PUBLIC SERVICE SUPPLEMENTARY PLAN (PSSP)

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1 PUBLIC SERVICE SUPPLEMENTARY PLAN (PSSP) 1. Background The pension from the Public Service Pension Plan (PSPP) is limited to the maximum amount permitted under the Income Tax Act (Canada) and Regulations (ITA). For 2016, the maximum annual lifetime pension is $2, per year of Pension Credit earned after The Ontario Government established the Public Service Supplementary Plan (the Supplementary Plan ), effective from January 1, 1992, to provide pension payments for those PSPP members whose pension is limited by the application of the ITA limits. This Supplementary Plan came into existence on October 12, 1994 through an Order in Council (No. 2779/94); however, it relates to Pension Credit earned from January 1, In accordance with the ITA, the PSPP applies this limit, as follows: Maximum Lifetime Annual Pension Per Year of Service Pension Credit Annual Date Pension Commences Earned ITA Limit After 1991 January 1, 1992 December 31, 2003 $1, January 1, 2004 December 31, 2004 $1, January 1, 2005 December 31, 2005 $2, January 1, 2006 December 31, 2006 $2, January 1, 2007 December 31, 2007 $2, January 1, 2008 December 31, 2008 $2, January 1, December 31, 2009 $2, January 1, 2010 December 31, 2010 $2, January 1, 2011 December 31, 2011 $2, January 1, 2012 December 31, 2012 $2, January 1, 2013 December 31, 2013 $2, January 1, 2014 December 31, 2014 $2, January 1, 2015 December 31, 2015 $2, January 1, 2016 December 31, 2016 $2, Before 1990 January 1, 1990 December 31, 2003 $1, January 1, 2004 December 31, 2004 $1, January 1, 2005 December 31, 2005 $1, January 1, 2006 December 31, 2006 $1, January 1, 2007 December 31, 2007 $1, January 1, 2008 December 31, 2008 $1, January 1, December 31, 2009 $1, January 1, 2010 December 31, 2010 $1, January 1, 2011 December 31, 2011 $1, January 1, 2012 December 31, 2012 $1, January 1, 2013 December 31, 2013 $1, January 1, 2014 December 31, 2014 $1,846.67

2 2 of 6 January 1, 2015 December 31, 2015 $1, January 1, 2016 December 31, 2016 $1, The Supplementary Plan is not a Registered Pension Plan and, accordingly, it is not subject to the rules and regulations of the Ontario Pension Benefits Act. Additionally, it does not have tax-exempt status; i.e., contributions are not tax-deductible. Supplementary benefits are based on pension credit accrued with a PSPP employer (i.e., a Ministry, Agency, Board or Commission), including pension credit that is transferred or purchased from the OPSEU Pension Plan. However, supplementary benefits are not provided for pension credit that is: Transferred from another pension plan under a MOPPS agreement or a Reciprocal Transfer Agreement (RTA); Purchased for service with another pension plan; or, For pre-1990 employment with a PSPP employer that the member agreed to purchase between June 8, 1990 and December 31, PSSP Administration OPB administers the Public Service Supplementary Plan on behalf of the Ontario Government and has had that responsibility since November 1, However, the Ministry of Government Services (MGS) administers the fund used to pay for benefits from the PSSP. This is called the Supplementary Benefit Account. 3. Calculation of Threshold Salary for PSPP Member The threshold salary for a PSPP member is calculated annually according to the following formula: Annual Defined Benefit Limit + (0.007 x Current Year YMPE) 0.02 Applying this formula, the following chart illustrates the threshold salary rate beginning from 1992: Year YMPE Annual Defined Benefit Limit Payable at Age 65 (NRD) Threshold Salary To Age $32,200 $1, $ 97, $33,400 $1, $ 97, $34,400 $1, $ 98, $34,900 $1, $ 98, $35,400 $1, $ 98, $35,800 $1, $ 98, $36,900 $1, $ 99,026.00

3 3 of $37,400 $1, $ 99, $37,600 $1, $ 99, $38,300 $1, $ 99, $39,100 $1, $ 99, $39,900 $1, $100, $40,500 $1, $105, $41,100 $2, $114, $41,233 $2, $120, $43,700 $2, $126, $44,900 $2, $132, $46,300 $2, $138, $47,200 $2, $141, $48,300 $2, $144, $50,100 $2, $149, $51,100 $2, $152, $52,500 $2, $156, $53,600 $2, $159, $54,900 $2, $163, The threshold salary is used to calculate the employee contributions to be transferred from the PSPP to the PSSP.

4 4 of 6 4. Supplementary Plan Contributions Members whose annual salary is in excess of the Threshold Salary rate do not experience any change in the calculation or remittance of their pension plan contributions. They continue to make contributions to the PSPP as described in the Planning Today for Tomorrow booklet and in Section 3: Contributions. Both member and employer contributions are remitted to the OPB in normal fashion by the employer. At year-end, the OPB examines the contribution record and annual salary rate for each member and identifies those Members whose annual salary rate exceeds the Threshold Salary and whose contributions are above the maximum annual limit as set by the Income Tax Act (ITA) (e.g., 2016: $18,787.00). At that time, the OPB segregates the contributions that exceed the ITA limit and reallocates them and, if required, the employer amount to the Supplementary Plan. The funds themselves are taken from the PSPP Fund and forwarded to a Supplementary Benefit Account that is managed directly by the Management Board Secretariat. The only difference that the member may notice is that the Year-to-Date Amount for his/her pension contributions that appears on the Statement of Earnings and Deductions may not match the amount posted to his/her T4 form. The maximum allowable amount is the maximum amount of pension contributions that can qualify as a tax deduction. Pension contributions that are above that limit are not taxdeductible and, therefore, cannot be posted as such on a T4 form. The total dollar amount of member contributions will appear on his/her Statement of Earnings and Deductions. 5. Benefit Entitlements under the Supplementary Plan A PSPP member whose pension exceeds the ITA maximum amount may be eligible to receive a benefit from the Supplementary Plan upon termination. The entitlement from the Supplementary Plan is based on the conditions that exist at the time of termination of PSPP membership. Until the actual termination occurs, whether it is pre-retirement, retirement or death, there is no way of knowing for certain whether a member is entitled to a Supplementary Plan benefit in addition to the benefit from the PSPP. Upon termination, whether it is a pre-retirement termination, retirement or death, benefit entitlements will be calculated in the same manner as they are calculated for those members whose benefits are entirely within the PSPP. The exception is that any benefit entitlements that exceed the ITA maximum will be paid from the Supplementary Plan Account, if eligible. (a) Termination Benefits All provisions of the PSPP as described the Termination Section apply to the benefit entitlement under the Supplementary Plan. However, the following administrative practice is unique to this plan.

5 5 of 6 The choice that the member makes with regard to the direction of his/her entitlement from the PSPP will determine the choice for the Supplementary Plan benefit. For example, at termination, if the member chooses to receive a commuted value from the PSPP, any supplementary benefit will also be paid out as a commuted value. The member cannot choose to have the PSPP benefit paid out as a commuted value and the PSSP benefit as a deferred vested pension. If a commuted value is paid out from the Supplementary Plan, it is paid out in cash, less any withholding tax. Because the Supplementary Plan is not a Registered Pension Plan under the ITA, there are no tax-exempt transfers to an RRSP. (b) Retirement Benefits All provisions of the PSPP as described in the Retirement Section apply to benefit entitlements under the Supplementary Plan. Additionally, the following applies to the calculation of the Supplementary Plan portion of the retirement benefit: The ITA maximum is based on the pension benefit payable at Normal Retirement Date (i.e., age 65). In the event that a member chooses to retire earlier than age 65 and is not eligible for an unreduced pension (e.g., 60/20, Factor 90), the monthly amount of the pension will be subject to Age Reduction applied before the ITA limit. The age reduction prescribed in this plan is 5/12% for each month the early retirement date precedes the Normal Retirement Date. As a result, once the monthly pension had been reduced under this method, it may then be within the ITA limits, in which case the entire pension will be paid from the PSPP. However, if a member is eligible for a benefit from both the PSPP and the Supplementary Plan, then s/he receives two benefits: one from the PSPP and one from the Supplementary Plan Account. Both benefits are eligible for inflation protection and, accordingly, receive the same annual cost-of-living increase at the same time. If the amount payable from the Supplementary Plan is very small (e.g., net amount of $20.00/month or less), then it is paid as a lump sum amount on an annual basis in January for the previous year. For example, if the member retires effective September 1, 2015 and the pension from the Supplementary Plan is $20.00 per month, then the member receives a lump sum payment for the period from September 1, 2015 December 31, 2015 (less applicable tax) in January (c) Survivor and Death Benefits from the Supplementary Plan

6 6 of 6 The eligibility criteria for survivor and death benefits from the Supplementary Plan are the same as those for the PSPP. The benefits are payable to beneficiaries named under the PSPP, as designated on the Beneficiary Designation Form (BDF)(OPB 1015). Please refer to the Death Section for details.