is responsible for administering i i phased retirement within those parameters 53 Current Options Authorized leave periods Temporary reduced hours or workweek Double contributions 100% member paid 54 27

28 In the News Contribution Rates NRA Up to CPP earnings ceiling 7.4% Above CPP earnings ceiling 10.7% $48,300 = 2011 CPP earnings ceiling 56 28

29 Contribution Rates NRA Up to CPP earnings ceiling 8.9% Above CPP earnings ceiling 14.1% $48,300 = 2011 CPP earnings ceiling 57 Temporary Changes Approved Contribution rate increase Effective January 1, % % % 2.9% *increase spread over 3 years 58 29

30 Temporary Changes Approved Early termination calculation changes Effective January 1, 2013 on go-forward service only Impacts members leaving employment before age 55 (NRA 65) or 50 (NRA 60) Members who are within 10 years of their normal retirement age at termination are not affected Pension benefits earned after 2012 will be based on the actuarial value of the normal retirement pension without pre-retirement indexing and early retirement subsidies 59 Additional Voluntary Contributions 30

31 Additional Voluntary Contributions Invest in our expertise AVCs give members the opportunity to: Invest in the OMERS Fund Earn the OMERS annual rate of return based on its diversified global assets 61 Additional Voluntary Contributions Exclusive to OMERS Members Diversified ifi global l assets worth $53 Billion* * in public and private market investments Fees and expenses on a cost-recovery basis *As at December 31,

32 AVC Eligibility Available exclusively to OMERS members Active members Deferred members Retired members 63 AVC Contributions Active members are able to make AVC contributions through: Transfers from a registered retirement vehicle AVC automatic contributions 64 32

33 AVC Automatic Contributions Only for active members Option to make ongoing contributions via preauthorized debit from a bank account Biweekly or monthly options Debits can be timed with your pay cycle Minimum contribution $40/month or $20/biweekly 65 AVC Automatic Contributions AVC contributions are in addition to your OMERS defined benefit contributions Maximum AVC contribution amount aligns with a member s contributory earnings and credited service Tax receipt issued by OMERS 66 33

34 AVC Automatic Contributions Automatic Contribution Limits Established by OMERS Contributory earnings are before taxes and are based on full-time 12 month employment. When selecting your earnings range, do not include expected overtime earnings. 67 OMERS AVC Option 68 34

35 Transfers to an AVC Account Transfers from registered retirement vehicles only, including: RRSP non-locked-in funds LIRA locked-in funds RPP registered pension plan 69 Transfers to an AVC Account Transfers can be made during the annual transfer window period January 1 to April 30 only No minimum or maximum transfer limits imposed by OMERS 70 35

36 The OMERS Fund Trusted, Diversified, Global OMERS assets comprise a diversified global fund including investments in: Public markets Private markets 71 Investment Structure Public Markets Real Estate Private Equity Infrastructure 72 36

37 2010 Asset Mix (as at December 31, 2010) 60% % 40% Infrastructure Private Equity Real Estate Public Markets Private Markets 73 Bruce Power Borealis 74 37

38 Hudson Yards Oxford Properties 75 Golf Town OMERS Private Equity 76 38

39 High Speed 1 Borealis 77 Fairmont Resorts Oxford Properties 78 39

40 Yorkdale Mall Oxford Properties 79 Confederation Bridge Borealis 80 40

41 Enwave Energy Corp. Borealis 81 Give & Go OMERS Private Equity 82 41

42 OMERS Plan Rate of Return % * Average Annual Rate of Return 83 AVC Fees and Expenses AVC accounts earn the OMERS Fund rate of return less: Investment management expense Annual administration fee 84 42

43 Investment Management Expense Reflects cost to manage all OMERS investments Described as a basis point reduction to the rate of return expressed as a percentage, it has ranged from 0.39% to 0.64% over the last five years Expenses can vary from year to year No profit margin: based on cost recovery 85 Example 2010 OMERS Annual Rate of Return = 12.01% Investment Management Expense = 0.64% Net Annual Rate of Return = 11.37% 86 43

44 AVC Administration Fee Associated with the start-up, operation and maintenance of AVC accounts A flat annual fee For 2011 the fee is $23 87 Withdrawal Options for Active Members Annual withdrawal window March 1 to April 30 Annual withdrawal amount: Maximum of 20% per year Full withdrawal option over five years Withdrawal required for four consecutive years, then 20% limit no longer applies in the 5 th consecutive year 88 44

45 AVCs for Retired and Deferred Members Can contribute via fund transfer option; automatic contributions not available Can continue to transfer funds into AVCs until April 30 th of the year you turn 70 Full withdrawal available during annual withdrawal window May keep your AVCs with OMERS until Oct. 31 st of the year you turn AVC Options Upon Leaving your Employer Full transfer and withdrawal options become available for the 6 months following retirement or termination After the 6 months, the annual withdrawal window applies 90 45

46 AVC Risks Limitations on the liquidity of an AVC account An AVC account will experience the same variability of returns as the OMERS Fund AVCs are suitable for members with a moderate risk tolerance Fees and expenses may change over time 91 AVCs and myomers myomers: the key to your AVC account Set up and manage an AVC automatic contribution plan Initiate a lump-sum fund transfer into an AVC account View your AVC account information Use Retirement Income and AVC Estimators 92 46

47 AVC Tools and Information Consider the AVC Option and The Terms of Participation OMERS 2010 Annual Report, Focus: Today and Tomorrow AVC Self-Assessment Quiz OMERS Client Services at AVC Virtual Presentation 93 Questions 47