Employer Administration Manual

Transcription

1 Employer Administration Manual Current as of March 18, 2016 Healthcare of Ontario Pension Plan 1 Toronto Street Suite 1400 Toronto ON M5C 3B HOOPP (46677) [email protected]

2 Contents 1. Using this manual and contacting HOOPP Purpose Using this manual Contacting HOOPP Administration overview Board of Trustees HOOPP staff Employers Targeted communications Enrolments Getting started Full-time employees Part-time employees Enrolment eligibility more than one employer Enrolment process Portability of benefits Designating a beneficiary Overdue enrolments Enrolment checklist Contributions Employee required contributions Pensionable earnings Calculating employee contributions Employer required contributions Retroactive pay (retro) Contributions for leaves Contributions in other situations Remitting contributions deadlines and methods Reconciliation process Income tax requirements Contributions checklist Leaves and layoffs Leaves Employer reporting Limits and Income Tax Act requirements If some or all contributions are not made If a member dies, retires, or terminates while on leave When a leave ends Special situations Leaves and layoffs checklist Portability and buyback Buybacks MOPPs reciprocal transfers Commuted value transfers into HOOPP Commuted value transfers out of HOOPP Special transfer rules Section 80 of the Pension Benefits Act Employer Administration Manual

3 6.6 Buybacks and transfers checklist Disability benefits Free accrual Disability pension Administrative steps If a member chooses a disability retirement Termination What to do when a member terminates employment Notice of Termination HOOPP will contact the member Tax considerations Other information Termination checklist HOOPP pensions The HOOPP pension Survivor benefit options When pensions start Pension payments Shortened life expectancy (SLE) Re-enrolling in the Plan after retirement Retirement Steps to help a member retire Using retirement materials Member retirement checklist Death Death benefits Death before retirement Death after retirement Death checklist Member information Reporting changes Privacy Disclosure of information Family law matters Communications support Employers Members Pensioners Appendix A: Glossary Appendix B: PA guide B.1 How to use the PA guide B.2 What are PAs, PSPAs and PARs? B.3 Responsibilities for reporting PAs, PSPAs and PARs B.4 How RRSP contribution room is calculated B.5 Who gets a PA? B.6 Revising PAs B.7 Dates to remember Employer Administration Manual 3

4 B.8 Calculating 2015 PAs B.9 Calculating 2014 PAs B.10 Calculating 2013 PAs B.11 Calculating 2012 PAs B.12 Calculating 2011 PAs Appendix C: Change log Employer Administration Manual

5 1. Using this manual and contacting HOOPP 1.1 Purpose This manual is intended to help you understand your roles and responsibilities as a participating employer of the Healthcare of Ontario Pension Plan (HOOPP). To help you meet your responsibilities as a HOOPP employer, this manual will ensure that you: Have an understanding of the main features and administrative practices* Accurately enrol eligible employees Provide relevant information to members and eligible employees Remit accurate employee and employer contributions to HOOPP in a timely manner Provide HOOPP with accurate and complete data required to complete pension benefit transactions and annual statements * For an exact and complete description of entitlements under the Plan, consult the HOOPP Plan Text, the official Plan document. In cases where the information provided by this manual or any other source differs from that contained in the Plan Text, the Plan Text shall govern. 1.2 Using this manual Printing and personal copies Printing this document or keeping personal electronic copies is discouraged. Employers are encouraged to refer to the Administration Manual from its online location to ensure that the most up-to-date information is being used. Conventions and sections Checklists Remember to use the checklists provided throughout the sections of the manual so you do not miss important steps. Light bulbs This symbol appears throughout the manual to highlight important steps or instructions. ESE2 Throughout the manual you are directed to use smart forms on ESE2. To access smart forms you must sign in to ESE2 and select Smart Forms and Event Log. Glossary Key words and terms are defined in the glossary. Employer Administration Manual 5

6 Navigation Hide or show bookmarks using the bookmarks tab. Use CTRL+F to bring up the search box. Expand sections using the + sign. Go directly to a section by clicking a title. Links lead to web pages where resources can be downloaded. Cross references are clickable and lead to the sections they refer to. 1.3 Contacting HOOPP General contact Information Business hours: Mailing address: HOOPP s business hours are from 8 a.m. to 5 p.m., Monday to Friday. Healthcare of Ontario Pension Plan 1 Toronto Street Suite 1400 Toronto ON M5C 3B2 Client Service: or HOOPP (46677) [email protected] 6 Employer Administration Manual

7 Order Desk: Main number: Toll free: (Canada and U.S.) Fax number: If you know the extension of the person you are calling, enter that person's extension as soon as the attendant begins talking and your call will be directed. If you do not know the person's extension, press 5 for a staff listing. If you do not have a touch-tone phone, or need assistance, just wait on the line. HOOPP s receptionist will answer your call and connect you to someone who can help you. 2. Administration overview 2.1 Board of Trustees The HOOPP Board of Trustees is responsible for overseeing all aspects of the Plan and the HOOPP Fund. As a member of the Board governing the trust, each HOOPP trustee is a fiduciary and, as such, acts solely in the best interests of the Plan members and pensioners. The constant focus of the Board is on the importance of maintaining a financially secure and dignified retirement for HOOPP members. Board of Trustees' responsibilities The Board is responsible for all aspects of the Plan and the multi-billion dollar HOOPP Fund. HOOPP s Board: Establishes investment policy Approves contribution rates and plan design Monitors investment performance Makes plan changes There are eight trustees appointed by the Ontario Hospital Association (OHA) and four unions each appoint two trustees. The unions are: Ontario Nurses' Association (ONA) Canadian Union of Public Employees (CUPE) Ontario Public Service Employees Union (OPSEU) Service Employees International Union (SEIU) In addition, there can be two non-voting pension observers on the Board. HOOPP's President & CEO, reports directly to the Board. Employer Administration Manual 7

8 2.2 HOOPP staff HOOPP employees provide day-to-day investment and pension administration services under the direction of a President & CEO. Specialists are appointed by the Board to act as HOOPP's actuary, auditor, legal counsel, Plan custodian, and physician. HOOPP staff responsibilities HOOPP staff: Manage the multi-billion-dollar HOOPP Trust Fund as per the investment guidelines established by the Board of Trustees Process member benefits Provide administrative and educational support to more than 450 employers Administer monthly pensions for retired members and deferred pensioners Ensure HOOPP complies with pension and related legislation Assess the Plan s long-term financial status Maintain records for all contributing members Issue an annual statement to every HOOPP member Respond to all member inquiries 2.3 Employers While HOOPP handles most of the administrative workload associated with administering the pension plan, participating employers have an important role to play in the day-to-day operation of the Plan at their organizations. To administer HOOPP, you must follow the policies and procedures outlined in various pieces of legislation, the HOOPP Plan Text, as interpreted and applied by the Board of Trustees of HOOPP, the HOOPP Agreement & Declaration of Trust, this Administration Manual, and other material released by HOOPP. Employer responsibilities Employer responsibilities include: Ensuring the accurate calculation and timely remittance of monthly employer and member contributions Submitting forms on ESE2 that trigger such events as a member s enrolment, retirement or termination from the Plan Providing HOOPP with complete, accurate and timely data required to complete pension transactions Filing member data and associated documentation, and providing reports on members receiving free accrual and members who made contributions to HOOPP's retirement compensation arrangement (RCA) Making HOOPP communications materials available to members and eligible employees Ensuring that HOOPP has current and thorough contact information to properly provide important HOOPP updates including updates to this manual Ensuring part-time and other non full-time employees are advised that they are eligible to join the Plan 8 Employer Administration Manual

9 Helpful tips for remitting member information Use smart forms whenever possible. Smart forms have pre-populated member data and provide calculations. You do not need to file anything and you get status reports. Smart forms are fast and confidential. To access smart forms, sign in to ESE2 and select Smart Forms and Event Log. If you are using a paper form for a process that is not available on ESE2, use a fillable form so that information is easier to read and scan. Make sure paper forms are printed out on the correct-sized paper so that HOOPP can properly scan the barcodes. Always remember to include the member s SIN. 2.4 Targeted communications HOOPP targets messages to different people at your organization who need specific information to carry out their HOOPP-related duties. This helps ensure that your staff receives only the HOOPP information that is relevant to their specific jobs. For example, those designated as the CEO contact will get high level information, but they will not be advised about day-to-day administrative changes, such as changes to HOOPP forms. One person may be listed as more than one type of contact - this is especially common among smaller HOOPP employers. The targeted approach also tracks quantities to help ensure that HOOPP does not send too many, or too few, copies of materials to employers. Employer co-operation is critical to the system's success. Types of contacts AC Administrative Contact - receives administrative newsletter and updates concerning the day-to-day administration of the Plan CEO Chief Executive Officer CFO Chief Financial Officer CHRO Chief Human Resources Officer EC executive contact other officers of your organization who should receive high level information HLC health leave contact involved in preparation of member data collection, pension adjustments, and maintaining records regarding health leaves MCR Monthly Contribution Report submits and views Monthly Contribution Reports using the remittance tab on ESE2 MDC member data collection responsible for providing your organization's annual member data collection to HOOPP MIC member information coordinator receives s from HOOPP with messages and links to the quarterly member newsletter RCA maintains records for members who are covered by HOOPP's retirement compensation arrangement (RCA) Employer Administration Manual 9

10 New employers New employers will be asked to name people who should be receiving various types of information from HOOPP. Existing employers HOOPP's regional managers will verify your organization's list of HOOPP contacts about once each year, during a regular employer visit. Tip Keep HOOPP informed of any changes in contact personnel or addresses by updating your employer profile information on ESE2. 3. Enrolments 3.1 Getting started At the time of hire At the time of hire, provide employees with a copy of the member information booklet What You Need: A Pension Plan For You, which provides useful information about HOOPP. It is important that you advise new full-time employees that participation in the Plan is a compulsory condition of employment, regardless of their age and that they will be enrolled in HOOPP immediately. Also, it is important to ask a new hire if they: Are already a member of HOOPP at another employer, or Have already elected to retire and are receiving a pension from HOOPP, or were a member of a pension plan at their former employer and if they are interested in exploring the possibility of transferring benefits into HOOPP. Defining an employee You are responsible for distinguishing between employees and non employees, such as contract workers. You must also determine whether an employee is a full-time or part-time employee for the purpose of participating in HOOPP. Local or collective agreements may define each. For administrative purposes, HOOPP defines an employee as a person who is employed on a regular, full-time or part-time basis by a participating employer (or filling a permanent and continuing position on a contract basis). Any person who is paid under contract on a fee for service basis or other arrangement to perform a specific, narrowly defined duty for a specified period of time is not considered to be an employee for the purposes of the Plan. As a result, that person cannot participate in HOOPP. 10 Employer Administration Manual

11 However, if the employment contract covers work that is expected to continue beyond the end of the contract, and the contract worker is receiving the same salary and benefits as other non-contract employees in their class, the worker would be subject to the same HOOPP eligibility rules as permanent employees because the worker meets the key criteria of HOOPP's definition of employee. Privacy HOOPP takes the privacy of its members and pensioners very seriously. When you enrol a member, give them a copy of HOOPP s Privacy Guidelines. HOOPP may collect, use and disclose the personal information of its members, but only as required to administer their pension benefits and the HOOPP Plan and, after retirement, to pay their pension. For further information about privacy and disclosure of information, please see section 12 Member information. 3.2 Full-time employees In general, a full-time employee must join HOOPP and begin making contributions as of the date of hire. There are some exceptions, as listed below. Hired before employer joined HOOPP Full-time employees hired before your organization joined HOOPP do not have to join the Plan unless your organization made enrolment compulsory for all employees or certain classes of employees. Retired members New employees who are receiving a HOOPP pension when they are hired have two options. They can: continue to collect their pension while they work, and not re-enrol in HOOPP; or temporarily suspend their pension and re-enrol in HOOPP If a retired member chooses to continue receiving their HOOPP pension and does not want to re-enrol then no action is required on your part. If a retired member chooses to re-enrol then they must resume making contributions at your organization on the first day of the month following their last pension payment, regardless of whether they are working on a full-time or part-time basis and their pension will be suspended until the earliest of their termination of employment or they decide to cease making contributions and resume their pension payments. If a retired member is interested in suspending their pension and re-enrolling, the following steps should be taken: Provide the retired member with a copy of the member information sheet Rejoining HOOPP After Retirement/Working After Retirement. Inform the retired member that they must submit a Re-enrolment Estimate Request Form to HOOPP. This estimate is required before re-enrolling to ensure the retired member has information to assist them in making an informed decision about their pension. If after reviewing the Estimate the retired member wants to suspend their pension and re-enrol then they will need to contact HOOPP to notify us of this decision. Once the retired member notifies HOOPP of their decision to suspend their pension and re-enrol HOOPP will contact you to obtain further information required to complete the reenrolment process including suspending the pension payments. Employer Administration Manual 11

12 When the employee ceases employment, a HOOPP Pension Resumption Form will need to be completed and submitted to HOOPP before HOOPP can resume paying the member their pension. The pension will then be recalculated to reflect the additional service they have accrued. Retired members need to be aware that they will not receive any pension payments from HOOPP during the period during which they resume making contributions. It is important that the retired member receive a re-enrolment estimate from HOOPP before they decide to re-enrol or not. While the member will get a larger pension if they re-enrol based on the benefits they were receiving before, plus their new period of service and earnings it is possible that the value of the pension payments they forego may be more than the increase in their future pension. Pensioners should seek financial advice when considering the option to suspend their pension and re-enrol in HOOPP. Weekend workers A class of full-time employees known as "weekend workers" includes employees who typically work 30 hours per week, but are paid (and contribute on) the equivalent of 37.5 hours of pay, and thus are treated as full-time employees. A new employee hired as a "weekend worker" must enrol in the Plan immediately. Contributory service will be earned at the full-time rate. Part-time to full-time When a part-time employee who has not already joined HOOPP becomes employed in a full-time position, they must join the Plan as of the date they become employed full-time. 3.3 Part-time employees Enrolment in HOOPP is optional for part-time employees (and other non full-time employees) on the first day they start work at a HOOPP employer. Enrolment is not mandatory for these employees, it is up to the employee to decide if they want to join HOOPP or not. Part-time employees who do not enrol immediately may join HOOPP on any subsequent date. Part-time employees include part-time, contract, temporary, casual and all other employees not classified as full-time by their employer. There are several situations in which an employer will classify employees who are working full-time hours as a part-time employee for the purposes of joining HOOPP. For example, if an employee is hired on a temporary contract or is hired on a temporary basis to fill a permanent and continuing position (i.e. to backfill for a parental leave) and their employment is not expected to continue beyond the end of the employment contract, the employer may choose to classify the employee as part-time. Part-time employees who want more information about HOOPP before deciding whether or not to join should be given a copy of the booklet The Sooner You Join: Working Part-Time. Once a part-time employee enrols in the Plan, HOOPP will mail the member a welcome package that contains a more detailed overview of HOOPP's provisions. If a part-time employee chooses to join HOOPP they must continue to make contributions as long as they are employed part-time by any HOOPP employer. They can only stop making contributions at an employer where they work part-time if they become a full-time employee at another HOOPP employer. 12 Employer Administration Manual

13 Part-time employee already contributing through other part-time employment A new part-time employee who is already contributing to HOOPP at another employer where they work part-time must join HOOPP and begin contributing immediately upon hire, enrolment is not optional. Submit the Enrol New Member smart form on ESE2 for this employee. Tip Make sure you ask a new or existing part-time employee if they belong to HOOPP at another employer. If you are unsure if an employee is already a HOOPP member, please contact HOOPP Client Service. Inform part-time employees that they have the option to join HOOPP Important It is your responsibility to inform your part-time employees that they have the option to join HOOPP on their date of hire or on any subsequent date. If a part-time employee chooses not to join HOOPP you do not have to notify HOOPP of this decision. However, for your own records HOOPP recommends that employers have part-time employees who choose not to join HOOPP sign a waiver to ensure that the employer can show that enrolment was offered. Please refer to the Part-time Employee Waiving Right to Join HOOPP document available on ESE2 for some sample wording. It is important to note that this is sample wording only, HOOPP strongly encourages employers to determine what documentation they require from an employee and to prepare their own forms to meet their needs. If a part-time employee does not join HOOPP on their date of hire they can still join the Plan anytime in the future if they choose to do so. Retired members See Retired members in section Enrolment eligibility more than one employer Participating at more than one HOOPP employer Ask any new employee joining your organization if they work at another HOOPP employer. If an employee is working at another HOOPP employer they should be given a copy of the member information sheet, Working For More Than One Employer. Members who participate in the Plan at more than one employer will: Build contributory service in the Plan each year based on contributions at all employers where they work (up to a 54 week limit), thus building a bigger pension In most cases, have their annualized earnings blended in proportion to the amount of contributory service they build at each employer Employer Administration Manual 13

14 Not be entitled to receive a benefit from HOOPP until they have terminated their employment at all employers and terminated their membership in HOOPP A member who participates in HOOPP at more than one employer cannot build more than 54 weeks of contributory service in a year. You may need to provide such members with a refund of their contributions if they exceed this limit in a calendar year. HOOPP will provide you with details regarding the amount of the refund when the member's contribution data from all employers has been reconciled. Members who belong to HOOPP at one employer must, usually also contribute to the Plan at all the other HOOPP employers where they work as full-time, part-time, or casual employees. However, an exception can occur for members who work full-time at one HOOPP employer and part-time at others. In this case, members can choose to stop contributing at their part-time employer(s). It is important to note that if a member who is working full-time chooses to stop contributing at an employer where they work part-time they must make this same decision at all employers where they work part-time. If a member ceases working at the full-time employer or changes status from full-time to part-time, then contributions must resume at the part-time employer immediately. More than one employer scenarios In the following scenarios, all of the smart forms can be accessed by signing into ESE2. There are two types of waivers. The sample Part-time employee waiving the right to join HOOPP is a form that you create to use for part-time employees who choose not to join HOOPP and who are not already contributing to HOOPP. This is not a HOOPP form; this is merely sample wording to help you design your own form for part-time employees who choose not to enrol in HOOPP. HOOPP s Contributions Waiver is used for members who were contributing to HOOPP but have the option to stop due to a change in employment status. The Contributions Waiver can be downloaded from ESE2 under Forms. You should submit a signed Contributions Waiver to HOOPP and keep a copy for your records. Here are the forms to use for current employees or new hires who are working at more than one employer: Scenario #1 New part-time hire already works part-time at another HOOPP employer(s). If the employee is already contributing at another HOOPP employer, the employee must join HOOPP and begin contributing at your organization immediately. Submit the Enrol New Member smart form on ESE2. If the employee is not already contributing at the other HOOPP employer, they can: a. Choose to contribute at all employers where they work part-time Submit the Enrol New Member smart form on ESE2 and inform the employee that they should talk to their other employer(s) and begin contributing as of the day they start contributing at your organization; or b. Choose not to contribute: Have the employee sign any documentation you have developed to document a waiver of enrolment by a part-time employee, as described above. See also the sample Part-time employee waiving the right to join HOOPP. Scenario # 2 New part-time hire already works full-time at another employer. The member can: 14 Employer Administration Manual

15 a. Choose to contribute at the employer where they will work part-time Submit the Enrol New Member smart form on ESE2; or b. Choose not to contribute at the employer where they will work part-time Have the employee complete the HOOPP Contributions Waiver, return it to you for submission to HOOPP and do not submit the Enrol New Member smart form on ESE2. If the employee ceases working at the full-time employer or changes status from full-time to part-time, then you must enrol the employee immediately and begin deducting contributions. Scenario # 3 - New full-time hire already works part-time at another HOOPP employer. Submit the Enrol New Member smart form on ESE2. If the member was already contributing at the employer where they work part-time, they can continue to do so or they can stop contributions at that employer. Advise the member to talk to their part-time employer(s) about the option to stop contributions. Scenario # 4 - Current employee changes from full-time to part-time and already works part-time at another employer. The member can: a. Choose to contribute at all employers where they work part-time Submit the Contribution Status Change smart form on ESE2 and inform the member that they should talk to their other employer(s) and begin contributing as of the day they start contributing at your organization based on their part-time hours; or b. Choose not to contribute at all employers where they work part-time Have the employee complete and sign the HOOPP Contributions Waiver and return it to you for submission to HOOPP Scenario # 5 - Current employee changes from full-time to part-time because they will be working full-time at another employer. The member can choose to either continue contributing at your organization or stop contributing If the member chooses to stop contributing at your organization, have them complete the HOOPP Contributions Waiver and return it to you for submission to HOOPP. Submit a Contribution Status Change smart form on ESE2. If they want to contribute while working part-time, submit the Contribution Status Change smart form on ESE2 Scenario # 6 - Current employee changes from part-time to full-time and already works part-time at another employer. The member must begin contributing immediately at your organization. Submit the Contribution Status Change smart form on ESE2. If the member was contributing at the other employer where they work part-time, they can: a. Choose to continue contributing at their part-time employer; or b. Choose to stop contributing at their part-time employer - advise the member to talk to their part-time employer about the option to stop contributions Employer Administration Manual 15

16 3.5 Enrolment process Enrol on ESE2 You can enrol members instantly by completing the Enrol New Member smart form on ESE2. The enrolment process has the following purposes: To enrol the employee in HOOPP To provide HOOPP with basic information about the employee and, if applicable, the employee s HOOPP membership status To establish if opportunities exist for the transfer of pension service into HOOPP from another pension plan When to enrol on ESE2 Full-time employees Part-time employees who choose to enrol Part-time employees who are already contributing part-time at another HOOPP employer: enrol immediately When not to enrol on ESE2 Group enrolments resulting from a divestment or amalgamation. HOOPP provides employers with a special form to use if a group of non-hoopp employees is joining your organization from another organization with a registered pension plan due to a divestment a sale, assignment, or disposition of business. Please notify HOOPP if such a situation occurs at your organization. Part-time hires who choose not to enrol New employees in receipt of a HOOPP pension that want to suspend their payments and re-enrol in HOOPP Instructions for processing an enrolment on ESE2 Submitting the Enrol New Member smart form on ESE2 is simple and intuitive. The three-step process, which is outlined in the ESE2 User Guide, will allow you to complete member information, employment information and contact information. You will need the following information to complete the three-step enrolment: Step 1 Member Information Name SIN Date of birth Gender Language preference Step 2 Employment Information Employment status Date of employment* 16 Employer Administration Manual

17 Date of HOOPP registration* Reason if the member s start date is different from the HOOPP registration date Union designation Pay information complete only for late enrolments Benefits transfer complete if member is interested in transferring benefits from another pension plan Section 80/81 protection HOOPP needs to know if a member is joining HOOPP as a result of a divestment or a change in the pension plan you offer Step 3 Member Address and Phone Numbers Mailing address Home and business phone numbers *Additional instructions: Date of Employment: A member's date of employment is their first day worked. For a part-time employee joining the Plan because they moved to a full-time position, the date of employment is the date they started work with your organization on a part-time basis. Date of Registration: The date of registration for new full-time employees is the date of hire. For new part-time employees who already belong to HOOPP at another HOOPP employer, the date of registration is the date of hire because immediate enrolment is mandatory. For new part-time employees who do not already belong to HOOPP at another HOOPP employer, the date of registration is the date the employee joins HOOPP at your organization. What HOOPP sends to the member Upon receipt of an Enrolment via ESE2, HOOPP will mail new members a welcome package including a copy of the booklet What You Need: A Pension Plan For You, which provides an overview of the Plan's provisions. 3.6 Portability of benefits It is important to determine if a new hire previously contributed to HOOPP, contributed to a pension plan with a non-hoopp employer, or is part of a group transfer. If a new hire indicates that any of these situations apply, refer to section 6 Portability and buyback for detailed information. 3.7 Designating a beneficiary When new members receive their Welcome package from HOOPP it will include instructions to contact HOOPP to name a beneficiary or beneficiaries. Under provincial pension legislation, a member's qualifying spouse is the member's automatic primary beneficiary for HOOPP benefits and will receive spousal benefits upon the member's death. If the member has no spouse, or spousal benefits have been waived, the member can name any person, person(s), organization, or their estate as their primary beneficiary. Members should complete the form to instruct HOOPP who should be entitled to any benefits in the event of the member s death. Employer Administration Manual 17

18 If a member s qualifying spouse outlives the member, they will automatically receive the member's death benefit unless: They do not meet HOOPP's definition of a qualifying spouse; or A prescribed spousal waiver form has been signed and delivered to HOOPP. These forms can be found at A member who has a qualifying spouse can also designate a secondary "non-spouse" beneficiary. The secondary beneficiary a person, persons, organization, or estate will receive any death benefits that may be payable from HOOPP after both the member and the spouse have passed away. Members may designate more than one beneficiary. The Beneficiary Designation Form, is used to select multiple "non-spouse" beneficiaries, and allows the member to decide if any benefits payable on their death should be: Shared equally among all their non-spouse beneficiaries; or Divided based on specific percentages selected by the member If a member wants more flexibility in the designation of multiple named beneficiaries, they can designate individual beneficiaries for HOOPP pension benefits in their Will. A Will can specify exactly how any HOOPP death benefits that are payable should be divided and paid out of a member s estate. Beneficiary designations should be reviewed by members when they receive their annual statement, when they retire or whenever their personal circumstances change. Spousal waivers The signing of a spousal waiver is a serious decision by a member and their qualifying spouse. Both should consider getting legal and financial advice before signing a spousal waiver form. Waiving spousal benefits does not increase the size of the member's pension. Only the qualifying spouse at the date of retirement, or at the date of death if the member's death occurs before retirement, is entitled to receive a spousal pension. A waiver can be rescinded any time prior to a member s retirement date. However, if a signed waiver has been received, and the pension payments have begun, the decision to waive spousal benefits is irrevocable. Furthermore, a pensioner and their spouse may not waive spousal benefits after the member has begun receiving pension payments, this decision must be made before a member retires and begins receiving a pension. For further information on spousal waivers, please see section 9.2 Survivor benefit options. Designating a minor as a beneficiary According to Ontario law, HOOPP cannot pay death benefits directly to a minor (a child under age 18), even if the minor is named as a beneficiary on the Beneficiary Designation Form. A member may, however, arrange for a minor child to receive death benefits in one of the following ways: Guardian of Property: An application may be made to the courts to appoint a Guardian of Property for a minor. A Guardian of Property can only be appointed through a court order. A child s parent or legal guardian is not automatically the Guardian of Property. 18 Employer Administration Manual

19 A Guardian of Property is responsible for managing the financial affairs of the minor and must make decisions in the child s best interest. A Guardian of Property must apply to the court to use or dispose of a minor s property. Payment to Ontario Superior Court of Justice: If a Guardian of Property is not appointed, the benefit may be paid into the Ontario Superior Court of Justice. A parent or guardian may then apply to the court to withdraw funds on behalf of the minor. After turning 18, the child may request that the Superior Court of Justice pay them the full benefit, including interest. Trustee: To provide death benefits through a trustee, a member can name the minor child as a beneficiary of their HOOPP benefits and provide a properly executed trust agreement naming a trustee who will receive any funds on behalf of the minor child. To ensure the member's wishes can be carried out, it is strongly recommended that they obtain legal advice before designating a minor as a beneficiary. 3.8 Overdue enrolments Making up contributions If, due to an oversight, an employee's contributions do not begin on the correct date, part of the responsibility for the error must be shared by the employee for failing to notify you that pension contributions were not being deducted from their pay. You should inform the employee of this responsibility when submitting the Enrol New Member smart form. The employee is responsible for making up their entire share of the missed contributions. Your organization must also make employer contributions, at the prescribed rate, on any contributions the employee makes. For more information on this process, see Missed contributions in section Enrolment checklist Remember to: Give new hires the What You Need: A Pension Plan For You booklet Give new hires the Privacy Guidelines Immediately enrol all full-time employees Explain enrolment options to part-time (and other non full-time) employees Determine if the employee is working for any other HOOPP employers Confirm if there are previous pension plan transfer opportunities Advise the employee to contact you if contributions are not being deducted (this is to avoid arrears) Advise HOOPP when new employees join HOOPP due to a divestment a sale, assignment, or disposition of business Employer Administration Manual 19

20 4. Contributions 4.1 Employee required contributions Employee required contributions to HOOPP are made by payroll deduction and apply to the current year of service. It is your responsibility as a HOOPP employer to calculate, deduct and remit employee required contributions. A member must continue to make required contributions until they: Terminate employment Retire Die Reach Nov. 30 in the year in which they turn age 71 (at that point, the income tax act prevents a member of a registered pension plan from building any more benefits); or Become an inactive member (an inactive member is one who has changed from full-time to part-time employment and has chosen to stop contributing to HOOPP) The following four factors determine the amount of a member s required contributions: Factor 1: Pensionable earnings These are the basic wages, salary, or other compensation a member earns in a given pay period, excluding non pensionable earnings. See section 4.2 Pensionable earnings for a further description and examples. Factor 2: The member s annualized earnings Annualized earnings are what a member earns in a calendar year that counts toward their HOOPP pension. For members who work part-time, or for only part of the year, their annualized earnings will be based on what they would earn by working full-time for the whole year. However, their contributory service will be proportionate to the time they worked to reflect the fact that they did not contribute to HOOPP for a complete year. Factor 3: Year s maximum pensionable earnings (YMPE) The YMPE is set each year by the federal government, based on the average wage in Canada. Factor 4: Employee contribution rates HOOPP uses a two-tier contribution rate. Calculate member contributions using the following formula: Year YMPE 2015 $53, $52, $51, $50, $48, $47, $46, $44, % of annualized earnings up to the YMPE 9.2% of annualized earnings above the YMPE Members contribute at the low rate on that portion of their annualized earnings up to the current YMPE and at the high rate on that portion of their annualized earnings above the YMPE. 20 Employer Administration Manual

21 You should calculate the contributions of all HOOPP members using the universal payroll deduction method. Required contributions and contributory service should be calculated each pay period. If a member's annualized earnings are above the YMPE, contributions must be made at both the high and low rate each pay period, according to the Universal payroll deduction method in section 4.3. It would be incorrect, for example, to deduct contributions at the low rate during the first part of the year until the member's accumulated earnings reach the YMPE and then deduct at the high rate for the remainder of the year. Actual employment earnings may vary between pay periods during the year, while annualized earnings remain constant unless there is a salary increase or decrease during the year. For part-time employees, or members who terminate part-way through the year, the difference between the actual earnings they receive and their annualized earnings can be significant. If contributions are not deducted correctly, there can be a complicated catch-up period later for both you and the affected members. A member s contributions may decrease from one year to the next. This would occur for a member whose annualized earnings are above the YMPE and their annualized earnings remain the same from one year to the next. Their annual contribution amount would decrease because with an increase in the YMPE, more of their contributions will be calculated at the low 6.9% contribution rate than in the previous year. 4.2 Pensionable earnings Pensionable earnings guiding principles Pensionable earnings are the regular straight time portion of wages, salary and other amounts paid to members in relation to hours, weeks, or other specific periods of time for which a member is employed, and that form a regular and integral part of the member's remuneration. Pensionable earnings may not exceed 52 weeks per year. Pensionable earnings application Common types of employment earnings are listed below that are pensionable and non-pensionable. Please note that this list is intended to be illustrative but is not exhaustive as compensation types may vary widely from employer to employer. The above guiding principles and the examples below should be used when determining whether earnings are pensionable or not. Please contact HOOPP if you are unsure whether a type of earnings or compensation is pensionable or non-pensionable. Examples of pensionable and non-pensionable earnings Pensionable earnings Regular wages and earnings related to straight time pay, including pay for overtime, up to full-time hours. The regular pay portion or straight time pay for working a statutory holiday. The regular pay portion or straight time pay for working a weekend, call-in or unscheduled extra shift. Non-pensionable earnings Any pay for earnings that exceed regular full-time hours or an additional amount paid above the regular hourly rate for working a specific shift. (i.e. overtime shift premium paid at rates exceeding regular rates). An additional amount paid above the regular hourly rate for working a statutory holiday. Pay that exceeds regular straight time pay for working a weekend, call-in or unscheduled extra shift. Employer Administration Manual 21

22 Pensionable earnings Payments made in lieu of termination notice as required under ESA. Payment made in lieu of termination that are greater than the ESA requirements if both employer and member agree to make contributions. Severance pay if paid as salary continuance. Retroactive pay for active or retired employees, for a period of time when the member was contributing to HOOPP. Paid vacation. A regularly occurring bonus that represents a fundamental and recurring component of an employer's long-term compensation program. Contributions deducted for pensionable bonuses are treated the same as retroactive pay. When a pensionable bonus is paid for a previous calendar year, contributions must be deducted using the contribution rates in effect for the year in which the bonus applies, not for the year in which it is paid. Straight time pay for time off in lieu of overtime (banked hours). The regular straight time portion of pay when called-in to work while on "stand-by." Paid sick days that are classified as an employerapproved leave or employer-approved health leave. Ongoing and regular payment for additional responsibilities. Non-pensionable earnings Payment made in lieu of termination that are greater than the ESA requirements if both employer and member agree not to make contributions. Severance pay if paid as a lump sum. Retroactive pay for members who are terminated or deceased. Retroactive pay for an active or retired employee for a period when the member was not contributing to HOOPP. Pay or percentage in lieu of vacation or a lump sum vacation payout. A one-time, unexpected or ad hoc bonus that is not part of an employer's long-term compensation program, even if an employee receives it in more than one year. Pay in lieu of benefits. Pay that exceeds regular straight time pay when called-in while on "stand-by." Unpaid days that are not classified as an employerapproved leave. Car allowances, meal allowances or reimbursements for similar types of expenses. 4.3 Calculating employee contributions Universal payroll deduction method Employers should use the universal payroll deduction method to calculate required contributions and contributory service weeks for all HOOPP members. As the name suggests, the universal method can be used for members who are full or part-time, absent for part of a pay period, on reduced pay, on sick leave, pregnancy or parental leave or participating in a prepaid leave program. The method is also suitable for any length of payroll period, including bi-weekly, monthly, and semimonthly. 22 Employer Administration Manual

23 The six-step universal payroll deduction method calculates contributions based on a member s annualized earnings, and then prorates contributions to reflect the hours worked during the payroll period in question. When calculating contributory service, the figure should be rounded to two decimal places to avoid distorting a member s annualized earnings and related pension. Please ensure that your payroll service, whether handled internally or contracted through an outside provider, properly calculates HOOPP contributions. It might be helpful to supply the provider with the information contained in this section. If you or your outside payroll services provider has questions, please contact HOOPP. The following examples demonstrate how employee required calculations are calculated using the universal payroll deduction method. Example 1: Full-time member paid bi-weekly This example is for a full-time employee who is paid bi-weekly however, the calculation method can be used for any HOOPP member, regardless of hours worked or salary received, and any payroll frequency. The member in this example works full-time and is paid bi-weekly. The member's current hourly rate of pay is $29. The normal full-time work week or full-time equivalence (FTE) for the member's job is 37.5 hours per week or 1,950 hours per year. HOOPP annualizes earnings on a 52-week basis. The example uses the 2013 contribution rates and the 2013 YMPE of $51,100. Step 1: Calculate annualized earnings Annualized earnings = hourly rate full-time hours in a year for that job The member s annualized earnings are: $29 1,950 = $56,550 Step 2: Calculate earnings per pay Earnings per pay = hourly rate hours worked in a pay period The member works 37.5 hours a week and is paid every two weeks. Therefore, their earnings for the biweekly pay period are: $29 75 = $2,175 Step 3: Calculate contributions at the low rate Contributions at the low rate are calculated as follows: Contributions at 6.9% = [earnings per pay (YMPE* 6.9%)] annualized earnings * Use the lesser of the member's annualized earnings or the YMPE. Therefore, the bi-weekly contributions at the low rate are: [$2175 ($51,100*.069)] $56,550 = $ Employer Administration Manual 23

24 * The 2013 YMPE ($51,100) is used here because it is less than the member's annualized earnings ($56,550). Note: There is a maximum amount of low contributions that can be made within the year. This can be calculated by: Maximum low contribution rate = (6.9% YMPE) number of weeks in the year = (0.069 $51,100) 52 = = Therefore in 2013, the maximum amount that a member pays at the low contribution rate is $ per year or $67.81 per week. Step 4: Calculate contributions at the high rate A member must contribute at the high employee contribution rate on the portion of their annualized earnings per pay that exceeds the YMPE. Contributions at the high rate are calculated as follows: Contribution at 9.2% = [earnings per pay (annualized earnings* - YMPE*) 9.2%] annualized earnings *If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE. Therefore, the bi-weekly contributions at the high rate are: [$2,175 ($56,550 - $51,100).092] $56,550 = $19.28 Step 5: Calculate total HOOPP contributions The formula is: $135.61(the low) + $19.28(the high) = $ Step 6: Calculate contributory service A member's earnings per pay and annualized earnings are used to calculate contributory service. The figure is calculated by converting pay into weeks and rounding off the figure to two decimals. Contributory service = [earnings per pay 52 weeks in a year] annualized earnings In this example, the member worked full-time during the two-week pay period, therefore, the contributory service credit is two weeks. Example 2: Part-time member paid bi-weekly The member in this example works part-time, is paid bi-weekly, and works a total of 15 hours each week. The member's current hourly rate of pay is $27. The normal full-time work week or full-time equivalent (FTE) for the member's job is 37.5 hours per week or 1,950 hours per year. HOOPP annualizes earnings on a 52-week basis. The example uses the 2013 contribution rates and the 2013 YMPE of $51, Employer Administration Manual

25 Step 1: Calculate annualized earnings Annualized earnings = hourly rate full-time hours in a year for that job The member s annualized earnings are: $27 1,950 = $52,650 Step 2: Calculate earnings per pay Earnings per pay = hourly rate hours worked in a pay period The member works 15 hours a week and is paid every two weeks. Therefore, their earnings for the biweekly pay period are: $27 30 = $810 Step 3: Calculate contributions at the low rate Contributions at the low rate are calculated as follows: Contributions at 6.9% = [earnings per pay (YMPE* 6.9%)] annualized earnings * Use the lesser of the member's annualized earnings or the YMPE. Therefore, the bi-weekly contributions at the low rate are: [$810 ($51,100*.069)] $52,650 = $54.24 * The 2013 YMPE ($51,100) is used here because it is less than the member's annualized earnings ($52,650). Note: There is a maximum amount of low contributions that can be made within the year. This can be calculated by: Maximum low contribution rate = (6.9% YMPE) number of weeks in the year = (0.069 $51,100) 52 = = Therefore in 2013, the maximum amount that a member pays at the low contribution rate is $ per year or $67.81 per week. Step 4: Calculate contributions at the high rate A member must contribute at the high employee contribution rate on the portion of their annualized earnings per pay that exceeds the YMPE. Contributions at the high rate are calculated as follows: Contributions at 9.2% = [earnings per pay (annualized earnings* - YMPE*) 9.2%] annualized earnings *If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE. Employer Administration Manual 25

26 Therefore, the bi-weekly contributions at the high rate are: [$810 ($ $51,100).092] $52,650 = $2.19 Step 5: Calculate total HOOPP contributions To calculate total HOOPP contributions for the pay period, add the contributions at the low and high rates. Total contributions = low rate + high rate Because the member makes contributions at both the low and high rates, the total HOOPP contributions for the bi-weekly pay period are: $54.24(the low) + $2.19(the high) = $56.43 Step 6: Calculate contributory service A member's earnings per pay and annualized earnings are used to calculate contributory service - the length of time, measured in weeks, that the member has contributed to HOOPP, adjusted for such things as part-time service. The figure is calculated by converting pay into weeks and rounding off the figure to two decimals. Contributory service = [earnings per pay 52 weeks in a year] annualized earnings If the member in our example had worked full time during the two-week pay period, the contributory service credit would have been two weeks. Because the member works part time, however, the contributory service credit is prorated as follows: [$810 52] $52650 =.80 weeks The final figure (.80) is the contributory service the member earned during the two week pay period. Example 3: Full-time member receiving sick pay The member in this example is on an employer-approved health leave, is receiving 80% of their regular bi-weekly salary of $2,100, and has decided not to top up contributions to their pre-leave level. The normal full-time work week or full-time equivalent (FTE) for this position is 37.5 hours, or 1,950 hours a year and the hourly rate of pay is $28. The example uses the 2013 contribution rates and the 2013 YMPE of $51,100. Step 1: Calculate annualized earnings Annualized earnings = hourly rate full-time hours in a year The member's annualized earnings are: $28 1,950 = $54,600 Step 2: Calculate earnings per pay The member receives 80% of regular salary as short-term sick pay. The member chooses not to contribute at their regular rate of pay while on short-term sick leave. The member's earnings per pay for the bi-weekly payroll deduction period are: 26 Employer Administration Manual

27 0.80 $2,100 = $1,680. Step 3: Calculate contributions at the low rate The formula is: Contributions at 6.9% = [earnings per pay (YMPE* 6.9%)] annualized earnings *Use the lesser of the member's annualized earnings or the YMPE. Therefore, the member's bi-weekly contributions at the low rate are: [$1,680 ($51, )] $54,600 = $ Step 4: Calculate contributions at the high rate The formula is: Contributions at 9.2% = [earnings per pay (annualized earnings*- YMPE) 9.2%)] annualized earnings = [$1,680 ($54,600 - $51,100).092)] $54,600 = $9.91 *If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. Step 5: Calculate total HOOPP contributions The formula is: $ (the low) + $9.91 (the high) = $ Step 6: Calculate contributory service Contributory service = (earnings per pay 52 weeks in a year) annualized earnings = ($ ) $54,600 = 1.6 weeks for the pay period Example 4: Member works two different jobs concurrently A member may work two different jobs at an organization at the same time, often at two different rates of pay. To calculate the member's contributions, use blended annualized earnings. In this example, a member works two jobs at one organization. In job A, the member s base wage is $28.50 per hour. In job B, the member s base wage is $27 per hour. In both jobs, the normal full-time work week or full-time equivalent (FTE) is 37.5 hours or 1950 hours per year. During the current 2-week pay period, the member has worked 45 hours in job A and 10 hours in job B for a total of 55 hours. However, the member s hours may change every pay period. The example uses the 2013 contribution rates and the 2013 YMPE of $51,100. Step 1: Calculate the annualized earnings for each job Annualized earnings for job A = hourly wage full-time hours in a year = $ ,950 = $55,575 Annualized earnings for job B = hourly wage full-time hours in a year = $27 1,950 = $52,650 Employer Administration Manual 27

28 Step 2: Calculate the blended annualized earnings (AE) for the pay period Blended AE = [(hours worked in job A AE for job A) total hours worked] + [(hours worked in job B AE for job B) total hours worked] = [(45 $55,575) 55] + [(10 $52,650) 55] = $45,470 + $9,573* = $55,043* *Rounded to the nearest dollar Step 3: Calculate earnings per pay The formula for earnings per pay is: Hours worked in job A basic hourly wage + hours worked in job B basic hourly wage = 45 $ $27 = $1, $270 = $1, Step 4: Calculate contributions at the low rate Contributions at 6.9% = [earnings per pay (blended) (YMPE* 6.9%)] blended AE = [$1, ($51, )] $55,043 = $99.45 *Use the lesser of the member's blended annualized earnings or the YMPE. Step 5: Calculate contributions at the high rate** Contributions at 9.2% = [earnings per pay (blended) (blended AE* - YMPE) 9.2%] blended AE = [$1, ($55,043- $51,100).092] $55,043 = $10.23 **If the member's blended annualized earnings are less than the YMPE, there are no contributions at the high rate. Step 6: Calculate total HOOPP contributions Total contributions = contributions at low rate + contributions at high rate = $ $10.23 = $ Step 7: Calculate weeks of contributory service [Earnings per pay (blended) 52 weeks in a year] blended annualized earnings = $1, $55,043 = 1.47 weeks of contributory service for the pay period Modifications may be required to your payroll system to handle this situation for each pay period. Supply your payroll department or external service provider with a copy of the preceding information. Example 5: Member rate of pay changes from below YMPE to above YMPE A member s rate of pay may increase during the year due to a raise or promotion. To calculate the member's contributions, continue to use the universal payroll deduction method, the methodology does not change. 28 Employer Administration Manual

29 However, if a member s annualized earnings changes and moves above the YMPE during the year, it will appear in the final sum, that the member had high contributions before maximizing the low contributions. During the annual Member Data Collection process, this will be a variance you will need to account for. For this scenario, provide details that the member s salary changed from below the YMPE to above the YMPE. The following example shows how required contributions are calculated using the universal payroll deduction method for a member who receives a pay increase during a calendar year. The member in the example works full-time, is paid bi-weekly, and works a total of 37.5 hours each week. The member's starting hourly rate for 2013 is $27. Mid-year, the member s hourly rate was increased to $28. Step 1: Calculate annualized earnings for Period 1 Annualized earnings = hourly rate full-time hours in a year for that job $27 1,950 = $52,650 Step 2: Calculate earnings per pay for Period 1 Earnings per pay = hourly rate hours worked in a pay period $27 75 = $2025 Step 3: Calculate contributions at the low rate for Period 1 This example uses the 2013 contribution rates and the 2013 YMPE of $51,100 Contributions at the low rate are calculated as follows: Contributions at 6.9% = [earnings per pay (YMPE* 6.9%)] annualized earnings * Use the lesser of the member's annualized earnings or the YMPE. Therefore, the bi-weekly contributions at the low rate are: [$2025 ($51,100*.069)] $52,650 = $ * The 2013 YMPE ($51,100) is used here because it is less than the member's annualized earnings ($52,650). Step 4: Calculate contributions at the high rate Period 1 A member must contribute at the high employee contribution rate on the portion of their earnings per pay that exceeds the YMPE. Contributions at the high rate are calculated as follows: Contribution at 9.2% = [earnings per pay (annualized earnings* - YMPE*) 9.2%] annualized earnings *If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE. Employer Administration Manual 29

30 Therefore, the bi-weekly contributions at the high rate are: [$2025 ($52,650 - $51,100).092] $52,650 = $5.48 Step 5: Calculate total HOOPP contributions Period 1 To calculate total HOOPP contributions for the pay period, add the contributions at the low and high rates. Total contributions = low rate + high rate Because the member makes contributions at both the low and high rates, the total HOOPP contributions for the bi-weekly pay period are: $ (the low) + $5.48 (the high) = $ Step 6: Calculate contributory service Period 1 A member's earnings per pay and annualized earnings are used to calculate contributory service. The figure is calculated by converting pay into weeks and rounding the figure to two decimals. Contributory service = [earnings per pay 52 weeks in a year] annualized earnings If the member in our example had worked full-time during the two-week pay period, the contributory service credit would have been two weeks. This is calculated as follows: [$ ] $52,650 = 2.00 weeks per pay period. Repeat the process for the second period at new hourly rate of $28.00: Step 1: Calculate annualized earnings for Period 2 $28 1,950 = $54,600 Step 2: Calculate earnings per pay for Period 2 Earnings per pay = hourly rate hours worked in a pay period $28 75 = $2,100 Step 3: Calculate contributions at the low rate for Period 2 [$2100 ($51,100 *.069)] $54,600 = $ Step 4: Calculate contributions at the high rate Period 2 [$2100 ($54,600 - $51,100).092] $54,600 = $12.38 Step 5: Calculate total HOOPP contributions Period 2 $ (the low) + $12.38 (the high) = $ Step 6: Calculate contributory service Period 2 [$ ] $54,600 = 2.00 weeks per pay period. 30 Employer Administration Manual

31 The member would contribute $ per pay period for earnings in the first period of For the second period, the member would contribute $ To calculate contributions for multiple pay periods, the total hours worked may be substituted in step 2. In this example, the total contributions are calculated for the first and second half of 2013 to obtain the total contributions for the year. From the beginning of the year, until the hourly rate change, the member s annualized earnings would be $52,650 ($ ) with the following contributions per pay period: Low: $ High: $5.48 For second part of the year, from the start of new hourly rate, the member s annualized earnings would be $54,600 ($ ) with the following contributions per pay period: Low: $ High: $12.38 Contributions for hourly rate of $27.00 (Period 1 01/01/ /30/2013) Step 1: Calculate annualized earnings for Period 1 $27 1,950 = $52,650 Step 2: Calculate earnings per period for Period 1 Earnings per pay = hourly rate hours worked in period 1 $ = $26,325 Step 3: Calculate contributions at the low rate for Period 1 [$26325 ($51,100*.069)] $52,650 = $ Step 4: Calculate contributions at the high rate Period 1 [$26325 ($52,650 - $51,100).092] $52,650 = $71.30 Step 5: Calculate total HOOPP contributions Period 1 $ (the low) + $71.30 (the high) = $ Step 6: Calculate contributory service Period 1 [$ ] $52,650 = weeks for Period 1 (01/01/ /30/2013). Contributions for Hourly Rate of $28.00 (Period 2 07/01/ /31/2013) Step 1: Calculate annualized earnings for Period 2 $28 1,950 = $54,600 Step 2: Calculate earnings per period for Period 2 Earnings per pay = hourly rate hours worked in period 2 $ = $27,300 Employer Administration Manual 31

32 Step 3: Calculate contributions at the low rate for Period 2 [$27300 ($51,100*.069)] $54,600 = $1, Step 4: Calculate contributions at the high rate Period 2 [$27300 ($54,600 - $51,100).092] $54,600 = $ Step 5: Calculate total HOOPP contributions Period 2 $ (the low) + $ (the high) = $ Step 6: Calculate contributory service Period 2 [$ ] $54,600 = weeks for period 2 (07/01/ /31/2013) Total contributions for the year Period Contributory service Low contribution High contribution Total 01/01/ /30/ /01/ /31/ $ $71.30 $1, $ $ $1, total $3, $ $3, Employer required contributions The level of employer contributions is determined by the administrator on the advice of the Plan s actuary. Employer contributions relate to the Plan as a whole and do not apply directly to each member's individual account. Employer contributions are, for administrative purposes, expressed as a percentage of total employee required contributions. Currently, employer contributions are 126% of member contributions received during the year. You must make contributions, at the prevailing employer contribution rate, for member required contributions in relation to: A member s pensionable earnings use the employer contribution rate for member required contributions Retroactive salary or wage adjustments use the rates in effect for the years to which the retro payment applies (not the year the retro is paid) Leaves use the employer contribution rate, for any contributions a member makes during or after a leave. Any member contributions relating to a leave must be made no later than six months after the end of the leave. If the member does not contribute by the deadline, you do not have to make employer contributions. Members should be advised that, if contributions are not made for the leave, the service associated with the leave can be purchased later, under HOOPP's buyback provisions. Temporary periods of reduced earnings Use the employer contribution rate if you give a member permission to "top up" contributions for a temporary period of reduced earnings. The "topped-up" contributions can either be made during the temporary period of reduced earnings, or as a lump sum no later than six months after the end of the 32 Employer Administration Manual

33 period. If the member misses the deadline, they lose the opportunity to top up the service. HOOPP's buyback provisions do not apply to temporary periods of reduced earnings. Health leave top ups You must make contributions at the employer contribution rate in conjunction with any top up contributions made by a member during the 15 week qualifying period of an employer-approved health leave 4.5 Retroactive pay (retro) Important HOOPP contributions on retroactive pay settlements are based on the contribution rates that were in effect for each of the years to which a settlement applies, not on the contribution rates in effect for the year in which the settlement is paid. As well, the YMPE for the year to which the settlement applies should be used to calculate the contributions to be deducted on the retro amount. See the table, later in this section, that shows historical contribution rates and YMPEs. You can either calculate the contributions yourself or you can use the retro calculator, which is a standalone feature that is accessible only through Member Data Collection in ESE2. For more detailed instructions on the use of the retro calculator, please refer to the ESE2 User Guide. For HOOPP purposes, only payments relating to prior years are considered retroactive payments. This means that any payment received in the current year, for prior years, is considered to be retro (i.e. a settlement paid in 2013 pertaining to 2012 and 2011). Any payment received in the current year, for the current year, is considered an adjustment to current year contributions, and is not considered retro. To calculate contributions on retro: If at the date for which the retro amount applies, the member s annualized earnings are under the YMPE for that calendar year, contributions are deducted using the low rate in place for that year If at the date for which the retro amount applies, the member s annualized earnings are equal to or are higher than that year s YMPE, contributions are deducted using the high rate in place for that year Retroactive contributions should not be deducted for a calendar year when a member was not contributing to HOOPP and did not accrue contributory service. If a member receives retro for a year that they were not contributing to HOOPP or a period of time when they were receiving free accrual, do not deduct contributions. If contributions are deducted in these scenarios they will need to be refunded. You may encounter a situation where there is "retro on retro," meaning that a settlement is made for a year for which an earlier retro settlement had previously been made. If the first settlement moved the member's annualized earnings from below the YMPE to above it, when calculating contributions, remember to use the member s higher annualized earnings figure (the annualized earnings immediately before the second settlement). The following examples demonstrate how to deduct contributions from retro pay. Employer Administration Manual 33

34 Example 1: annualized earnings above YMPE On June 1, 2013, a member receives a $5,000 retroactive pay settlement in respect of the years 2010 to 2012, and an adjustment to the current year. Of the $5,000, $1,100 applies to 2010, $1,300 applies to 2011, and $1,600 applies to The remaining $1,000 applies to 2013, which means that an adjustment to the member's current year contributions will have to be made. In each of the years covered by the settlement, the member's annualized earnings prior to the retroactive pay settlement were above the YMPE. Because of this, contributions are made at the high rate in effect for each year, as follows: Year covered by retro payment Amount of payment that applies to this year What the member contributes What the member s employer contributes 2010 $1, % (high rate) of $1,100 or $ $1, % (high rate) of $1,300, or $ $1, % (high rate) of $1,600, or $ % of $ or $ % of $ or $ % of $ or $ Total $4, $ $ In this case, the member's annualized earnings in the current year (2013) were also above the YMPE prior to the retroactive pay settlement. The member would contribute at the high rate, 9.2%, on the $1,000 in respect of 2013 for a total of $92. The employer's contribution for the 2013 portion would be 126% of what the member contributes, or $ Example 2: annualized earnings below YMPE On Aug. 1, 2013, a member receives a $3,000 retroactive pay settlement in respect of the years 2011, 2012, and Of the $3,000, $900 applies to 2011, $1,100 applies to 2012, and $1,000 applies to An adjustment to the member's current year contributions will have to be made due to the $1,000 portion of the retro that applies to In all of the years covered by the settlement, the member's annualized earnings prior to the retroactive pay settlement were below the YMPE. Because of this, contributions are made at the low rate, as follows: Year covered by retro payment Amount of payment that applies to this year What the member contributes What the member s employer contributes 2011 $ % (low rate) of $900 or $ $1, % (low rate) of $1,100, or $ % of $62.10, or $ % of $75.90, or $95.63 Total $2, $ $ In this example, the member s annualized earnings in the current year (2013) were also below the YMPE both before and after the retroactive pay settlement. The member would contribute at the 2013 low rate of 6.9%, on the $1,000, for a total of $69. The employer's contribution for the 2013 portion would be 126% of what the member contributes, or $ Employer Administration Manual

35 Example 3: earnings below and above YMPE (retro for current and previous year) On Nov. 1, 2013, a member receives a $3,000 retroactive pay settlement in respect of 2012 and a $2,000 salary adjustment for In this example, the member's annualized earnings for 2012 were below the YMPE. For 2013, the annualized earnings were below the 2013 YMPE of $51,100 before the settlement, but moved above the YMPE after it. Because the member's annualized earnings for 2012 were below the YMPE, regardless whether the settlement pushed their annualized earnings above the YMPE; contributions are made at the low rate for Because the settlement moved the member's annualized earnings from below to above the YMPE in 2013, contributions on the 2013 portion of the settlement must be made at both the low and high rates as this payment for current year is considered an adjustment to current year. The adjustment to the current year's low contributions will be the difference between what the member had already paid at the low rate, and the maximum low contributions for the number of weeks in 2013 to which the settlement applies. The maximum low contribution for 2013 is $67.81 per week. If the member was full-time, the maximum low contribution at Nov. 1 would have been 44 weeks $67.81 = $2, Year covered by retro payment Amount of payment that applies to this year What the member contributes What the member s employer contributes 2012 $3, % (low rate) of $3,000 or $ % of $ or $ $ (portion of settlement up to the YMPE) $1, (portion of settlement above the YMPE) 6.9% (low rate) of $ or $ % (high rate) of $1, or $ % of $57.84 or $ % of $106.88, or $ Total $5,000 $ $ To calculate the amount of high contributions, it is necessary to first calculate how much of the settlement amount requires contributions at the low rate. In this example, the member had only contributed $2,400 at the low rate for 2013 prior to the settlement. This means the member is making an additional low contribution of $ Divide this amount by.069 (the low contribution rate), and this equals $ the amount of earnings which is applicable to the additional low contributions. The balance of the $2,000 adjustment, $1, requires contributions at the high rate of 9.2%. Example 4: earnings below and above YMPE (retro for previous year only) On Nov. 1, 2013, a member receives a $3,000 retroactive pay settlement in respect of In this example, the member's annualized earnings for 2012 were below the YMPE. This retro settlement pushed their annualized earnings for 2012 above the 2012 YMPE. Because the member's annualized earnings for 2012 were below the YMPE, regardless of if this settlement pushed their annualized earnings above the YMPE; contributions are made at the low rate for Employer Administration Manual 35

36 Year covered by retro payment Amount of payment that applies to this year What the member contributes What the member s employer contributes 2012 $3, % (low rate) of $3,000, or $ % of $207.00, or $ Total $3,000 $ $ Not all retro pay is pensionable Remember that not all retro pay may be pensionable. Pension contributions are not required on any portion of a payment that relates to: A period of time when the member was not a member of HOOPP or was not contributing to HOOPP Overtime premium (an additional amount paid above the regular hourly rate) Premium pay for working shifts, a statutory holiday, weekend pay, or an unscheduled extra shift (an additional amount paid above the regular hourly rate) Ad hoc bonuses Sick leave payouts Payments in lieu of vacation, or pay in lieu of benefits While retroactive salary adjustments are usually the result of delayed contract settlements, they also can be caused by other adjustments, such as a pay equity award. A one-time payment that does not result in a change in the member s rate of pay is not generally considered to be a retroactive salary adjustment. Such a payment is not pensionable and therefore HOOPP contributions should not be deducted. If you are uncertain whether contributions are required, contact HOOPP. Remitting and reporting retro It is necessary to provide HOOPP with details of the member contributions deducted for each year of the retro payment. Contributions on any retro payment will need to be reported separately from regular current year contributions. This additional information is required for the annual data collection process. You will also need to provide this additional information for any member who receives a retro settlement in the last 12 months before termination, retirement, or death that has not already been reported to HOOPP. Space to report retro pay is included on the Service, Earnings & Contributions Report, Notice of Termination, and Notice of Death smart forms. If retro is paid for years prior to 2004 when different contributions were in place, it will be necessary to report contributions in respect of any retroactive pay for these years separately from your regular monthly contributions, use the Monthly Contribution Report (MCR) on ESE2 in the remittance section. For detailed instructions on how to report and remit retro contributions, please refer to the ESE2 User Guide. Historical contribution rates The following chart lists historical member and employer contribution rate information from 1990 to the current year. This may help if you are modifying your payroll systems to be able to deduct contributions on retro pay. 36 Employer Administration Manual

37 Year Member contribution rate Employer contribution rate YMPE % (low) and 9.2% (high) 126% of member rates $53, % and 9.2% 126% $52, % and 9.2% 126% $51, % and 9.2% 126% $50, % and 9.2% 126% $48, % and 9.2% 126% $47, % and 9.2% 126% $46, % and 9.2% 126% $44, % and 9.2% 126% $43, % and 9.2% 126% $42, % and 9.2% 126% $41, % and 9.2% 126% $40, % and 8.3% 126% $39, % and 5% 125% $39, % and 3.2% 130% $38, % and 3.2% 130% $37, % and 3.2% 130% $37, % and 8% 140% $36, % and 8% 140% $35, % and 8% 140% $35, % and 8% 140% $34, % and 8% 140% $34, % and 6% % $33, % and 6% 100% $32, % and 6% 100% $30, % and 6% 100% $28,900 Retired members receiving retro Retroactive payments received by a member after they have retired and begun receiving a HOOPP pension are considered pensionable earnings and are subject to pension contributions. Employer Administration Manual 37

38 HOOPP will recalculate a retired member's pension to include the retroactive settlement. However, the pension benefit option originally selected by the member when they retired and commenced their pension will continue to apply. Retroactive contributions can only be accepted for retired members for a prior year when the member was contributing and accruing contributory service. Retro for deceased members or members who have terminated employment Contributions are not deducted from retroactive settlements that are paid on behalf of deceased members or members who terminated employment with their HOOPP employer before receiving the settlement. HOOPP will not recalculate a member's termination benefit to include retroactive adjustments that were not reported on the Notice of Termination smart form on ESE2. The amount of contributions and retroactive pay reported on this notice is final and cannot be adjusted. 4.6 Contributions for leaves Employer-approved leaves (less than 31 days) Members must make required contributions on any employer-approved leaves that are less than 31 days in duration. For more details, please see section 5 Leaves and layoffs. Employer-approved leaves (31 days or longer) Members can, usually with your approval, choose to make contributions if they are away from work on an employer-approved leave that is 31 days or longer in duration. Contributions may be made during the employer-approved leave or within six months after the end of the leave. For more details, please see section 5 Leaves and layoffs. Health leaves For more details, please see section 7 Disability benefits. 4.7 Contributions in other situations Weekend workers Weekend workers are those employees who work 30 hours per week but are paid for 37.5 hours. Contributions should be deducted from their full earnings as they are credited with 52 weeks of contributory service as if they were working a full 37.5 hours per week. Laboratory Medicine Funding Framework Agreement (LMFFA) The LMFFA creates pay equity for laboratory physicians to bring them up to the Uniform Minimum Level of Compensation (UMLC). The additional compensation is funded by the Ontario Ministry of Health and Long Term Care and provides both additional salary and covers the cost for any benefits, including HOOPP, associated with the additional salary. The Ministry funding is paid to employers in the form of a single payment that is meant to cover the cost of both the additional salary and any costs incurred by employers that are associated with providing additional benefits to members. 38 Employer Administration Manual

39 Important For HOOPP purposes, the portion of the payment that relates to salary is considered pensionable and the portion of the payment that relates to benefit costs is considered nonpensionable as this is used by employers to pay for benefits, such as HOOPP. Therefore, member contributions are required on the additional salary but are not permitted on the funding that employers use to pay for the cost of benefits. Employer contributions are required at the prevailing contribution rate. It is recommended that upon receiving the payment from the Ministry, you withhold the amount required to pay for additional benefits, including your employer required HOOPP contributions. The remainder would then be paid to the member as salary and HOOPP contributions must be deducted for the member from this remaining amount. Retirement compensation arrangement (RCA) and tax deductibility of employee contributions HOOPP s retirement compensation arrangement (RCA) formalizes the funding and payment of benefits that exceed the Income Tax Act (ITA) limit for registered pension plans. The RCA allows members and employers to make tax-deductible contributions based on the member's entire annualized earnings. This means the member receives benefits based on their full earnings, regardless of ITA limits. In accordance with the Income Tax Act, in order for a member's regular RCA contributions to be deductible they cannot exceed those made by the employer on their behalf in a given tax year. Further, the Canada Revenue Agency (CRA) considers monies used to complete an RCA buyback as a contribution by the member. Therefore if a member completes an RCA-related buyback, the transaction may render their regular RCA contributions ineligible for a tax deduction in the year of purchase. When this occurs the member's RCA contributions should not be reported on their T4. Please contact HOOPP if you have any questions. When you calculate HOOPP contributions, use a single formula that does not differentiate between registered pension plan (RPP) contributions and contributions for the retirement compensation arrangement (RCA). When you issue T4s to members who contribute to the RCA, the member's total required contributions for the current year should be reported in Box 20, Registered Pension Plan Contribution. The member s pension adjustment should be reported in Box 52, Pension Adjustment. You are required to issue the employee a contribution notice that provides the amount of RCA contributions. The Member Data Collection module within ESE2 produces these notices, along with details on the split between RPP and RCA contributions, for distribution to members who make RCA contributions. The Member Data Collection module provides details on the split between RPP and RCA contributions for employers of any member who makes RCA contributions. HOOPP s registration number is The registration number for HOOPP's RCA is RC You should ensure that your payroll service, whether handled internally or contracted through an outside provider, properly calculates HOOPP contributions. If your organization uses an external payroll services provider it might be helpful to supply that organization with the information contained in this section of the manual. Employer Administration Manual 39

40 If you or your outside payroll services provider has questions, contact HOOPP. Missed contributions From time to time, a member may miss making required contributions. HOOPP can learn about missed contributions in one of three ways: If you indicate, on an Enrol New Member smart form, that the member is enrolling late by selecting the appropriate box in the Employment Information Section Via the annual member data collection process; or Via correspondence from you or one of your employees advising of the situation When required contributions are missed, it is mandatory that both your organization and the member make up those contributions. Where applicable, interest will be charged. In order for HOOPP to calculate the amount required to make up the missed contributions you will need to provide: The member's rate(s) of pay Start date for each pay rate The full-time equivalent hours for the member's position The hours worked at each rate of pay For a late enrolment, this information can be provided in Step 2 of the Enrol New Member smart form. After receiving the information HOOPP will send you a notice and invoice by secure mail in ESE2 which outlines the cost of the required contributions, plus interest charges (if applicable) and instructs you to remit the contributions to HOOPP. If the contributions are made later than the due date, additional interest will apply. In all other cases of missed contributions, upon being notified, HOOPP will notify you of the amount of missed member and employer contributions. You must report the employee contributions plus any interest in box 20 Registered Pension Plan Contributions on the member's T4 slip for the year in which the missed contributions are made. Where the missed contributions are in respect of a prior taxation year, the contributions should be added with the required contributions for the current year. Late contributions paid retroactively for 1990 or later years will require an amended pension adjustment (PA) for each year in which the contributions apply. HOOPP will provide you with the revised PA upon receipt of the funds. In the event that you need to report contributions that apply to pre-1990 taxation years, contact HOOPP. When a job is jointly funded When part of the funding for an employee's salary comes from a HOOPP employer and part from a non- HOOPP employer such as a teaching facility, the member should be treated as a part-time employee for the purpose of calculating HOOPP contributions. As a result, you should use the universal payroll deduction method when calculating contributions. The formula prorates the member's contributory service, based on the earnings paid by the HOOPP employer, and takes into account the member's annualized earnings. 40 Employer Administration Manual

41 There is, however, an important twist in how the member's annualized earnings are derived. Where part of the salary is paid by a HOOPP employer and part by a non-hoopp employer, the annualized earnings are based on the sum of the two salaries. But while the salaries paid by the two employers are added together to calculate the member's annualized earnings, that is not the case for the member's earnings per pay. The member's earnings per pay reflect only the salary paid by the HOOPP employer. Let's take the example of a member who works 52 weeks a year, and is paid a total of $150,000: $100,000 by a HOOPP employer, and $50,000 by a teaching facility. For HOOPP purposes, the member s annualized earnings would be $150,000. However, the member s contributory service would be prorated to reflect the fact that the member s earnings per pay, and contributions made to HOOPP are based only on the member s earnings from the HOOPP employer. In this example, the member s contributory service for the year, measured in weeks, would be 100,000/150, weeks, or weeks, assuming the member works for the entire year. This situation only applies when there is a joint-funding agreement. Temporary periods of reduced earnings Members can choose to "top up" their contributions during a temporary period of reduced earnings, subject to your approval, as long as they have been employed by you for at least 36 months prior to the start of the period. Examples of a temporary period of reduced earnings include participation in a temporary job-sharing program or a decision by a member to work fewer hours each week for a temporary period of time. Let HOOPP know when a member is starting a temporary period of reduced earnings by submitting a Leave Commencement smart form. When it ends, submit a Leave Completed smart form. This is so HOOPP can credit the member with the correct amount of service. Members who want to "top up" contributions can either make these contributions periodically throughout the temporary period of reduced earnings, or remit them to HOOPP through you, the employer, no later than six months after the end of the temporary period of reduced earnings. Members who choose to "top up" their contributions each payday can, at any time during the period, switch back to making contributions on their actual earnings. If they make such a switch, they will not be allowed to resume periodic contributions, and will have to provide the rest of their "topped up" contributions as a lump sum no later than six months after the end of the temporary period of reduced earnings. Contributions for members who want to contribute during a temporary period of reduced earnings are based on what they were earning before the period of reduced earnings began. These "deemed earnings" must also include any subsequent pay increases. As a general rule, the contributions of part-time employees should be based on their average earnings for the 10 weeks preceding the period of reduced earnings. If the member does not "top up" contributions within six months from the end of the period of reduced earnings, they lose the opportunity to contribute, and you are relieved of any responsibility to match the contributions. HOOPP's buyback rules do not apply in this situation, so there is no way that the member can purchase the service later. Employer Administration Manual 41

42 Contributions paid on a periodic basis during a temporary period of reduced earnings are reported to HOOPP via the annual member data collection process if: The member pays the topped-up contributions on an ongoing basis (i.e. every payday); or The temporary period of reduced earnings starts and ends in the same calendar year, and the member makes contributions by the end of that same calendar year If the member's contributions are received as a lump sum after you have completed your annual member data report for the year in which the temporary period of reduced earnings began, use the Monthly Contribution Report (MCR) remittance section on ESE2. Interest will be charged on lump sum payments received more than 30 months after the beginning of the temporary period of reduced earnings. The employee can try to make all contributions relating to a leave/temporary period of reduced earnings each payday, so that contributions are made during the same calendar year in which the temporary period of reduced earnings occurs. Making contributions in the year in which they will apply will ensure the member's HOOPP annual statement and T4 slip reflect the correct contributions for the year. Should an employee elect to pay contributions that apply to a previous calendar year in the current calendar year, you must report the contributions on the member's T4 slip for the year in which the contributions are made. The employee's contributions should be reported in box 20 Registered Pension Plan Contributions. Contributions on termination payments The table below summarizes the way HOOPP treats pension contributions for various payments that may be made to members upon termination of employment. Whether or not HOOPP contributions are made on these amounts depends on the type of payment, and the method by which the payment is made. Type of payment If paid as Contributions required Payments in lieu of termination notice period not exceeding amount required by Employment Standards Act or collective agreement Payments in lieu of termination notice period exceeding amount required by Employment Standards Act or collective agreement lump sum salary continuance lump sum salary continuance yes yes Contributions allowed on excess portion if employer and member agree to make them yes Severance pay lump sum no Other: retiring allowances, lump sum payments in lieu of benefits, etc. salary continuance lump sum yes no 42 Employer Administration Manual

43 According to Income Tax rules, members cannot continue to contribute to HOOPP after the date their employment is terminated. Contributions are permissible when a member receives severance pay as salary continuance because their employment continues beyond the date they stop working but contributions are not permissible when a member receives severance as a lump sum payment because the employment relationship ends. As a general rule, contributions should not continue after the date of termination that appears on an employee s Record of Employment (ROE). Involuntary termination or retirement settlements may affect a member's pension benefits. Contact HOOPP before finalizing the settlement to ensure it does not contravene the HOOPP Plan Text or legislation governing pension payments. HOOPP cannot be bound by agreements made between members and employers if the agreement does not conform with applicable legislation or the provisions of the Plan. In addition, if you are unsure about any of the types of payments outlined in the chart that appears above, contact HOOPP for help. If you are offering a severance package consisting of several different types of payments, for example, payment for a period of notice and then severance payments (paid out in the form of a salary continuance) until the member finds work, contributions are required on the pensionable portions of the package as described earlier, regardless of the order in which the payments are made. For HOOPP purposes, the last day at work for a member receiving salary continuance is the last day of the continuance, or the prorated equivalent period if the member is receiving part pay. For example, a member who receives half of their pre-termination pay through a year-long salary continuance will be credited with six months of contributory service and eligibility service. If a member receives a lump-sum payment relating to a termination notice period, the last day at work should be reported as the last day of the legal notice period required under the Employment Standards Act, a collective agreement, or an employment contract. For example, the last day at work for a member who is entitled to two weeks' notice is the last day of that two-week period. However, if both you and the member agree, contributions can also be made on the portion of a lumpsum payment in lieu of termination notice that exceeds the statutory notice period. For example, if a member is entitled to two weeks' notice, but receives a lump-sum payment equal to four weeks' pay, an agreement can be made to make contributions on the full amount (four weeks' pay), rather than only the statutory amount (two weeks' pay). In this situation, the member's last day at work would be the last day of the four-week period. Contributions during layoff recalls Working an occasional shift while on a leave due to a temporary layoff does not interrupt the leave. Under these circumstances, contributions are not permitted. A return to work of a more permanent nature is considered a break in the leave, and therefore contributions should be deducted from earnings. Contributions for days off in lieu of overtime Members who bank their overtime pay and are paid from the banked pay when they take a lieu day should contribute on this pay. If contributions are not deducted, the member will lose contributory service for the lieu days. 4.8 Remitting contributions deadlines and methods Both member and employer contributions must be remitted monthly, except when members contributing for a leave or topping up contributions for a temporary period of reduced earnings choose to remit their Employer Administration Manual 43

44 contributions as a lump sum within six months after the end of the leave/period. In such a case, employer contributions should be made at the same time as the member contributions. Monthly Contribution Report (MCR) procedures Submit an MCR monthly to HOOPP. The submission of the MCR should be done no later than the 15th of the month following the month the contributions were deducted. If the 15th of the month is a weekend or holiday, the contribution due date shall be the next business day after the 15th of the month. For complete instructions on how to complete the MCR, please refer to the ESE2 User Guide under Remittance /Monthly Contribution Report Module/Creating a Monthly Contribution Report. Remitting payments procedures At the end of each calendar month, all employee contributions and related employer contributions are due and should be remitted by electronic funds transfer (EFT). If you have not already arranged to remit contributions by EFT you should contact HOOPP. If paying by cheque, cheques are to be made payable to Healthcare of Ontario Pension Plan and mailed to: Healthcare of Ontario Pension Plan 1 Toronto Street Suite 1400 Toronto ON M5C 3B2 Ensure the cheque amount is identical to the total contributions listed on the MCR. Important The submission of the MCR should be done no later than the 15 th of the month following the month the contributions were deducted. Remitting on time is important because Ontario pension legislation requires that contributions deducted in one month be deposited in the pension fund within 30 days of the end of the month in which the deductions were made. To meet that deadline, HOOPP needs your contributions no later than the 15 th of the month. Failure to do so will result in penalties, interest or a "make whole" charge will apply. This is in accordance with HOOPP s Agreement and Declaration of Trust and the Ontario Pension Benefits Act. When you do not remit HOOPP pension contributions or remit pension contributions late, the benefits of all Plan members are adversely affected. 4.9 Reconciliation process When you remit contributions, they do not specify what portion applies to individual members. HOOPP gathers this information once a year via HOOPP's annual member data collection process. The Member Data Collection module within ESE2 is used to gather the following information: Contributions Contributory service weeks The employment status of plan members for a given year 44 Employer Administration Manual

45 Retroactive pay Pension adjustments Details when a member contributes for a leave or temporary period of reduced earnings Based on the information collected, HOOPP updates member records. This information is used: To calculate a member's benefit entitlement To generate HOOPP annual statements By the Plan's actuaries to assess HOOPP's financial obligations Once HOOPP has received and analyzed all the data, and issued annual statements, your HOOPP account will be reconciled and a HOOPP statement of account will be issued. This statement provides you with a summary of employer and member contributions, based on the data provided as well as money that was remitted to HOOPP, and any adjustments made during the year. The statement will indicate if you have an outstanding balance or credit. You will receive your HOOPP statement of account each fall. If there is an overpayment, HOOPP will refund the amount owed to you within 30 days after the account has been reconciled. If there has been an overpayment due to a member accumulating more than 54 weeks of contributory service, you will be refunded, including interest based on rates defined by the Agreement and Declaration of Trust (ADT). If there has been an underpayment, you will receive an invoice. You will have 30 days to make the payment; after that, you will be invoiced for make whole charges. In addition to the Member Data Collection process, other reporting documents are used to collect data for special situations: The PA Health Leave section of the Member Data Collection module is used to gather data for members who, during the previous calendar year, were off work on an employerapproved health leave that lasted longer than 15 consecutive weeks. The data collected is used to credit eligible members with Free Accrual (accrued service for which no contributions have been made). It is also used to calculate pension adjustments (PAs) for these members. The Group Transfer Data Collection process (which is, in effect, an interim annual Member Data Collection Report) can be used when a group of employees transfers from one HOOPP employer to another. HOOPP s transfer/amalgamation team is responsible for the completion of the Group Transfer Data Collection process. The RCA Contributions Summary Report, which is part of the MDC process, calculates the breakdown of: o o o Registered pension plan contributions Retirement compensation arrangement (RCA) contributions Tax information members need when you issue T4 slips 4.10 Income tax requirements Member contributions are tax-deductible Employee required contributions are fully tax-deductible in respect of the year in which the contributions are remitted to HOOPP, within the limits imposed by the Income Tax Act. Employer Administration Manual 45

46 RCA contributions In accordance with the Income Tax Act, in order for a member's regular RCA contributions to be deductible they cannot exceed those made by the employer on their behalf in a given tax year. Further, the Canada Revenue Agency (CRA) considers monies used to complete an RCA buyback as a contribution by the member. Therefore if a member completes a RCA-related buyback, the transaction may render their regular RCA contributions ineligible for a tax deduction in the year of purchase. When this occurs the member's RCA contributions should not be reported on their T4. Please contact HOOPP if you have any questions. Reporting You must report the following information on the member s T4 slip: The total annual member contributions in the RPP contribution box (box 20), including those contributions made to HOOPP, up to the maximum contribution limit in the applicable year HOOPP s registration number The member s Pension Adjustment (PA) that you calculated Employer contributions are not reported on a member s T4. Leaves/periods of reduced earnings Any leaves or periods of reduced earnings where a member has made contributions are subject to Income Tax Act limits. Under the Income Tax Act, there is a five year lifetime limit on the amount of pension service a member can build when making contributions while away from work on leave, or topping up contributions during a temporary period of reduced earnings. There is an additional limit of up to three years on the amount of service a member can build during pregnancy/parental leaves. If the member applies to make contributions for a leave or to top up contributions during a temporary period of reduced earnings and has already reached these limits while participating in HOOPP, the contributions will be returned. If lump sum contributions are made by the earlier of six months after the end of a leave/ period of reduced earnings, or by April 30 of the year after the leave/period of reduced earnings ends, the member receives a revised pension adjustment (PA). Revised PAs are reported via revised T4 slips for the years in question. All other information on the revised T4 slip should remain unchanged from the original T4. If the member makes contributions for a prior year after April 30, the member will receive a past service pension adjustment (PSPA) instead of a revised PA. This applies only when a leave ends in the previous November or December and contributions are remitted after April 30 in the following year. A PSPA will affect the member's RRSP contribution room in the year in which the PSPA is certified. HOOPP will apply to the Canada Revenue Agency for the PSPA certification Contributions checklist Remember to: Use the Universal Payroll deduction method to calculate contributions Use the retro calculator in the MDC module within ESE2 for retro calculations Remit Contributions by the 15 th of each month use the Remittance module in ESE2 46 Employer Administration Manual

47 Report leaves (Leave Commencement smart form and Leave Completed smart form) even if a member is not contributing Ask HOOPP for help if you are unsure if earnings are pensionable 5. Leaves and layoffs 5.1 Leaves While all leaves are absences, not all absences are leaves. A leave is any period of time that a member has employer approval (or is permitted under the Employment Standards Act) to be absent from work. An absence is any period of time for which a member is absent from work and this time off is not an employer-approved leave (i.e. an unapproved leave). An example of an absence that may not be approved by an employer as a leave could include a disciplinary suspension or a period when an employee does not get permission from their employer to be off work or fails to work a scheduled shift. Contributions can be made if you, as the employer, agree to contribute but contributions are not mandatory during absences that are not approved leaves. Health/disability leaves Health and disability-related leaves are handled differently from other employer-approved leaves. See section 7 Disability benefits for details. Statutory leaves As outlined in the Employment Standards Act (Ontario), members can choose whether or not to make contributions while they are off work for the following types of leaves: Pregnancy leave Parental leave Family medical leave Emergency leave Organ donor leave Family caregiver leave Critically ill child care leave Crime-related child death and disappearance leave Members may also choose to make contributions for strike or lock-out periods. Employers are required to permit employees to take these types of leaves in accordance with provincial law while maintaining employer-related benefits including HOOPP. Therefore, members do not require approval for these types of leaves and if a member decides to contribute for these periods of time, your organization must also make contributions at the required rate. Employer Administration Manual 47

48 Other types of (non-statutory) leaves Short term leave leaves less than 31 days Contributions are mandatory for members and employers on any employer-approved leave that is 30 days or less in duration. If a member starts a short term leave (less than 31 days) but the leave subsequently exceeds 30 days, then the long term leave rules outlined below would apply. Leaves exceeding 30 days Members may contribute during any other employer-approved leave, regardless of the reason for the leave, as long as you approve the request to contribute. The maximum length of a leave is defined by you, not HOOPP HOOPP does not set limits on the length of leaves. The Income Tax Act does set limits on the amount of pension service a member can build while they are away from work. Therefore, for any leave greater than 30 days, unless it is a statutory leave, it is your role to determine if the leave is an approved leave or not. If it is an approved leave then contributions can only be made if both the member and your organization agree to make them. If your organization does not agree to make contributions, the member may be eligible to purchase the service through HOOPP s past service provisions. Please refer to section 6 Portability and buyback. 5.2 Employer reporting Reporting a leave of less than 31 days Details are reported via HOOPP s annual member data collection process, so there is no need to submit a Leave Commencement smart form and a Leave Completed smart form for short term leaves that are less than 31 days. Reporting a leave of more than 30 days (no contributions) If a member is going on a leave that is more than 30 days in duration, and will not be making contributions, let HOOPP know by submitting a Leave Commencement smart form on ESE2. Indicate the type of leave and its start date. Use a Leave Completed smart form on ESE2 to let HOOPP know that this "non-contributory" leave has ended. The form can also be used to notify HOOPP that a member is starting a temporary period of reduced earnings, as described later in this section. Reporting a leave (contributions) If a member plans to contribute for a leave, they can either make periodic contributions while away, or make all the contributions as a lump sum payment by no later than six months after the end of the leave. An exception occurs for strike or lockout periods; contributions can only be made after the strike or lockout ends, and no later than six months from the end of the strike/lockout period. Submit a Leave Commencement smart form to inform HOOPP of the leave indicating the start date of the leave. Submit a Leave Completed smart form when the leave has ended. If a member makes contributions, your organization must make contributions at the required rate. For fulltime employees, the member contributions during a leave are based on what the member was earning 48 Employer Administration Manual

49 before the leave began. As a general rule, the contributions of part-time employees should be based on their average earnings for the 10 weeks preceding the leave. For both full-time and part-time employees, these "deemed earnings" must also include any subsequent pay increases. If the member's contributions are received as a lump sum, after you have completed your annual member data report, and it is within six months after the end of the leave, complete an MCR on ESE2 under Remittance/ Monthly Contribution Report Module/ Creating a Monthly Contribution Report. For complete instructions on how to complete the MCR, please refer to the ESE2 User Guide. If contributions are not received within the six months after the end date of the leave, the member may be eligible to purchase the service through HOOPP s past service provisions. Please refer to section 6 Portability and buyback. When to report deemed earnings Deemed earnings represent the difference between what the member would have earned had they worked as scheduled during a leave period or a period of reduced earnings, and their actual earnings during the leave period. Tip Deemed earnings are only reported for leaves when contributions are made (contributory leave). If no contributions are made during a leave, no deemed earnings are to be reported. The table below illustrates when to report deemed earnings, and when you do not need to report deemed earnings for a leave. Leave type Contributions Deemed earnings Unreduced earnings (100% pay) Reduced earnings (< 100% pay) No earnings (0% pay) Regular contributions Regular contributions Top up* No contributions Top up* No deemed earnings No deemed earnings Deemed earnings No deemed earnings Deemed earnings * Deemed earnings are calculated for the contributions made for the topped-up amount on a leave or a period of reduced earnings. For example; if a member receives 80% of their pre-leave earnings and topsup the 20% to their full pre-leave earnings, deemed earnings are calculated for the 20%. If the member chooses to not make the top up then do not calculate or report any deemed earnings. In many cases, you are required to provide deemed earnings on leaves that are less than 31 days in duration. For example: If a member is off work on an employer-approved leave for one day and receives no earnings, they are still required to make contributions for that one day, and you would have to provide the deemed earnings for that day. Employer Administration Manual 49

50 If a member is off work on an employer-approved leave for one day and receives reduced earnings (80% of their normal pay) and they top up the other 20% you would only be require to report deemed earnings on the top up portion of 20%. When a member takes a leave for 1 day and is paid at 100%, deemed earnings are not required because they contribute on their actual earnings. Please note: Although contributions are required on any unpaid employer-approved leaves less than 31 days, there are some exceptions: Leaves that do not fall under the category for required contributions under 31 days are: emergency leaves, family medical leaves, pregnancy, parental and health leaves. 5.3 Limits and Income Tax Act requirements The Income Tax Act prescribes a five year lifetime limit on the amount of pension service a member can build when away from work on leave (or during a temporary period of reduced earnings). There is an additional lifetime limit of up to three years on the amount of service a member can build during pregnancy/parental leaves. If a member uses up the three year pregnancy/parental limit, and applies to contribute for another pregnancy/parental leave, they can apply the time against the five year limit. Tip If a member applies to make contributions for a leave (or to "top up" contributions during a temporary period of reduced earnings) and has already reached the lifetime limits while participating in HOOPP, the contributions will be returned. However, the member may be eligible to purchase this period of time under HOOPP's buyback provisions. To ensure that members do not exceed the limits imposed by the Income Tax Act, HOOPP is required to track periods when members are not being paid but continue to contribute as if they were receiving full earnings during a leave of absence or temporary period of reduced earnings. If lump sum contributions are made by the earlier of six months after the end of the leave/ period of reduced earnings, or by April 30 of the year after the leave/period of reduced earnings ends, the member receives a revised pension adjustment (PA). Revised PAs are reported via revised T4 slips for the years in question. All other information on the revised T4 slip should remain unchanged from the original T4. If the member makes contributions for a prior year after April 30, the member will receive a past service pension adjustment (PSPA) instead of a revised PA. This applies only when a leave ends in the previous November or December and contributions are remitted after April 30 in the following year. A PSPA will affect the member's RRSP contribution room in the year in which the PSPA is certified. HOOPP will apply to the Canada Revenue Agency for the PSPA certification. 5.4 If some or all contributions are not made A member who has chosen to contribute during a leave (or who you are allowing to contribute) must make the contributions no later than six months after the end of the leave. If this deadline is missed, contributions can no longer be made for this leave period and you, as the employer, are relieved from the responsibility of contributing. The member may, however, be eligible to purchase the service through HOOPP s past service provisions. If a member makes only some of the required contributions by the six month deadline, your organization only has to make contributions that correspond to those made by the member. 50 Employer Administration Manual

51 Important It is important that you provide all members with the appropriate information about making contributions while they are on a leave and that contributions can be made during the leave or within six months after the leave ends. 5.5 If a member dies, retires, or terminates while on leave Leave/temporary period of reduced earnings information is generally reported at year end, as covered in section 5.2 Employer reporting. If a member retires, terminates, or dies in the current calendar year while on a leave or during a temporary period of reduced earnings, you will need to submit a Service, Earnings & Contributions Report (for retirement), a Notice of Termination, or a Notice of Death. These smart forms can all be submitted on ESE2. The following information may be required: The type of event (leave type, or temporary period of reduced earnings) The start and end dates of the event Deemed earnings for the period Pensionable earnings received Weeks of contributory service Pension adjustment for the current year Contributions at high and low rate (if applicable) 5.6 When a leave ends HOOPP considers a leave to have ended when a member: Returns to work for your organization Retires Terminates employment, or Dies 5.7 Special situations Pregnancy and parental leaves Employees who have worked for their employer for 13 weeks before the birth of their child are entitled by law to take up to 17 weeks for a pregnancy leave and up to 35 additional weeks for a parental leave. Employees who do not take a pregnancy leave can take up to 37 weeks for a parental leave. Since an eligible employee can elect to continue contributions for either a pregnancy leave, parental leave, or both, employers are obligated by law to also contribute for up to 52 weeks in cases where new or expectant mothers take the two leaves consecutively and choose to make contributions. The Employment Standards Act (ESA) sets the minimum length of a pregnancy/parental leave or other type of statutory leave, but you can extend the duration of these types of leaves under collective agreements or human resources policies. Remember, however, that the member can contribute for the Employer Administration Manual 51

52 entire leave period without employer approval, and you are obligated to make required employer contributions based on any contributions made by the member. If a member is going on a pregnancy/parental leave and will not be making contributions, submit a Leave Commencement smart form on ESE2. Indicate the type of leave (pregnancy/parental leave) and its start date. When the leave ends and the member returns to work, submit a Leave Completed smart form. Again, confirm the type of leave (pregnancy/parental) and the start and end dates in the space provided. For members who chose not to make contributions, or who missed the deadline (six months after the end of the leave), the service associated with the leave period is available for purchase under HOOPP's buyback provisions. Please see section 6 Portability and buyback, for further details. If a member chooses to make contributions for a pregnancy/parental leave, the percent of normal earnings on which contributions were made, the contributions, and the start and end dates of the leave are reported to HOOPP via HOOPP's annual member data collection process. If the contributions are made as a lump sum after you have completed your Member Data Collection for the year in which the leave began and within six months of the leave s end date, use the Monthly Contribution Report (MCR) remittance section on ESE2. For complete instructions on how to complete the MCR, please refer to the ESE2 User Guide under Remittance/ Monthly Contribution Report Module/ Creating a Monthly Contribution Report. A member on a pregnancy/parental leave can pay all contributions that apply to the current year before the year ends - either as periodic payments during the leave or as a lump sum paid at the end of each year of the leave. Paying contributions in the year in which they will apply will ensure that your Member Data Collection, the member's HOOPP annual statement, and the member's T4 slip reflect the correct contributions for the year. Should a member elect to pay contributions that apply to previous calendar years, in the current calendar year, you must report all the contributions on the member's T4 slip for the year in which the contributions are made. For further information on this requirement, consult the CRA website. Pre-paid leave plans A "four-for-five" arrangement allows employees to receive 80% of their earnings for four years while "banking" the remaining 20% of their earnings to take as income during the fifth year which they take as a one year leave. For HOOPP purposes, even though the member is only receiving 80% of their normal earnings during the first four years, contributions should be deducted based on 100% of the member's earnings. This means that the member will accrue full contributory service during the first four years, just as they would if they were not taking a leave in the fifth year. You must also contribute based on the member's full earnings during the first four years. You must also report a pension adjustment (PA) based on 100% of what the member earns in each year (not the 80% the member actually receives). There are two ways in which members can build pension service for the fifth year, while they are away from work - they can contribute for the fifth year, or they can buyback this period. Contributing for the fifth year of a four-for-five plan The member can contribute for the fifth year through regular contributions, or as a lump sum within six months after the end of the leave, if your organization (who must also contribute) agrees to allow the contributions to be made. Contributions are based on 100% of what the member would have earned had they worked their usual hours. Contributions are not based on the "banked" income (20% four) the 52 Employer Administration Manual

53 member collects, as contributions have already been made based on the member's full earnings during the four years prior to the leave. Buyback for the fifth year of a four-for-five plan If the contributions are not received within six months after the end of the leave, or if you do not allow contributions for the leave, the member may buy it back through HOOPP's past service provisions any time after they return to work. If the member does not contribute for the fifth year or purchase the period of service, they will not receive contributory service or eligibility service for the year. Additionally, contributions made in the fifth year while the member is on a leave, will apply against a member's prescribed compensation limits as set out in the Income Tax Act, and a PA or PSPA may apply. For more information please refer to Temporary periods of reduced earnings in section 4.7. A four-for-five plan has been used as an example but the same rules would apply for other similar arrangements such as a three-for-four leave plan. Leaves due to temporary layoff There are two types of layoffs permanent and temporary. When a permanent layoff occurs, the employment relationship has been severed and the member must terminate their membership in HOOPP. When a temporary layoff occurs, the member has a reasonable chance of being permanently recalled to work. Therefore, a temporary layoff is treated as a leave. In addition to the usual conditions under which an approved leave ends (i.e. the member returns to work), a leave due to temporary layoff ends when the member subsequently terminates employment voluntarily or when their recall rights have expired as set by you, the employer, or specified in a collective agreement, and the member has not resumed work for your organization. If the member is recalled to work, member and employer contributions to HOOPP must resume immediately. The only exception to this is if the member returns to work on a contract or fee-for-service basis and is not an employee. If the member is laid off a second or subsequent time after being recalled to work, you must decide whether they are being permanently or temporarily laid off. If the layoff is temporary because the member has a reasonable chance of being permanently recalled to work, a new leave begins. If the member has recall rights, member and employer contributions can be made during this period. Unpaid sick days When an employee takes an unpaid sick day you must decide whether to classify the time off work as an employer-approved health leave, an employer-approved leave or you may decide not to approve the leave. If you approve the time off work as a health leave please see section 7 Disability benefits, for further details on how to handle health leaves. If you approve the time off work as an employer-approved leave and it is for a period of less than 31 days, the short term leave rules set out above apply and therefore contributions are mandatory. If you do not recognize the day off as an employer-approved leave then the period should be treated as an absence and contributions cannot be made while the member is off work. Please remember that if you do not approve these days as a leave then the member will lose contributory service and they will not be able to purchase this service under HOOPP s buyback provisions. Employer Administration Manual 53

54 Members on a leave when joining due to divestment Special rules apply to members who are on a leave when they join HOOPP under a divestment (a sale, assignment, or disposition of business) or as a result of a change in their employer's pension plan. Please contact HOOPP if you have employees in this situation. Temporary periods of reduced earnings Members can choose to "top up" their contributions during a temporary period of reduced earnings, subject to your approval, as long as they have been employed by your organization for at least 36 months prior to the start of the period. Examples of a temporary period of reduced earnings include; participation in a temporary job-sharing program, or a decision by a member to work fewer hours each week for a temporary period of time. For further information about temporary periods of reduced earnings and reporting requirements, please refer to Temporary periods of reduced earnings in section 4.7. Health leave/ disability pension Please refer to section 7 Disability benefits. 5.8 Leaves and layoffs checklist Remember to: Determine if it is a leave or an absence If it is a leave, determine if it is a short-term leave or a long-term leave Determine whether contributions are required or optional Advise members that they have the option to contribute and about the six month deadline Ensure that accurate start and end dates of leave periods are reported to HOOPP Ensure contributions are remitted to HOOPP as required Determine if deemed earnings should be reported 6. Portability and buyback 6.1 Buybacks Only active members may buy back past service. This option is not available to members who have terminated their membership in the Plan, retired or to retired members who have decided to temporarily stop their pension and re-enrol in the Plan. Why buying back service is important Buying back past service allows members to increase the amount of pension they will receive when they retire and may allow members to qualify for an unreduced pension at an earlier age. The cost of a buyback is calculated based on a number of factors such as the member s age, current salary rate, current interest rates, and the amount of service the member requests to purchase. The full cost of a buyback may be considerably higher than the amount a member would contribute through regular payroll 54 Employer Administration Manual

55 deductions because the member is solely responsible for the cost of the additional service. It is a member s responsibility to determine whether a buyback is the right option for them. Eligible periods of past service for purchase If a member has an eligible period of past service and the financial means to purchase the service, they will gain additional weeks of contributory service in HOOPP. The following types of past service are eligible for purchase: A period of time when a member was employed by a HOOPP employer but not enrolled in the Plan: This could include a waiting period or a period of time when a member was working on a part-time or non full-time basis and was not contributing to HOOPP. Prior employment service with a new participating employer: If your organization has employees who were hired before you joined HOOPP and became a participating employer, they may purchase the period of time while they were employed and not contributing to HOOPP. This option is only available to members if your organization did not offer another pension plan before joining HOOPP or if you did, for members who did not belong to it. Employer-approved leaves: This includes any type of leave approved by a HOOPP employer when a member did not contribute to HOOPP. This could include periods when a member was off work on a pregnancy leave, parental leave, employer-approved health leave or another type of leave and did not make contributions to HOOPP or accrue service during the leave. Layoff or strike: This includes time while a member was off work with a HOOPP employer due to a layoff or strike and did not make contributions to HOOPP. Service with a predecessor employer that now participates in HOOPP: This includes any period of service with a predecessor employer if the successor employer now participates in HOOPP. For example if a member was subjected to a waiting period to join their previous pension plan and they joined HOOPP due to a divestment, the waiting period can be purchased. Former HOOPP service: If a member received a termination benefit from HOOPP in the past but has re-enrolled in the Plan, they may buy back this service. For example, if a member received a cash refund or transferred a termination benefit to a RRSP or LIRA they can buy back this period of service. Past service in another pension plan: This includes service a member earned in another pension plan that they transferred out of that plan when they terminated their membership. For pre-1992 service, the Income Tax Act requires that funds be transferred directly from the member s previous pension plan. Deadlines and time limits There is no deadline for members to apply for a buyback. The opportunity to purchase exists as long as the member is an active member of the Plan. However, the cost generally increases as members get older and the value of their HOOPP benefit increases. The time to prepare and provide a quote will depend how quickly HOOPP can confirm information with current and/or past employers. The quote price will be based on the date HOOPP receives all the required information. When a quote is issued, it is valid for 90 days. After that time it expires and the member cannot proceed with the buyback based on that quote. If such a member contacts HOOPP to request a new quote, the new quote will be based on the new date that HOOPP receives all the required information. Employer Administration Manual 55

56 Cost of a buyback The longer an active member waits to buy service, the more costly it will be. The cost of past service equals the difference between the value of a member s pension benefits today, before the purchase, versus what those benefits would be worth after the purchase. The cost of a buyback generally increases with increases in the member's age, annualized earnings and years of eligibility service. Typically, buying past service costs more than what a member would pay for their current service through payroll deductions. This is because you, the employer, are not allowed to contribute. Members must bear the entire cost of a buyback. Buyback procedures How to get estimates Members interested in getting an estimate of the cost of a buyback should be directed to the Buyback Estimator. The HOOPP Buyback Estimator provides members with an estimate of how much it will cost to buyback service based on the data the member has entered. The estimate does not convey an actual entitlement to benefits and is not binding on HOOPP. Before performing an estimate or contacting HOOPP, the member should have the following information on hand: Date of enrolment in HOOPP Current annualized earnings: o o If the member works full-time, enter the annual salary If the member works part-time, enter what they would earn if they worked fulltime at their current rate of pay Contributory service to date The amount of service they would like to buy back or the amount of money they want to spend on a buyback How to apply for a formal quote Members should complete the appropriate Buyback Quote Request Forms only if they intend to proceed with a purchase. A formal quote offers a member a fixed buyback cost that is valid for a period of 90 days. Completing the Buyback Quote Request Forms There are two types of quote request forms: A Buyback Quote Request - Required Employer Information should be used if the member would like to receive a buyback quote under the following conditions: For a period of time worked at a HOOPP employer when the member was not enrolled in the Plan For a period of time they were on an employer-approved leave (non-health), or For former HOOPP service where the member received a termination benefit. A Buyback Quote Request - Required Former Pension Plan Information should be used if the member would like to receive a buyback quote under the following conditions: To transfer funds from the member s previous registered pension plan (RPP) to HOOPP, or 56 Employer Administration Manual

57 For a period of time when the member belonged to another RPP and transferred benefits out of that plan. The data provided on the forms is crucial for HOOPP to calculate the fixed cost of the buyback/transfer. The buyback/transfer must be completed within 90 days. If a member chooses to proceed with a buyback, you and/or the administrator of the member s former plan will be required to complete some sections on the forms, for example: Annualized earnings Service history: to be completed by employer(s) where a period of time could be eligible for purchase (if the member is including service from multiple employers, a separate form for each employer will be required) If you cannot obtain the member s past service history, both you and the member must estimate where necessary and complete the service history chart Proof of age Members will be required to provide HOOPP with proof of age documentation if they have not already done so. HOOPP has a two-tiered proof of age requirement. Please see section 8 Termination for a full explanation of acceptable documents. The official buyback quote will include: The member s date of birth Issue date and the expiry date of the quote Calculation details including the cost of the buyback Payment options to complete the buyback (i.e. payable via registered funds or cash) The amount of the PSPA which will reduce the member s RRSP contribution room Benefits of purchasing a buyback projections of the member s retirement benefits based on two scenarios; purchasing the eligible period/full amount of service or not making a purchase Payment options A buyback is entirely the responsibility of the HOOPP member. To comply with the terms of the Plan and the Income Tax Act, employers cannot pay for a member s buyback. HOOPP will send the member a Purchase/ Transfer Payment Form that outlines the total cost of all period(s) of past service that are eligible to be purchased. The member must elect if they will purchase the full or partial amount detailed in their buyback quote. Cash or registered funds such as funds from an RRSP or locked-in retirement account (LIRA) can be used to make a payment. HOOPP will advise the member which portion of their buyback can be paid with registered funds, and if applicable, which part can be paid with cash. If a member purchases past service from a former HOOPP employer they will need to do the following: Return the Past Service Payment Form to HOOPP and select the appropriate option If paying for the purchase with cash, send HOOPP a cheque payable to HOOPP in Trust for the required amount Employer Administration Manual 57

58 If paying for the purchase with registered funds, then the member must forward a completed T2033 form directly to their financial institution(s). The member s financial institution must then complete the form and return it to HOOPP along with the transfer of funds. If a member is transferring funds from their former pension plan to HOOPP they must do the following: Return the Past Service Payment Form to HOOPP and select the appropriate option Send the former pension plan a completed T2151 form If there is a shortfall (the maximum cost is more than what their former plan has available) and the member chooses to purchase the additional service, they must send HOOPP a personal cheque if paying with cash, or send a completed T2033 form directly to their financial institution(s) if purchasing additional service using registered funds from their RRSP or LIRA Members are responsible for contacting and following up with their financial institution or former pension plan to ensure the funds have been transferred to HOOPP. The funds and completed forms must be received by HOOPP prior to the quote expiry date. HOOPP does not follow up with financial institutions or former pension plans to confirm whether or not the funds have been sent. Tax implications Depending on when the period of past service occurred, the Income Tax Act will dictate whether the member can pay for the past service using cash or registered funds. HOOPP will advise members which payment options are available to them when they request a buyback quote. If a member completes a buyback they may receive a past service pension adjustment (PSPA) which must be certified by the Canada Revenue Agency (CRA). The PSPA will reduce the member s available RRSP contribution room for the year the PSPA is certified. In some cases, CRA may require the member to withdraw funds from their RRSP before they can make a purchase. Such decisions are up to the member, who may choose to buy less service rather than withdrawing registered funds. If buyback payments are made in cash, HOOPP will issue a tax receipt directly to the member. If the member pays for a buyback using registered funds such as funds transferred from a RRSP or LIRA, HOOPP will not issue a tax receipt. 6.2 MOPPs reciprocal transfers The Major Ontario Pension Plans (MOPPs) Portability Agreement was established in 1993 to permit transfers of pension service for employees who move between the larger Ontario public sector employers. Under this agreement, transfers can be accepted between any of the following pension plans that participate in the agreement: Hydro One Pension Plan Independent Electricity System Operator (EISO) Pension Plan Electrical Safety Authority Pension plan Ontario Municipal Employees' Retirement System (OMERS) Ontario Power Generation (OPG) Pension Plan Ontario Teachers' Pension Plan Public Service Pension Plan Ontario (OPB) 58 Employer Administration Manual

59 Ontario Public Service Employees Union Pension Trust (OPTrust) Providence Centre Pension Plan St. Michael's Hospital Pension Plan St. Joseph's Health Centre Pension Plan Ontario Workplace Safety & Insurance Board Employees' Pension Plan Other non-mopps transfer agreements HOOPP has separate reciprocal transfer agreements with the following pension plans: Hospital for Sick Children Pension Plan Pension Plan for the Employees of the Ontario Public Service Employees Union (OPSEU) Some organizations may offer members additional retirement benefits that exceed the limits imposed by the Income Tax Act such as a Retirement Compensation Arrangement (RCA). Benefits that exceed these tax limits cannot be transferred between pension plans as the terms of the agreement are only applicable to benefits that are accrued up to the tax limits that are imposed on pension plans. HOOPP has reciprocal transfer agreements with a number of pension plans. Each of these agreements allows eligible members to transfer contributory service between HOOPP and another pension plan or group of plans. The terms and conditions and transfer deadlines associated with each of these transfer agreements may differ and are subject to change at any time. Advise members to contact HOOPP for more details. Eligibility requirements Tip While you may advise terminating members that HOOPP has reciprocal agreements with other pension plans, HOOPP recommends that you not counsel employees about eligibility requirements. In the event a terminating employee transfers to an employer that offers a pension plan covered by a reciprocal agreement, it is the responsibility of the member s new employer and/or pension plan to establish whether the employee is eligible under the agreement and to inform the employee of their rights to transfer. A new member may be eligible to transfer service from another pension plan into HOOPP if they meet all of the following conditions: Has ceased contributing to the other pension plan(s) Is entitled to a pension benefit from their former pension plan Has not received a pension benefit (monthly pension or commuted value payment) from their former pension plan Becomes employed with a HOOPP employer within 18 calendar months of terminating their membership in their former pension plan Joins HOOPP within six calendar months after becoming eligible to enrol Completes and returns an Appendix A within six calendar months from the date they enrolled in HOOPP Employer Administration Manual 59

60 Deadline requirements An employee who joins a HOOPP employer within the period specified in the agreement may be eligible to transfer their contributory service from their former pension plan into HOOPP. The transfer is not compulsory, but if the employee declines the opportunity the decision is final and binding and the employee cannot choose to make the transfer at a later date. In addition, if the new employee does not qualify to transfer benefits because they joined a HOOPP employer after the eligible transfer period or if they miss a deadline, they may still be able to transfer their service into HOOPP. This type of transfer is often referred to as a PBA transfer or a commuted value transfer, as described in section 8 Termination. Employer procedures at HOOPP enrolment Important When an employee is hired, you should determine if they belonged to a pension plan that has a reciprocal transfer agreement with HOOPP. If the employee belonged to a reciprocal pension plan and is eligible to join HOOPP, when you submit the Enrol New Member smart form on ESE2 indicate that the member is interested in exploring the possibility of transferring service from their former pension plan into HOOPP in step 2 of the form. Also indicate the date the member terminated employment from their previous employer. When HOOPP receives the Enrolment, HOOPP will contact the member at the mailing address they provided on the Enrol New Member smart form and provide the member with information about initiating a transfer from their former pension plan into HOOPP. If a shortfall of service exists Pension plans offer different benefits to their members and the cost of providing these benefits varies from one plan to another. In some cases, the funds required by HOOPP to provide the same amount of contributory service as the employee had with their former pension plan may cost more than the amount available from the former plan. In other words, a shortfall of service may occur if HOOPP requires a greater transfer value than the amount the exporting pension plan has available. Members have three options if a shortfall of service exists: Purchase the entire shortfall of service to obtain increased service under HOOPP (may be purchased with cash, registered funds such as RRSPs or a combination of both). Purchase part of the shortfall (may be purchased with cash, registered funds such as RRSPs or a combination of both). Service provided to the member is prorated accordingly. Do not purchase the shortfall of service. This will result in the member being credited with less contributory service than they had in their former pension plan. If a member chooses not to purchase the shortfall amount, or if they purchase only a portion of the shortfall, they may purchase the remaining period of service at a later date through HOOPP s buyback provisions. Transfer of service for 1990 or later years (PSPA and tax implications) The transfer of service for 1990 or later years may result in a past service pension adjustment (PSPA) that will reduce the amount the member is allowed to contribute to a registered retirement savings plan 60 Employer Administration Manual

61 (RRSP). If a PSPA is required for a reciprocal transfer, HOOPP will calculate the estimated amount, notify the member of the estimated PSPA, and send it to Canada Revenue Agency (CRA) for certification. A PSPA will usually be required when the benefits transferred into HOOPP result in a larger basic lifetime pension than the member would have received under their former pension plan. If the member decides to proceed with the transfer, HOOPP will send a provisional PSPA to the Canada Revenue Agency (CRA) for approval, as required under the Income Tax Act. This will happen after the funds have been transferred from the reciprocal plan. Service cannot be credited to a member until the CRA certifies the PSPA, a process that can take up to three months. As a result, the member's HOOPP annual statement will not reflect the service transferred into HOOPP until the PSPA is certified. The PSPA affects the member's RRSP contribution room in the year in which it is certified by the CRA, not the year in which the service is transferred. If the member does not have enough RRSP contribution room to accommodate the PSPA, the CRA will not certify the PSPA until the member de-registers some of their RRSP funds to make room. If the member does not de-register some RRSP funds to make room, HOOPP is not permitted to proceed with the transfer. Reciprocal transfers out of HOOPP The option to transfer benefits to another pension plan will be presented to terminated members when they receive their Termination Election Options from HOOPP. Members should contact HOOPP if they have any questions about reciprocal transfers. If a terminated member is going to work at an organization with a pension plan that has a reciprocal transfer agreement with HOOPP, they may be eligible to transfer their HOOPP benefits into their new pension plan. The member should be told to advise their new employer at the time they enrol in their new pension plan that they belonged to HOOPP. It is up to the other pension plan - and not HOOPP - to let the member know about any deadlines that may apply. Deadlines and eligibility requirements may vary depending on the agreement. Members should contact HOOPP for more information. 6.3 Commuted value transfers into HOOPP If HOOPP does not have a reciprocal transfer agreement with a member s previous pension plan, or if they are not eligible to transfer under a reciprocal agreement, a transfer may still be possible. This type of transfer is often referred to as a PBA transfer or commuted value transfer. Eligibility and deadlines Under provincial pension law, members of a registered pension plan are able to transfer the commuted value of their pension benefits to another registered pension plan, such as HOOPP, provided that both pension plans agree to the transfer. In this case, the member may be able to transfer the commuted value of their pension from their previous pension plan to HOOPP. There may be time limits and restrictions on the type and amount of benefits that can be transferred. Members should contact HOOPP for more details. HOOPP will accept a transfer of pension benefits only from another pension plan registered in Canada. Any member wishing to transfer the value of a deferred pension (from another pension plan) into HOOPP should contact HOOPP at the time of enrolment. Unlike MOPPs reciprocal transfer agreements, if a member's termination benefit from the other pension plan was transferred to a locked-in retirement Employer Administration Manual 61

62 account (LIRA), the member may be eligible to buy back any service they accrued in their previous pension plan after Tax implications The transfer of service for 1990 or later years may result in a past service pension adjustment (PSPA) that will reduce the amount a member is allowed to contribute to an RRSP. A PSPA is usually required when the benefits transferred into HOOPP result in a larger basic lifetime pension than the member would have received under their old pension plan. Service cannot be credited to a member until CRA certifies the PSPA, a process that may take up to three months. As a result, the member's HOOPP annual statement will not reflect the service transferred into HOOPP until the PSPA is certified. The PSPA affects a member's RRSP contribution room in the year in which it is certified by the CRA, not the year in which the service is transferred. 6.4 Commuted value transfers out of HOOPP A member who terminates their Plan membership may transfer the commuted value of their benefits to a new employer's pension plan, provided HOOPP and the other pension plan agree to the transfer and the other pension plan agrees to sign a Locked in Transfer Account (LITA) Form and administer the funds in accordance with the Ontario PBA. Once a Notice of Termination smart form has been received, members will be presented with details on transferring the commuted value out of HOOPP and any other termination options, via a personalized communications statement. The Notice of Termination smart form can be submitted on ESE2. Members transferring the commuted value of their benefits to another pension plan may not receive the same amount of service in their new pension plan as they had in HOOPP. This is because the value and cost of features offered by each pension plan may vary. Members also have the option of transferring the commuted value of their benefits to a locked-in savings vehicle if the member is under age 55 at the time of termination (such as a locked-in retirement account (LIRA), locked-in retirement income fund (LRIF) or a life income fund (LIF). If a member is age 55 to 64, they may still be eligible to transfer the commuted value of their benefits to another defined benefit pension plan. The transfer of a commuted value out of HOOPP may result in a pension adjustment reversal (PAR) that will increase a member's available RRSP room. If the commuted value is transferred out of HOOPP, the member will no longer be entitled to receive any benefits from HOOPP. 6.5 Special transfer rules Section 80 of the Pension Benefits Act If an employee is joining HOOPP as the result of a divestment, the usual pension transfer rules which let members transfer pension service from their former pension plan to HOOPP do not apply. A divestment occurs when an employer sells, assigns, transfers or disposes all or part of its business to another employer. The most common examples are when: 62 Employer Administration Manual

63 Two or more organizations amalgamate to form one organization One organization separates into two or more companies, or A service offered by an employer is sold or transferred to another employer According to Ontario pension laws, divested employees are deemed not to have terminated employment with their former employer for pension purposes. This means that those affected will remain a member of both their former pension plan and HOOPP, until they terminate their employment with their new HOOPP employer. There are some advantages to these divestment rules. Until a member terminates their employment with their new HOOPP employer, their former pension plan and HOOPP must both recognize the period of membership the member accrued in the other pension plan for eligibility purposes when determining the pension benefit the member is entitled to receive. For example, a member s HOOPP eligibility service will be based on their period of membership in HOOPP but will also include the period of membership in their former employer s pension plan. Eligibility service plays an important part in HOOPP s early retirement benefits. Also, the member s period of employment with their new HOOPP employer will be factored into the benefits they are eligible to receive from their former employer s pension plan. Two important transfer rules 1. Members will not be able to receive termination or retirement benefits from their former employer s pension plan until they terminate employment or retire from their new HOOPP employer. 2. If a member moves to another HOOPP employer after leaving their current HOOPP employer, they can continue to be a member of HOOPP, but the protected period ends. This means they may get termination benefits from their former employer s pension plan, which could be transferred into HOOPP if their former pension plan agrees to transfer the funds. Please contact HOOPP if you have employees who are enrolling as a result of a divestment or if you are unsure if these rules are applicable. 6.6 Buybacks and transfers checklist Ensure that members are aware of buyback opportunities o o Provide a copy of You Can Have More: Buying Back Service booklet or direct them to hoopp.com Direct them to hoopp.com to get an estimate For new employees: o o Ask if they participated in any of the pension plans with whom HOOPP has a reciprocal transfer agreement Indicate on the Enrol New Member smart form that the employee is interested in exploring the opportunity of a reciprocal transfer Tell terminating members that they should advise their new employer that they contributed to HOOPP Advise HOOPP if members are joining due to a divestment Employer Administration Manual 63

64 7. Disability benefits HOOPP offers two types of disability benefits to active members of the Plan free accrual and a disability pension. The extent of a member's disability, as demonstrated by the evidence that the member and their physician supply to HOOPP, determines which, if any, HOOPP disability benefits the member may be eligible to receive. Members may receive disability benefits from HOOPP if medical evidence is provided that demonstrates that they meet one of the following definitions: Partially disabled the member has a medically certifiable physical or mental impairment that HOOPP has determined currently prevents them from doing their own job; or Totally disabled the member has a condition causing physical or mental impairment that prevents them from engaging in any employment for which the member is reasonably suited by virtue of their education, training or experience; or Totally and permanently disabled the member has a condition causing physical or mental impairment that prevents them from engaging in any employment for which the member is reasonably suited by virtue of their education, training or experience and that can reasonably be expected to continue for the remainder of the member s lifetime 7.1 Free accrual Free accrual is contributory service that is credited by HOOPP to a member who is determined by HOOPP to be partially, totally, or totally and permanently disabled. A disabled member receiving free accrual builds contributory service without having to make any contributions. Your organization does not make contributions either. Qualifying period and timelines The first 15 weeks of a health leave is known as the qualifying period. Members must make contributions on any employment earnings they receive from your organization during this period and employers must match contributions made by the member at the prevailing employer contribution rates. See section 7.3 Administrative steps for further details about deducting contributions and the options that are available to members during this period. Important If a member returns to work during the qualifying period for a period of 3 weeks or less and then is off work for the same illness, the health leave is considered to be continuous and should not be ended. If a member returns to work during the qualifying period for more than 3 weeks or if the member returns to work and then goes off work on a health leave for a different illness then the health leave should be ended on the date the member returned to work. A new 15 week qualifying period will begin if the member goes off work again on a subsequent employer-approved health leave. Free accrual begins after the 15 week qualifying period if the member is determined by HOOPP to be partially, totally or totally and permanently disabled. If the member is partially disabled, free accrual can continue for up to four years from the date the health leave started, less the qualifying period. If the member is totally disabled or totally and permanently disabled the member may continue to qualify for 64 Employer Administration Manual

65 free accrual past the four year limit until the member recovers, dies, retires, reaches age 65 or builds 35 years of contributory service, whichever occurs first. If not approved for free accrual If HOOPP determines that a member is not eligible to apply for free accrual or does not meet any of the definitions of disability outlined above, the member will not be approved for free accrual. A member who is not approved for free accrual may remain on an employer-approved health leave for a maximum of four years and both you and the member may continue to make contributions to HOOPP to build the member s contributory service. If you do not allow the member to make contributions they will continue to be a member of HOOPP while they are on the employer-approved health leave and remain employed, but the member will not build any additional benefits in HOOPP. Rehabilitation program A member who is in receipt of free accrual can continue to qualify for free accrual until their next medical review date if you place them on a rehabilitation or modified work program. For more information about rehabilitation programs, see Step E: Member returns to work on an employerapproved rehabilitation or modified work program in section Disability pension A member, who has been determined by HOOPP to be totally and permanently disabled, can choose to receive free accrual or a HOOPP disability pension. A disability pension is an immediate, unreduced pension based on the contributory service (including free accrual) accrued before the members disability retirement date. Before a member can collect a disability pension, they must terminate employment at all the HOOPP employers where they work. HOOPP disability pensions do not include early retirement benefits, therefore there is no bridge benefit paid with a disability pension. A member who receives a HOOPP disability pension cannot convert it to a HOOPP retirement pension. If a member is assessed as being totally and permanently disabled, they are not required to apply for a HOOPP disability pension or to receive a disability pension if they choose not to. If an LTD insurance carrier insists/requires that a member must do so, this is a matter between your organization, the insurance carrier and the member. Survivor benefits are available with a HOOPP disability pension. If a member dies while receiving a disability pension and has a surviving qualifying spouse, the qualifying spouse will receive 60% of the member s disability pension for the remainder of their lifetime. If a member does not have a qualifying spouse when they retire or a spousal waiver has been completed and they die before receiving 15 years of payments the member s designated non-spouse beneficiary will receive the member s monthly disability pension for the balance of the guaranteed 15 year period. To be eligible for a HOOPP disability pension, a member must: Be on a health leave or in receipt of free accrual Have contributed to the Plan before the start of their health leave Be under age 65 Employer Administration Manual 65

66 Have less than 35 years of contributory service Submit an application to HOOPP before terminating their membership in the Plan including a completed Member s Statement of Disability and Physician s Statement of Disability to HOOPP previous statements will not be sufficient Be assessed by HOOPP as being totally and permanently disabled 7.3 Administrative steps Here are the administrative steps to be taken by employers when a member is unable to work for health reasons: Step A: Notify HOOPP of health leave It is up to you to place a member on a health leave. HOOPP does not need to be notified about the health leave until it has continued for at least 30 days. If a member has been on a health leave for at least 30 days, submit a Leave Commencement smart form on ESE2 and select "health" as the leave type. This will let HOOPP know that you have placed the member on an employer-approved health leave. If a member returns to work permanently (or for longer than a 3 week period) before the 15 week qualifying period has been reached, submit a Leave Completed smart form on ESE2 and end the leave on the date the member returned to work. Your organization may prefer to use their own standardized letters but HOOPP has developed a sample cover letter (available on ESE2) that you can use to advise members that they can apply for disability benefits and that HOOPP will send them a copy of the Here For You: Disability Guide. The cover letter should be printed on your organization's letterhead, and provided to the member. We would also recommend that you keep a copy of the letter in the member's file. Important Members on an employer-approved health leave who are totally and permanently disabled may apply for a HOOPP disability pension at any time; they do not have to wait until the end of the 15 week qualifying period. If a member indicates that they are interested in applying for a disability pension before the end of the 15-week qualifying period or requests any information about HOOPP s disability benefits please ask them to contact HOOPP directly. Submit the Leave Commencement smart form on ESE2. Health leaves should be reported to HOOPP once a member has been on a health leave for 30 days and are expected to be off work more than 15 weeks. Advise members on a health leave that they can apply for HOOPP disability benefits using the sample letter available on ESE2. If the member returns to work or the health leave is interrupted report these changes to HOOPP in a timely manner. Step B: Contributions Checklist: Place member on an employer-approved health leave 66 Employer Administration Manual

67 Deduct contributions for the first 15 weeks of the health leave Stop deducting contributions after the 15 week qualifying period if the member is approved for free accrual by HOOPP During the 15 week qualifying period members must make contributions on any employment earnings they received from your organization. Employers must also make contributions at the prevailing employer contribution rates. Any contributions the member makes during the health leave will be reported at year end to HOOPP as part of HOOPP's annual member data collection process. Below are possible contribution scenarios during the qualifying period. Full earnings If you pay a member 100% of their pre-leave earnings during the qualifying period, contributions must be made by members and employers on those earnings. Partial earnings If you pay a member less than 100% of their pre-leave earnings during the qualifying period, contributions must be made on the pay received and the member will accrue contributory service at that level. Members also have the option to top up their contributions to the pre-leave level without employer approval. If a member elects to top up they can make additional contributions to a maximum of 100% of the contributions they would have made if not for the leave. They can either make contributions during the qualifying period or anytime within six months after the end of the qualifying period. Employers must also contribute if a member chooses to top up their contributions. If a member contributes less than the full amount of what they would have contributed had they been working, their contributory service will be prorated to reflect this. Example: Before her health leave Susan earned $2175 bi-weekly. Susan earns $1305 bi-weekly during the disability qualifying period (60% of what she was earning before the leave started). Susan must contribute on the actual employment earnings she receives ($1305) but she has the option to make contributions on her pre-leave earnings of $2175 or to make contributions on earnings between $1305 and $2175. No earnings If you do not pay a member any earnings during the qualifying period, the same rules applicable to "partial earnings" apply. The member can make no contributions or "top up" contributions to 100% of the pre-leave level. Example: Before her health leave Susan earned $2175 bi-weekly. Susan receives no earnings during her health leave and is therefore not required to make any contributions. She has the option to make contributions on her pre-leave earnings of $2175 or to make contributions on earnings between $0 and $2175. Workplace Safety & Insurance Board (WSIB) benefits If a member receives WSIB benefits during the qualifying period, they can choose whether to make contributions on those benefits or not. Employer Administration Manual 67

68 If a member chooses to contribute on WSIB benefits they can either be made at the time they are received (i.e. during the qualifying period) or within six months after the end of the qualifying period, as a lump sum. You must also make contributions to HOOPP on any WSIB benefits that a member chooses to contribute on. The member's contributory service for this period will be based on the contributions received by HOOPP. Contributions are not required after the end of the 15 week qualifying period if the member qualifies for free accrual. However, you can permit members to continue making contributions if they remain on a health leave and are not receiving free accrual after the qualifying period has ended. This might occur if a member does not provide HOOPP with medical evidence to support their disability, or if a member is not approved for free accrual because the medical evidence does not support that the member is at least partially disabled. For a health leave that continues after the 15 week qualifying period, a member s contributions should be based on their pre-leave level which is determined as follows: Full-time member: The full-time pensionable earnings the member was receiving before the 15 week qualifying period Part-time member: If formerly scheduled to work but begins a health leave, contributions must be based on the earnings the member would have earned had they continued to work If not scheduled to work, contributions must be based on the member s earnings level immediately before the health leave began. Since the earnings of a part-time member can fluctuate, you should average the member s earnings for the 10-week period leading up to the leave the total hours worked in the 10 weeks prior to the leave, multiplied by the hourly rate of pay, divided by 10. If the member has not worked part-time for 10 weeks, use the same formula but substitute the actual number of weeks worked for the 10. Step C: Disability Guide HOOPP will mail a copy of Here For You: Disability Guide directly to members who reach 10 weeks on an employer-approved health leave. This booklet contains important information for members about the disability benefits offered by HOOPP and how they can apply for them. It also includes a copy of a Member s Statement of Disability and Physician s Statement of Disability forms that members need to complete and submit to HOOPP if they wish to apply for disability benefits. After reading the booklet, if a member wants to apply for disability benefits they must send the two forms to HOOPP before the end of the qualifying period, along with any other medical evidence they may have relating to their medical condition. After receiving the forms, HOOPP will send the member a letter informing them whether or not they are approved for disability benefits based on the medical evidence submitted, and the date by which new medical evidence will be required in order for the benefits to continue. HOOPP will also notify employers whether the member has been approved for free accrual or not via secure mail. A member who is not approved for free accrual may apply again if their condition worsens, as long as new medical evidence is provided to HOOPP. 68 Employer Administration Manual

69 Important If you do not report a health leave to HOOPP then a disability guide will not be mailed to the member. Health leaves should be reported to HOOPP via a Leave Commencement smart form on ESE2 once a member has been on a health leave for more than 30 days, and by 8 weeks at the latest. Step D: Member returns to work If a member who is receiving free accrual returns to work, submit a Leave Completed smart form on ESE2. Free accrual ends and the member must start contributing on the day they return to work. If a member on free accrual has returned to work, and subsequently goes back off work within three weeks for the same cause or a cause related to their initial disability, they may be able to continue on the same health leave, as though they had not returned to work. Please contact HOOPP if this situation occurs. Step E: Member returns to work on an employer-approved rehabilitation or modified work program If a member who is receiving free accrual returns to work, HOOPP will consider the health leave to have ended and free accrual will stop. There is one exception to this rule. If the member is returning to work on an employer-approved rehabilitation or modified work program, the health leave may continue. Free accrual will also continue if the member continues to be eligible and continues to satisfy the medical evidence requirement. In general, HOOPP does not consider a member to be on a modified work or rehabilitation program if the member is back at work permanently, performing either their own job or a completely different job. A rehabilitation or modified work program does not need to be approved by HOOPP, but as a general guideline these types of programs should meet the following criteria: Have the objective of enabling the member to return to work Have specific, measurable goals which are time-dependent Not continue beyond the fourth year of a health leave, if the member is partially disabled Be weeks or months in duration, not years If a member returns to work at his or her own job or a different job on a permanent basis you must inform HOOPP that the member s health leave has ended so that free accrual can stop being credited and you must resume deducting regular contributions for the member. 7.4 If a member chooses a disability retirement Checklist: Inform the member that they have to resign from all their HOOPP employers to be eligible to start a disability pension Confirm the date of termination and submit the Retirement Notice smart form to HOOPP Employer Administration Manual 69

70 If HOOPP determines that a member is totally and permanently disabled based on the medical evidence provided, the member can either receive free accrual (after the end of the 15 week qualifying period), or apply to receive a HOOPP disability pension. Before a member can start to receive a disability pension (assuming they meet HOOPP's definition of totally and permanently disabled), you must submit a Retirement Notice smart form on ESE2. On this form you will need to indicate the member s termination of employment date and check the box to acknowledge that it is a disability retirement. If a member is no longer employed by you, HOOPP will contact the member directly, and send them the form that they need to complete and submit to HOOPP before they can start to receive a disability pension. 8. Termination 8.1 What to do when a member terminates employment There are a number of steps you must take when a HOOPP member terminates employment. Here is an overview of these steps: Provide HOOPP with the last day the member was employed by your organization. If this date differs from the member s last physical day at work, due to a leave/absence, vacation, or a termination notice period, you will need to provide a reason for the difference between the last day worked and the termination of employment date. Provide members with the information sheet Termination: Options When Leaving a HOOPP Employer. The information sheet provides members with the information they need to make an informed decision when they receive their termination options from HOOPP. Members who want more advice before making a decision should be advised to speak with a qualified legal or financial advisor. If the member is 55 or older and eligible to retire and is interested in exploring retirement options, give them a copy of Getting You Ready: Retirement Planning booklet, HOOPP's pre-retirement booklet. Submit the Notice of Termination smart form on ESE Notice of Termination Submit a Notice of Termination smart form on ESE2 to notify HOOPP of a member's termination of employment. The purpose of the form is to report final pension information for the member, including: Termination of employment date Annualized earnings (if member was part-time inactive) Final weeks and contribution information Retroactive pay information Leave/temporary periods of earnings in current year (deemed earnings and % of preleave earnings) Contributions made on deemed earnings, if applicable Pension adjustment information 70 Employer Administration Manual

71 If termination is challenged or grieved If a termination is being challenged or grieved do not process the Notice of Termination until the grievance has been resolved. Contact HOOPP immediately if a termination is challenged or grieved after you have submitted the Notice of Termination. Once notified of the grievance, HOOPP will put the Notice of Termination on hold until you confirm that the grievance has been resolved and you are certain that a bona fide termination of employment has occurred. All questions relating to grievances must be settled by the employer and employee. HOOPP is not party to the employment contract and cannot be bound by the terms of any grievance settlement. If member receives a severance package Not all types of payments a member may receive upon termination of employment are pensionable. See section 4.2 Pensionable earnings for more details. If you are planning to offer a member a complex severance package, contact HOOPP before finalizing the terms of the termination agreement to ensure that the terms of the package are consistent with HOOPP s policies. Failing to do this could lead to problems later, particularly if the terms of the settlement conflict with HOOPP's provisions. If member receives a retiring allowance Retiring allowances cannot be transferred into HOOPP and HOOPP contributions cannot be deducted on these amounts as they are not pensionable earnings for HOOPP purposes. It is important that you carefully check all of the information reported on the form because any figures that are provided in error could result in the payment of an incorrect benefit to a member. HOOPP will validate the information provided on the Notice of Termination smart form and contact you if any questions arise. When not to submit the Notice of Termination Do not submit the Notice of Termination if: The member is aged 55 or older and wants to retire immediately; or The member is stopping contributions due to a change in employment status. You will not need to use a Notice of Termination for members who change from full-time to part-time status at your organization, but are contributing to HOOPP at another employer on a fulltime basis. These employees can choose to stop making HOOPP contributions at their part-time employers. Please submit a Contribution Status Change smart form on ESE2. It is important that the dates for "employment type effective date" and "change in contributory status effective date" match even if you do not need to change both sections of this form. If, due to a contribution status change request, the member will no longer be making contributions, the member should sign a HOOPP Contributions Waiver to acknowledge that they understand the rules regarding waiving contributions. Please send the completed form to HOOPP. Normal termination procedures (at the part-time employers) do not apply for these members and they will not get a termination or retirement benefit until they terminate or retire from their full-time employer as well. The member is part of a divestment (sale, assignment, or disposition of a business). Contact Client Service for information. Calculating final weeks, contributions, other amounts For help calculating final weeks, contributions, and other required amounts, refer to section 4 Contributions and the PA guide. Employer Administration Manual 71

72 8.3 HOOPP will contact the member After the Notice of Termination smart form is submitted on ESE2, HOOPP will mail information to the member, including their termination options. HOOPP will follow up with the member for: Instructions on where to transfer HOOPP benefits (i.e., to another pension plan or a locked-in retirement savings vehicle) A photocopy of an acceptable proof of age document (if not previously submitted). HOOPP has a two-tiered proof of age requirement. Members can provide a copy of either one level 1 proof of age document or copies of any two level 2 proof of age documents. HOOPP accepts the following proof of age documents: Level 1 documents Valid Canadian passport Birth certificate Baptismal certificate Citizenship papers Valid Canadian driver s licence Valid Ontario Photo Card Level 2 documents Valid foreign passport Expired Canadian passport regardless of expiry date Ontario picture health card Canadian immigration papers Marriage records Ontario age of majority card You do not have to provide any of the information above with the Notice of Termination smart form. HOOPP will request this information from members directly. 8.4 Tax considerations Income tax on termination benefits Whenever a member receives a lump-sum cash payment from HOOPP as a termination benefit, taxes must be withheld. Cash payments are taxable as income for the year in which they are paid. HOOPP withholds tax based on the refund amount, not the member's total income. As a result, members may need to pay additional tax when filing their income tax returns. The tax HOOPP must withhold from cash payments is calculated as follows: 72 Employer Administration Manual

73 Amount Withholding tax rate Payment of $5,000 or less 10% Payment of $5, to $15,000 20% Payment of more than $15,000 30% If a cash refund is paid to a member, HOOPP will mail a T4A Supplementary tax slip to the member in the February following the year in which the payment is made. The information on the T4A slip must be reported on the member's income tax return. Limits If a member decides to transfer the commuted value of their pension out of HOOPP, either to a locked-in retirement savings vehicle or to another pension plan, it is important for them to know that the Canada Revenue Agency (CRA) limits the amount that can be transferred out of a pension plan on a tax-sheltered basis. The amount varies with a member's age and other factors. HOOPP will notify members if they are subject to any limits imposed by the federal government. HOOPP will withhold tax on any transferred amounts that exceed the limits that are paid to a member in cash. In addition to these limits, in most cases, benefits from HOOPP's Retirement Compensation Arrangement (RCA) must be paid out in cash and cannot remain tax-sheltered when they are moved out of the Plan. Pension Adjustment Reversals (PAR) Terminated members who transfer their benefits out of HOOPP may receive a pension adjustment reversal (PAR). The purpose of a PAR is to restore RRSP contribution room to members when the value of the benefits they transfer out of HOOPP is less than the sum of the PAs and PSPAs they received during the years they accrued the benefits. A PAR equals the total of a terminating member's PAs from 1990 onwards, plus PSPAs, minus the amount of the termination benefits they receive for service built from 1990 onwards, including refundable contributions, and any interest payable. HOOPP will provide members with a Canada Revenue Agency T10 form, showing their final PAR amount, after the benefit has been transferred out. Commuted value withdrawal carries risk Members who terminate their membership can withdraw the commuted value of their benefits anytime before they reach age 55. Members should be made aware of the risks when considering this option. Taking a commuted value is an important and permanent decision that results in members giving up a guaranteed lifetime retirement income, including spousal benefits and inflation. Members considering a commuted value transfer should consider the following features of collecting a pension: Guaranteed monthly income: HOOPP is a defined benefit plan where the amount of pension is guaranteed and determined by a formula that recognizes a member s pre-retirement earnings, contributory service, and age. Promised pension: HOOPP guarantees to pay members a specified monthly pension for life. After the member dies, their qualifying spouse at retirement continues to receive a percentage (a member can choose between 60, 80, or 100 per cent) of the member's basic lifetime pension (excluding bridge and transition benefits) for the rest of their life. Neither the member nor the qualifying spouse can outlive the pension. Members without a qualifying spouse at retirement are also guaranteed a pension for life -- and Employer Administration Manual 73

74 should they die before receiving payments for 15 years (180 payments), their designated beneficiary will receive the remaining payments, excluding any bridge and transition benefits. HOOPP assumes investment risk: A HOOPP pension does not fluctuate with the ups and downs of the financial markets. If money is transferred out of HOOPP, future retirement income will depend on how well the investments perform and interest rates in effect at the time the investments are converted to income. Inflation protection: A deferred pension receives guaranteed and/or ad hoc cost of living adjustments annually, even before the member starts collecting their pension. Taxation: It is possible that not all of a member s termination benefit can be transferred out on a taxsheltered basis. Any amounts that exceed tax-sheltered limits are taxed as income for the year in which they are received. 8.5 Other information Bridge benefit The bridge benefit is a monthly payment that supplements a member s basic lifetime pension until age 65 when government pensions typically begin. When members choose to move their termination benefits out of HOOPP, the bridge will be factored into the transfer amount. See further information regarding the Bridge Benefit in section 9 HOOPP pensions. Termination when a member is receiving free accrual If a member s employment is terminated while they are in receipt of free accrual, submit a Leave Completed smart form on ESE2 and indicate termination as the reason the leave is ending. Also, submit a Notice of Termination smart form on ESE Termination checklist Remember to: Determine termination date Give terminated members a copy of the information sheet, Terminations: Options When Leaving a HOOPP Employer Submit Notice of Termination smart form to HOOPP Ensure final calculations are accurate If a termination is being challenged or grieved do not process the Notice of Termination until the grievance has been resolved. Contact HOOPP immediately if a termination is challenged or grieved after you have submitted the Notice of Termination. 74 Employer Administration Manual

75 9. HOOPP pensions 9.1 The HOOPP pension HOOPP provides a defined benefit (DB) pension. This means that when members retire, they are paid a set pension amount every month for their lifetime. The amount is based on a formula that takes into account a member s length of service and best five consecutive years of annualized earnings. For each year of contributory service, a member s basic lifetime pension will be: 1.5% of the member s average annualized earnings up to the average year's maximum pensionable earnings (YMPE) plus 2.0% of the member s average annualized earnings above the average YMPE Members receive their pension, plus any inflation protection paid by HOOPP, for as long as they live. The normal retirement age under HOOPP is 65. However, members can retire from the Plan as early as age 55 or as late as age 71. Early retirement: before age 65 Members can retire as early as age 55 with a reduction in their pension unless they have completed 30 years of eligibility service, or they can retire at age 60 without any reduction. The reduction reflects how long they have belonged to the Plan and their age at the time of retirement. The reduction is permanent and applies to any pension that may be payable after the member s death. Postponed retirement: after age 65 Pensions that start after age 65 will be increased to reflect the fact that the member s pension payments are starting later than the normal retirement date. The adjustment, which will be applied only to the pension benefits the member earned up until age 65, will increase those benefits by 0.5% for each completed month the member worked between their 65th birthday and the date they retire. For example, a member who retires on their 66 th birthday, 12 months after reaching age 65, will receive 106% (0.5% 12) of the pension the member earned up until age 65. The pension will also include the benefits earned from 65 to 66, which are not adjusted. The exact amount of the adjustment will be shown on the Pension Calculation Statement the member receives with their retirement kit. In accordance with the Income Tax Act (ITA), pension payments must begin no later than the end of the calendar year in which a member attains age 71. For HOOPP to comply with the ITA, members must stop making contributions on or before November 30 of the year in which they turn 71 so HOOPP can start pension payments no later than December 1. A member may continue to work but cannot continue making contributions to the Plan. Slightly different rules apply to retired members who choose to temporarily stop their pension and re-enrol in HOOPP. If, after re-enrolling in HOOPP, they reach age 65 before commencing their pension payments again, the upward adjustment will be applied only to the pension benefits they earned from the date they suspended their pension and re-enrolled in HOOPP until age 65, not to the pension amount that was temporarily suspended that they built before retirement. Employer Administration Manual 75

76 Early retirement reductions The retirement table below (also available on hoopp.com) shows the percentage of pension a member will receive if they retire early. The table, which also applies to any bridge or transition benefits the member is entitled to receive, is based on the combination of age and completed years of eligibility service. Partial years do not count - members must complete a full year of eligibility service, or pass a birthday, to reach the next level. You will see that the later a member retires, or the more years of eligibility service a member has, the larger the member's benefit will be. If the member has reached age 60 or completed at least 30 years of eligibility service at retirement, they will receive 100% of the pension benefits earned to date with no reduction. Completed years of eligibility service Percentage of pension payable (based on age at retirement) Age 55 Age 56 Age 57 Age 58 Age 59 Age or less 70.0% 76.0% 82.0% 88.0% 94.0% 100% % 82.0% 86.5% 91.0% 95.5% 100% % 83.2% 87.4% 91.6% 95.8% 100% % 84.4% 88.3% 92.2% 96.1% 100% % 85.6% 89.2% 92.8% 96.4% 100% % 86.8% 90.1% 93.4% 96.7% 100% % 88.0% 91.0% 94.0% 97.0% 100% % 89.2% 91.9% 94.6% 97.3% 100% % 90.4% 92.8% 95.2% 97.6% 100% % 91.6% 93.7% 95.8% 97.9% 100% % 92.8% 94.6% 96.4% 98.2% 100% % 94.0% 95.5% 97.0% 98.5% 100% % 95.2% 96.4% 97.6% 98.8% 100% % 96.4% 97.3% 98.2% 99.1% 100% % 97.6% 98.2% 98.8% 99.4% 100% % 98.8% 99.1% 99.4% 99.7% 100% % 100% 100% 100% 100% 100% 76 Employer Administration Manual

77 Terminate employment to start a pension Important Members who work at more than one HOOPP employer cannot receive a pension from HOOPP until they terminate employment and elect to retire at all HOOPP employers where they work. For the purpose of calculating the member's benefit, the retirement date will be the date the member terminates employment with the last HOOPP employer. The only exception to this rule is if a member reaches November 30 of the year in which they turn 71 or members who are subject to HOOPP s shortened life expectancy provisions. These members are not required to terminate their employment to start receiving their pension or to gain access to their HOOPP funds. Bridge benefit Members will receive a bridge benefit if they retire before age 65. The bridge benefit is a monthly payment that supplements a member's basic lifetime HOOPP pension until age 65 when government pensions normally begin. The bridge benefit is intended to increase a member's basic lifetime pension to a full two percent of their average annualized earnings for each year of contributory service. In other words, the full bridge equals 0.5% of the member's average annualized earnings up to the average YMPE for each year of contributory service. The bridge benefit, as well as the member's basic lifetime pension, will be reduced, as shown in the early retirement table, unless the member has at least 30 years of eligibility service or is age 60 or older when they retire. The bridge benefit is payable until age 65 or the member's death, whichever occurs first. The bridge benefit is not payable to members who are receiving a HOOPP disability pension. The bridge benefit is also factored into the value of termination and death benefits but is not paid to spouses or non-spouse beneficiaries who collect a survivor pension after the death of a retired member. 9.2 Survivor benefit options To qualify for a HOOPP spousal survivor pension or death benefit, an individual must meet the Plan Text definition of a qualifying spouse. Qualifying spouse means a person to whom a member is: Married but is not separated from; or Not married, but living together in a conjugal relationship; o o Continuously for a period of not less than one year; or In a relationship of some permanence, if they are the natural or adoptive parents of a child, both as defined in the Family Law Act Acceptable proof of spouse documents include: Canadian marriage certificate a certified copy of Statement of Marriage (also known as the long form) or a Marriage Certificate (also known as the short form) Church documents such as Church Registry, Record of Marriage or Record of Solemnization Employer Administration Manual 77

78 Foreign marriage certificate or foreign church documents (with English translation) A marriage licence that clearly indicates the date that a couple were married A Statutory Declaration or Affidavit (required for common-law spousal relationships or if no supporting documents outlined above are available) Spousal waivers Waiver of Pre-Retirement Death Benefit and Waiver of Joint and Survivor Pension By law, a qualifying spouse is automatically a member's primary beneficiary for HOOPP benefits, unless spousal benefits have been waived. The Waiver of Pre-Retirement Death Benefit can be completed by the qualifying spouse of a member anytime before or after the member s death if the qualifying spouse consents to give up their rights to a spousal death benefit so that another beneficiary designated by the member will be entitled to receive the pre-retirement death benefits payable from HOOPP. The Waiver of Joint and Survivor Pension can be completed by a member and their qualifying spouse at the time of retirement, to waive the spousal entitlement to a survivor pension. Both the member and their qualifying spouse must sign and deliver this waiver to HOOPP within 12 months prior to the commencement of the member s first pension payment. When a waiver is submitted, the qualifying spouse consents to giving up their rights to a spousal pension and any death benefits payable after the death of the member will be paid to the member s designated beneficiary(s). These waivers can be found on the Financial Service Commission of Ontario s (FSCO) website. Once pension payments begin, a waiver cannot be reversed. Members considering waiving spousal benefits should contact HOOPP for further information. Members with a qualifying spouse at retirement Unless a member has waived post-retirement spousal benefits, their qualifying spouse is automatically entitled to a lifetime pension equal to 60% of what the member was receiving at the time of their death, excluding any early retirement benefits. At the time of retirement, a member has the option of increasing their qualifying spouse s pension to 80% or 100% of the lifetime pension the member will receive, subject to an actuarial reduction in the member s pension based upon the age of the member and their qualifying spouse at retirement. The reduction is applicable for the duration of the member s and the qualifying spouse s pension even if the qualifying spouse pre-deceases the member. Members without a qualifying spouse at retirement If a member does not have a qualifying spouse at the time of their retirement or the member and their spouse have waived the survivor pension, the member should contact HOOPP to name one or more persons, organizations or their estate, as their non-spouse beneficiary. The member can designate one or more non-spouse beneficiaries as their primary beneficiary but no secondary beneficiaries can be designated. If a member dies before receiving their monthly pension for 15 years (180 payments), their beneficiary receives the member s monthly pension, excluding any early retirement benefits, for the balance of the 180 payment period. 78 Employer Administration Manual

79 If the beneficiary also dies before the 180 payments have been made, the value of the remaining pension payments will be paid to the beneficiary's estate as a lump sum. New spouse after retirement In recognition of the fact that pensioners may marry, re-marry, or enter a new spousal relationship after retirement, HOOPP has made a spousal pension available to post-retirement spouses, at the pensioner's expense. The direction to provide for a new spouse can be made using the Post-retirement Benefit Application. Members must be in good health and other conditions may apply. This option is not available if the qualifying spouse the pensioner had at the time of retirement is still living. If the qualifying spouse at the time the member retired has subsequently died, HOOPP will require a copy of the death certificate or a funeral director s statement to be attached with the application, as a proof of death document for the late spouse. 9.3 When pensions start A member's pension payments usually begin on the first day of the month that follows the retirement date listed on the Retirement Notice smart form. A member s retirement date is the date the member ceases to be an employee. In the case where a member works for multiple HOOPP employers, their retirement date is the date the member terminates their employment and retires from the last HOOPP employer where they worked. For that reason, when an employee wishes to begin their HOOPP pension, they will want to be sure to terminate their employment and elect a retirement date that is close to the end of the month to minimize the possibility of a gap in their income. If a member is no longer employed and is entitled to a deferred pension from HOOPP, their retirement date is the end of the month before the month in which the pension starts. These members should be directed to HOOPP for assistance with the retirement process. Different rules apply for disability retirement, please see section 7 Disability benefits. 9.4 Pension payments HOOPP pensions are normally paid on the first day of each month. Where the first day of the month falls on a weekend or a statutory holiday, HOOPP will make the deposit on the last business day of the previous month with the exception of January. For tax purposes, January pension payments cannot be made in December. 9.5 Shortened life expectancy (SLE) Members, pensioners or deferred pensioners facing a shortened life expectancy may apply to HOOPP to withdraw a lump-sum amount equal to the value of their pension based on HOOPP s shortened life expectancy rules. They can do this if a doctor licensed in Canada provides a medical opinion that the pensioner has a life expectancy of less than two years. If a member, pensioner or deferred pensioner has a qualifying spouse, they must also get the qualifying spouse's permission, through a signed waiver, to withdraw the funds. If the qualifying spouse agrees to the withdrawal, they forfeit their entitlement to any benefits from HOOPP upon the death of the member, pensioner or deferred pensioner. The spouse should get independent legal and financial advice before signing the waiver. Employer Administration Manual 79

80 Important Members who are subject to a shortened life expectancy can terminate their membership with HOOPP without terminating their employment relationship with their HOOPP employer(s). Plan membership will be deemed to be terminated on the date a completed SLE application is received by HOOPP. This date is used as the deemed termination date for benefit calculation purposes and any disability benefits the member may have been receiving will end on that date. Qualifying applicants will be required to complete the Application to Withdraw Funds from HOOPP which can be obtained by contacting HOOPP. Both the member attestations and/or consent from the applicant s qualifying spouse must be signed and dated within 60 days of the date HOOPP receives the completed application form for the application to be considered valid. Upon receipt of a completed application, HOOPP will inform you (and the member s other HOOPP employers, if applicable) of the member s termination of Plan membership date. HOOPP will also notify you that contribution deductions and remittance must cease as of the member s termination date and request any information required to promptly calculate and issue the member s benefit. Pension adjustments (PA) will need to be calculated for all members who terminate membership under the SLE provision. Once a completed application is received and approved, HOOPP will provide the applicant with the funds within 30 days. Upon termination of membership and payment of the SLE benefit, the applicant, their qualifying spouse (if applicable) and/or their beneficiaries, will no longer be eligible to receive any benefits from HOOPP in the future, including but not limited to pension, death and/or disability benefits. Members, pensioners and deferred pensioners who are considering the SLE benefit are encouraged to contact HOOPP for more information or may arrange to meet with your HOOPP Regional Manager. 9.6 Re-enrolling in the Plan after retirement Retired HOOPP members can, upon returning to work with a HOOPP employer, choose to temporarily stop their pension and resume contributions to the Plan. If they choose to do this, their pension will be recalculated when they start receiving it again. Different procedures apply for members in this situation: Retired members inquiring about re-enrolment should be given a copy of the Rejoining HOOPP After Retirement/Working After Retirement information sheet. If the retired member is interested in re-enrolling, they must complete a Re-enrolment Estimate Request Form to get an estimate from HOOPP that shows how their pension will be affected if they temporarily stop receiving it and begin building pension benefits again. If the retired member wants to re-enrol after reviewing the re-enrolment estimate, then they will need to contact HOOPP to notify us of this decision. Once the retired member notifies HOOPP of their decision to suspend their pension and re-enrol HOOPP will contact you to obtain further information required to complete the reenrolment process including suspending the pension payments. 80 Employer Administration Manual

81 When their employment ceases and/or they decide to stop contributing and resume their pension payments, a Pension Resumption Form will need to be completed. Do not submit a Retirement Notice smart form for members in this situation. Although the Pension Resumption Form has space for final weeks and contributions which may not be available until after the member s requested resumption date, you can send in a copy of the form with the resumption date and indicate that the final weeks and contributions information will follow once available. Once you have the final weeks and contributions data then send in a completed copy of the form to HOOPP. When the member decides to re-start their pension, stop collecting contributions when the Pension Resumption Form is completed. The member will begin receiving pension payments again after HOOPP processes the form and recalculates the member's pension. Pension payments will resume on the first of the month following the month in which the member stops making contributions. The member is not required to actually terminate their employment in order to resume their pension but, they are required to stop contributing to the plan. Retired members who have temporarily stopped receiving their HOOPP pension and re-enrolled in the Plan cannot purchase past service. 10. Retirement 10.1 Steps to help a member retire The following resources are available to members to help them make decisions about their retirement. Step 1 Retiring in three to five years The decisions members make at retirement can impact the amount of their HOOPP pension. For that reason, it is important that members are aware of all their options in advance. To help members make informed retirement decisions, give members who are within three to five years of retirement (i.e. members aged 50 or over), a copy of the HOOPP retirement booklet, Getting You Ready: Retirement Planning or refer them to hoopp.com to get a copy. The booklet will help members understand some key factors about their pension including: survivor options; choosing a retirement date; early retirement; and the retirement process. The booklet also includes an early retirement table that shows members how their age and number of years of eligibility service can affect their pension. The early retirement table can also be found in the Early retirement reductions section and on hoopp.com. The booklet also provides detailed information designed to help members through the many decisions and timelines they will face as their retirement date approaches. Step 2 Member meetings Arrange for your HOOPP regional manager to conduct a pre-retirement presentation for members planning to retire within five years. Members may also arrange one-on-one meetings with regional managers at the pre-retirement presentation. At least six months before a member plans to retire, meet with the member to discuss their retirement date. Employer Administration Manual 81

82 Step 3 Pension estimates HOOPP offers a pension estimate service for members. The estimate provides a projection of how much pension the member will receive at specified future retirement date(s) based on certain assumptions. This helps members select a retirement date that is appropriate based on their own individual circumstances and financial needs. The estimate will show the member's pension including any bridge benefit and early retirement transition benefit they may be eligible to receive on their proposed retirement date(s). An estimate is also recommended if the member will reach a key age or eligibility service milestones in the next few years. A pension estimate is not usually necessary for a member who is more than three years away from retirement. Members who are more than three years away from retirement can get an idea of what their pension will be by looking at their most recent HOOPP Annual Statement. The statement provides estimates of the projected pension a member will receive if they retire at one or more key ages. Estimates for dates after age 65 If pension estimates are requested for dates after a member has turned age 65, an upward adjustment will be factored into those estimates. A member who retires after age 65 will have their pension increased by 0.5% for each completed month after the month the member attained age 65. The portion of the pension earned to age 65 will be increased to reflect the fact that the member is starting their pension later than the normal retirement date. Any service purchased or accrued prior to age 65 is eligible for the postponed retirement adjustment while any service purchased or accrued after age 65 is not eligible for the upward adjustment. For example, if a member purchases five years of past service at age 50 and then retires at age 67 those five years would be included in the postponed retirement adjustment because they were purchased (i.e. accrued) before age 65, while any service accrued/purchased after age 65 would be ineligible for the adjustment. How to request estimates Tip You should encourage members to get a pension estimate before choosing a final retirement date. Members can request pension estimates by using a Member Request for Pension Estimates form which can be downloaded from hoopp.com, under Members/Forms & Resources. The estimate will be sent to the member s permanent address. Members can also get an estimate using HOOPP's pension calculator on hoopp.com or on HOOPP Connect, or by contacting HOOPP by telephone. If you want to request a pension estimate for a member, you can use the Employer Request for Pension Estimates form. To protect their privacy, members must sign the authorization in the member information section on the form authorizing HOOPP to produce a pension estimate that includes information from all the member's HOOPP employers, past and present. Estimate requests will not be processed if the member has not authorized it. HOOPP can deliver estimates by mail or by secure participant mailbox for members who are registered on HOOPP Connect. 82 Employer Administration Manual

83 When selecting retirement dates, members should keep in mind that their pension will begin on the first day of the month that follows their retirement date, even if the retirement date falls on the first of the month. For example, if a retirement date is February 1, 2013 then the member will receive their first pension payment on March 1, Step 4 Retirement Notice Submit the Retirement Notice smart form to inform HOOPP of a member s intention to retire. The Retirement Notice should be processed at least three months before the member's retirement date. HOOPP will contact members directly to advise them of their pension options. HOOPP may also ask for additional information to validate the member s proof of age, proof of the spouse s age, and marital status, if applicable. Applicable proof of age and qualifying spouse documents, and a direct deposit form or void cheque must be received before pension payments can begin. A member's pension will start on the first day of the month following the retirement date selected on the Retirement Notice. For example, if a member elects to retire on May 31, 2013 and has provided HOOPP with all the required forms and any additional documents requested, they will receive their first pension payment on June 1, Severance packages and termination notice periods may affect a member s retirement date. Under the Employment Standards Act (ESA), some severance payments are pensionable while others are not. If you are planning to offer a member a complex severance package, be sure to check with HOOPP first. HOOPP cannot be bound by agreements made between members and employers if the agreement does not conform to legislation or the provisions of the Plan. In the case of a termination notice period, the retirement date is the later of the last day of the legal notice period as required under the Employment Standards Act (ESA) or a collective agreement, or the last day of salary continuance. However, if both the employer and the member agree, contributions can also be made on the portion of a lump-sum payment in lieu of termination notice that exceeds the statutory notice period. For example, if a member is entitled to two weeks' notice, but receives a lump-sum payment equal to four weeks' pay, an agreement can be made by the employer and member to make contributions on the full amount (four weeks' pay), rather than only the statutory amount (two weeks' pay). In this situation, the retirement date would be the last day of the four-week period. For more information about termination and severance packages please refer to Contributions on termination payments in section 4.7. Tip HOOPP occasionally receives a Notice of Termination, rather than a Retirement Notice, for a member who is age 55 or older. Be sure that the member is aware that by terminating instead of retiring, the member is giving up the right to start receiving pension payments immediately. Step 5 Service, Earnings & Contributions Report When submitting final data for retiring members, use the Service, Earnings & Contributions Report smart form, not the Notice of Termination. The purpose of the Service, Earnings & Contributions Report is to provide the following information: Retirement date (the date the member s employment is terminated) Employer Administration Manual 83

84 Last day at work Reason if retirement date and last day at work are different Annualized earnings (for inactive members) Contributory weeks and contributions at the low and high rates (for both regular and retroactive contributions) Retroactive pay information Leaves and temporary periods of reduced earnings in the current year Deemed earnings and the percentage of normal earnings related to any leaves in current or previous year The Service, Earnings & Contributions Report smart form should be submitted immediately after the member's final payroll information is available so that HOOPP can calculate the member s pension entitlement. Important Never estimate final weeks and contributions. All information reported on the Service, Earnings & Contributions Report is final and binding and is used by HOOPP to calculate a member s pension. Errors in reporting this information will result in the payment of an incorrect pension amount. If, however, the member's final weeks and contributions are known when the Retirement Notice is ready to be submitted, please submit the Service, Earnings & Contributions Report at the same time as the Retirement Notice. For most HOOPP members, final weeks and contributions information cannot be determined until the member has completed their last day at work and final payroll information is available. This should not, however, keep you from sending HOOPP the Retirement Notice. When providing contributions data for a member who has received a retroactive pay settlement for a previous year, HOOPP contributions for each of the years to which the settlement was made, must be reported separately from regular contributions. Retroactive pay is considered to be an adjustment to earnings for a prior calendar year. Any adjustment to the current year is not considered to be retro for the purposes of calculating the contributions. Such an adjustment would require an adjustment to the current year's contributions. When completing the information for leaves and temporary periods of reduced earnings in the current year, please keep the following in mind: Deemed earnings represent the difference between what the member would have earned if the member worked as scheduled during the leave/period, and their actual earnings during the leave period If the employee works part-time, base the deemed earnings on the average weekly earnings received by the member during the 10 week period prior to the leave For more information about leaves and temporary periods of reduced earnings, please see Temporary periods of reduced earnings in section 4.7. Checking calculations Before submitting the Service, Earnings & Contributions Report and any information about contributions on retroactive settlements, you should check your calculations to ensure they are reasonable. The following formula will give you an idea of the accuracy of the member's annualized earnings for their last 84 Employer Administration Manual

85 year or two on the job. This formula should also be used if you are providing annualized earnings for an inactive member. Step 1: Determine the member's earnings for the current year (using regular contributions only 2013 contribution rates are used in this example): [low contributions.069] + [high contributions.092] = earnings for current year Step 2: Determine the member's estimated annualized earnings: [earnings for current year contributory weeks for current year] 52 = estimated annualized earnings Step 3: Check for discrepancies Check the estimated annualized earnings calculated in Step 2 against the member's annualized earnings for the previous year. To calculate the member's annualized earnings for the previous year, refer to the contributory weeks, contributions, and retroactive pay reported on the most recent HOOPP annual Member Data Collection Report. If there is an increase in annualized earnings of more than 15% or a decrease of $2,500 or more, you should indicate the reason on the Service, Earnings and Contributions Report smart form. The paper form of the Service, Earnings and Contributions Report can only be submitted for revisions after the online form has been submitted. Step 6 After forms have been sent to HOOPP Once the Retirement Notice smart form is submitted on ESE2, HOOPP will send a retirement kit to the member, which will include the information the member needs to: Select their pension options Let HOOPP know about any additional tax deductions the member may be entitled to receive You should keep the member's employment files on hand to help you respond to any requests from HOOPP for missing or incomplete information that might be required to support the Retirement Notice. It is essential that members return all documentation requested by HOOPP promptly. Failure to do so, or to sign a document where a signature has been requested by HOOPP, may delay the payment of the pension. Cancelling a retirement application If a member changes their decision to retire and wishes to cancel their application, they can do so if they cancel their retirement before their pension payments have commenced. They must notify HOOPP of this decision and should also notify your organization Using retirement materials HOOPP has a number of materials designed to help members and employers understand HOOPP s retirement features. The following table provides a list of HOOPP s retirement materials and how they should be used. Employer Administration Manual 85

86 Name of material Getting You Ready: Retirement Planning Employer Request for Pension Estimates Member Request for Pension Estimates Retirement Notice Service, Earnings & Contributions Report HOOPP website hoopp.com HOOPP Connect Purpose/use Intended for members aged 50 and older who indicate an interest in retiring within three to five years. This booklet is not intended for members applying for a disability retirement. Used by employers to request pension estimates for members near retirement age. Must be signed by member. Used by members to request a confidential pension estimate from HOOPP. A form submitted on ESE2 at least 8 to 12 weeks before the member's retirement to notify HOOPP of the member's impending retirement date. A form employers submit on ESE2 to inform HOOPP of the member s final weeks and contributions information. This form supplements the Retirement Notice. Retirement Countdown section provides members with information about the retirement process. Pension calculator, which can be used to produce pension estimates. Member and pensioner self-serve tool where they can access their Secure Participant Mailbox (SPM) and their personal information. Perform inquiries and transactions such as pension estimates and updates to their contact information Member retirement checklist Remember to: Provide members who are eligible to retire in three to five years with a copy of HOOPP s Retirement Planning booklet Meet with retiring members six months before they plan to retire: o o o Ensure HOOPP has the date of birth for the member and the member's qualifying spouse Ensure beneficiaries are up-to-date Encourage members to request a pension estimate to help them select a retirement date that suits their own individual circumstances Arrange a pre-retirement presentation with your HOOPP regional manager Process the Retirement Notice at least three months before the retirement date Process the Service, Earnings & Contributions Report after final payroll information is available Check calculations 86 Employer Administration Manual

87 11. Death 11.1 Death benefits The benefits payable upon the death of a HOOPP member are different depending on whether or not the member dies before or after retirement, and whether or not the member is survived by a qualifying spouse Death before retirement Notifying HOOPP Upon learning of the death of a HOOPP member, please notify HOOPP immediately by completing the Notice of Death smart form on ESE2. In addition to letting HOOPP know about the death of the member, the form will provide HOOPP with the following information: Contact information about the member, and, if applicable, the member s qualifying spouse Final pension information for the member, including: o o o o Date of death Last day of work Weeks and contribution information Retroactive pay information The member s annualized earnings if they were inactive in the current year Leave/temporary periods of reduced earnings in the current year Once HOOPP receives the form, your involvement with the case ends. HOOPP will contact the member s qualifying spouse, beneficiary or estate trustee directly to initiate a payment of any HOOPP benefits that may be owing. Benefits payable when a member dies before retirement with a qualifying spouse When a member dies, their qualifying spouse is the automatic beneficiary of any pension benefits that may be payable from HOOPP, unless the spouse has signed and delivered a Waiver of Pre- Retirement Death Benefit to HOOPP. A member s qualifying spouse is entitled to receive an amount equal to the commuted value of the member s pension which they may elect to receive in one of the following forms: A lump sum cash payment A transfer of the lump sum to a RRSP or RRIF An immediate lifetime annuity; or A deferred annuity which must begin no later than the end of the year in which the qualifying spouse turns 71 The death benefit will also include the value of any refundable contributions, bridge benefit and any other additional funds the member was entitled to. The following table summarizes a qualifying spouse's options for the death benefit: Employer Administration Manual 87

88 If the qualifying spouse chooses to receive the death benefit in cash transfer the death benefit to an RRSP or RRIF collect an immediate or deferred pension Any refundable contributions can be taken in cash or transferred to an RRSP or RRIF can be taken in cash or transferred to an RRSP or RRIF can be taken in cash or transferred to an RRSP or RRIF If applicable, any RCA-related benefits will also be listed among the spouse's options. If a spouse elects to transfer the death benefit out of HOOPP then any RCA-related benefits must be taken in cash. If a spouse elects to receive a pension, once monthly payments begin, they will continue for the remainder of the qualifying spouse's life and will be subject to annual cost of living adjustments. If the qualifying spouse dies before they receive monthly payments equal to the contributions (plus interest) made by the member until the date of death, any balance of the contributions plus interest will be paid to the spouse s estate. Unlike a HOOPP pension that is payable to a member, there is no provision that allows a qualifying spouse to name a beneficiary. Benefits payable when a member dies before retirement without a qualifying spouse When a member who has no qualifying spouse dies, the death benefits are paid to the member s designated beneficiary(s). If the member has not designated a beneficiary the death benefits are paid to the member's estate. The death benefit is equal to the commuted value of the member's pension at the date of death. The death benefit will also include the value of any bridge benefit, refundable contributions, and any other additional funds the member was entitled to. The benefit is paid out as a lump-sum cash payment. HOOPP is required, by law, to deduct tax from the cash payment and the payment is considered taxable income for the beneficiary or estate in the year in which it is paid. Deferred pensioners If you are notified of the death of a former employee who has a deferred pension with HOOPP, refer claims for death benefits directly to HOOPP Death after retirement Notifying HOOPP If you are contacted regarding the death of a member who has retired and begun receiving their HOOPP pension, please refer the person reporting the death directly to HOOPP. Please do not attempt to counsel the late member's family or friends about death benefits that may be payable from HOOPP. The best course of action is to have them contact HOOPP directly as these matters can be sensitive and only HOOPP can determine what death benefits are payable and who they should be paid to. The death benefits payable after retirement (if any) will depend on the benefit option selected by the member at the time of retirement. 88 Employer Administration Manual

89 Benefits payable when a member dies after retirement with a qualifying spouse A deceased member's qualifying spouse at the time of retirement is entitled to receive a lifetime pension from HOOPP. The spousal pension will equal 60, 80, or 100% of the basic lifetime pension the member was receiving, depending on the option they selected at the time of retirement. If the member was receiving a HOOPP disability pension, the spousal pension will equal 60% of the basic lifetime pension the member was receiving when they died. If the member was receiving a disability pension with projected service (under HOOPP s old rules) the spouse s pension will equal 60% of the basic lifetime pension based on service projected to the member s date of death. The basic lifetime pension for the qualifying spouse does not include any early retirement bridge benefit the member was receiving at the time of death. If the member had a qualifying spouse at the time of retirement, but spousal benefits were waived through the signing of a Spousal Waiver of Joint & Survivor Pension, the member's death benefits will be the same as those for members without a qualifying spouse. The spouse whose entitlement to spousal benefits has been waived, will not get a spousal pension, but could receive any benefits payable upon the member's death if they were designated as the member's non-spouse beneficiary. Residual death benefits A non-spouse beneficiary may receive residual death benefits - benefits payable after both the member and the member's qualifying spouse have died. If there was a qualifying spouse, the non-spouse beneficiary will, upon the death of the member and the spouse, receive a lump-sum payment of the HOOPP contributions plus interest made by the member up until the time of retirement, minus any pension and bridge benefit payments made to the member and the spouse. If the amount of pension and bridge payments paid to the member and qualifying spouse exceeds the contributions plus interest made by the member then no further benefits are payable. Benefits payable to beneficiary(s) when a member retires without a qualifying spouse and dies after retirement If a member does not have a qualifying spouse when they retire, or if the member and qualifying spouse have waived the spousal pension, the normal form of pension is a life guaranteed 15 years pension. Under this form of pension, the member receives a pension payable for their lifetime. However, if the member dies before receiving payments for 15 years (180 pension payments) the member's non-spouse beneficiary will receive the pension payments for the balance of the 180-payment period. The beneficiary will not receive any bridge benefits the member may have been receiving. If the non-spouse beneficiary dies before 180 payments have been made, the named beneficiary's estate will receive any remaining payments as a lump sum cash payment Death checklist Remember to: notify HOOPP by submitting the Notice of Death if one of your employees has died notify anyone who informs you of a member s death to contact HOOPP directly Employer Administration Manual 89

90 12. Member information 12.1 Reporting changes Member Change of Information The Member Change of Information smart form is the form that should be used to report any HOOPPrelated information that has changed since a member was enrolled in HOOPP. The form can be submitted on ESE2. If members wish to report changes of information, they can do so by contacting HOOPP directly and members can also change their contact information on HOOPP Connect. This smart form can be used to report changes or corrections to a member s: Name Date of birth Gender Preferred language Address Phone number Marital status prefix address It is important to keep member information accurate and ensuring that HOOPP has been advised of a change in a member s address will allow you to avoid updating address files during the MDC process. Do not use the Member Change of Information smart form: To name a spouse, one or more non-spouse beneficiaries, or to remove the name of a former spouse (members should be advised to call HOOPP to make these changes); or To report a change in a member s social insurance number. Call HOOPP to make this change Contribution status change You can use the Contribution Status Change smart form to update a member s employment and contributory status. The smart form can be submitted on ESE2 and can be used to report: A change in the member's employment status (i.e., from full-time to part-time status or vice versa) A change in membership status (i.e., from contributing to non-contributing or vice versa) Members must also sign a HOOPP Contributions Waiver if they choose to stop making HOOPP contributions because they are either: A part-time employee with one HOOPP employer and contribute to HOOPP on a full-time basis at another HOOPP employer; or Moving from full-time to part-time work Please have members sign the waiver and return it to you. Keep the waiver for your records and send a copy to HOOPP. 90 Employer Administration Manual

91 12.2 Privacy HOOPP takes the privacy of its members and pensioners seriously. When you enrol an employee in HOOPP and at any other time HOOPP collects a member s personal information, HOOPP will ensure that personal information is collected, used and disclosed only for the purpose of administering the Plan. Examples of the personal information which HOOPP collects, uses and, where necessary, discloses for purposes of administering member benefits include: Date of birth Home address Social Insurance Number Beneficiary information Earnings Health information (where an application has been made for disability benefits) When you enrol a member, give them a copy of the Privacy Guidelines which outlines HOOPP s privacy policy. HOOPP may collect, use and disclose the personal information of its members, but only as required to administer their pension benefits and the HOOPP Plan and, after retirement, to pay their pension. Permitted disclosures by HOOPP may include making certain information available to the Plan's auditors, actuaries and its other professional advisors and service providers for the purposes of their work in supporting the administration of the Plan; and, to its bank in order to pay pensions. HOOPP may also be required to disclose a member s personal information to pension regulators. Members can review the personal information that HOOPP has on file for them by contacting HOOPP Disclosure of information Disclosure policy HOOPP has a policy to ensure that there is no improper disclosure of Plan and member information, and to ensure that disclosure practices within HOOPP are consistent. Employer requests As a general rule, HOOPP will provide you with any information or documentation that you have submitted to HOOPP. You can request any Plan documents you require to administer HOOPP. Investment, member, and corporate information may be disclosed if the request is reasonable, and confidentiality issues have been addressed. A member s consent must be provided to HOOPP if you are requesting any estimates on their behalf. To provide consent, the member must sign the Employer Request for Pension Estimates before submitting it to HOOPP. Examples of documentation that HOOPP can disclose to employers: Copy of your organization s participation agreement Member-specific information or data that you have submitted to HOOPP Copies of any correspondence or s between HOOPP and your organization Any member forms, such as enrolment, termination or retirement forms Employer Administration Manual 91

92 A copy of HOOPP s Plan Text Information included in HOOPP s Annual Report Examples of documentation that HOOPP cannot disclose to employers: Any forms, correspondence, faxes or s submitted to HOOPP directly by a member or any other party Information relating to a member s employment with another HOOPP employer Member medical documents Medical assessment forms completed by HOOPP s physicians Internal calculation forms, policy documents, or training materials Internal procedures and internal correspondence Member requests Members can request Plan documents, investment information, and corporate information provided the request is reasonable, and confidentiality issues have been addressed. Examples of documentation that can be disclosed to members: Enrolment forms, termination and retirement notices Termination, retirement and buyback option and election forms Beneficiary designation and change of information forms Written authorizations and power of attorney documents Any medical information submitted to apply for disability benefits Any correspondence that HOOPP sent to a member or received from a member T2151, T2033 and TD1 forms Correspondence received by a third party acting on behalf of a member (i.e. a member s lawyer, accountant, doctor, financial advisor, spouse etc.) Examples of documentation that cannot be disclosed to members: Employer correspondence and s Internal calculation forms Medical assessment forms completed by HOOPP s physicians Policy documents Training materials Internal procedures and internal s HOOPP does not release copies of Independent Medical Examination (IME) reports directly to members but HOOPP will send a copy to a member s physician upon request. Third party requests In general, HOOPP may disclose the same information that a member would be entitled to receive, to a third party - such as a member's lawyer, accountant, power of attorney or other agent, if proper consent is on record. A letter of authorization is available on hoopp.com under Members/Forms & Resources. 92 Employer Administration Manual

93 However, if they prefer, members may also prepare and submit their own request in writing. Members may do this to restrict a third party s access to certain information only, such as medical reports or information from a certain time period. Please note that only a Power of Attorney (for property) has the authority to make changes on behalf of a member. Sometimes, members mistakenly believe that Banking Power of Attorney, Durable Power of Attorney, Enduring Power of Attorney, or Personal Care Power of Attorney have the same authority and capacity to act on the member's behalf but HOOPP is unable to disclose personal information to these parties as HOOPP does not have proper authorization to do so Family law matters When a HOOPP member gets divorced or separates from their spouse, the member may have to include the value of any pension benefits accumulated during the period of marriage or spousal relationship in the calculation of net family property. After the couple makes arrangements to split their assets, they may have to divide the pension benefits. If they do, HOOPP will be required to pay a portion of the member's pension benefits to the member s former spouse. Furthermore, HOOPP must if this step becomes necessary value or divide a member's HOOPP benefits, in accordance with the rules and guidelines set out under Ontario's Family Law Act (FLA) and Pension Benefits Act (PBA). In accordance with the PBA, HOOPP must provide a family law valuation to a member and their former spouse within 60 days of receiving an application. When HOOPP receives an application for a family law valuation, it may be necessary to contact employers for information needed to perform family law calculations. For example, if a member separates from their spouse during the current calendar year, HOOPP may need to request weeks and contributions data because this would not yet have been reported through the annual MDC process. HOOPP will contact you directly via secure through ESE2 to request the information required to perform a family law valuation. For more information and step-by-step instructions on how to proceed, please direct members to hoopp.com. 13. Communications support HOOPP offers comprehensive communications support to its employers, members and pensioners. This section describes the various types of communications available from HOOPP Employers The following materials are provided to help employers perform the duties associated with administering HOOPP: Administration Manual: This online manual provides detailed information you need to handle HOOPPrelated duties at the local level. Admin Manual contacts are alerted by broadcast when content has been updated. Use the online version of this manual for the most current information on the Plan and its provisions. Employer Administration Manual 93

94 ESE2: To make it easy to access online administrative resources, HOOPP has gathered frequently used tools and important news items that you can access on ESE2. HOOPP Alerts: HOOPP Alerts are sent via to contacts who handle HOOPP-related administrative duties to announce any upcoming or recent changes. Employer News: This quarterly newsletter, distributed electronically, is designed for individuals who handle HOOPP-related administrative duties. It provides news about Plan changes and amendments, important reminders, responses to frequently asked questions and helpful administrative tips. Annual Report: The HOOPP Annual Report details HOOPP's annual business operations and financial results. HOOPP website: HOOPP s website, located at hoopp.com, contains a summary of the Plan s features, investment and funding information, corporate information as well as forms, booklets, information sheets and fact sheets. Personal training by HOOPP staff: At least once a year, individuals at a HOOPP employer who handle Plan-related administrative duties are visited by their regional manager. Individuals, who are new in their position, or in need of assistance, can request additional visits. Employer seminars: HOOPP staff periodically hold employer seminars at locations across the province. These sessions enable employers in a geographic area to review Plan administrative procedures and receive information on any new Plan provisions or government requirements. They also provide an opportunity to meet key HOOPP contacts. Regional managers: Every employer is aligned with a HOOPP regional manager who can answer questions about Plan administration, features and benefits. As well, they will conduct presentations for your employees at your location on a variety of topics. They provide administrative training reviews that include topics such as: HOOPP's benefit provisions Calculating and reporting contributions, including helping you explain requirements to your payroll supplier Annual member data collection process Processes for events in a member's life cycle from enrolment through leaves, disability and retirement or termination Using HOOPP's website and other information materials and tools HOOPP ESE2 training Webinars If you wish to arrange a presentation please contact your regional manager. Regional managers can be reached toll free at Members HOOPP provides a number of information materials and services to keep members informed about their pension. Employers can download or order these materials 94 Employer Administration Manual

95 Member booklets: HOOPP produces a number of member booklets that members can download from hoopp.com under Members/Forms & Resources/Member Booklets. These booklets cover specific topics: Getting You Ready: Retirement Planning Here For You: Disability Guide The Sooner You Join: Working Part-Time What You Need: A Pension Plan For You You Can Have More: Buying Back Service Member information sheets: HOOPP produces a number of information sheets that members can download from hoopp.com: Options When Leaving a HOOPP Employer Calculating Your HOOPP Contributions Rejoining HOOPP After Retirement/Working After Retirement Working For More Than One Employer Privacy Guidelines Ontario s Rules for Relationship Breakdown Information and education sessions: HOOPP's regional managers are available to conduct several different member presentations at your location and periodically at other regional locations. Presentations are convenient and flexible and can be delivered in English and French. Webinars and customized presentations are also available. At group presentations, members may also attend individual appointments (15 minutes per member is recommended). These appointments allow members a chance to speak one-on-one with a HOOPP representative to review their personal annual statement or ask questions about their HOOPP benefits. Education presentations include: Overview presentation (can be tailored to specific needs): o o o All aspects of the Plan from contribution costs to benefits Part-time employees thinking of joining the Plan Self service tools such as HOOPP Connect Annual statement presentation: o o To help members understand the information on their HOOPP annual statement Best offered late spring or fall after annual statements have been mailed Pre-retirement presentation: o o For members within five years of retirement Consider offering a presentation outside of work hours so that members may invite their spouse or a family member Annual statements: Members receive an annual statement from HOOPP once a year, detailing their personal information, benefits entitlement to-date and projected retirement dates and benefits. Statements are mailed directly to members or sent to their Secure Participant Mailbox (SPM) if they have signed up for HOOPP Connect and chosen this preference. Employer Administration Manual 95

96 HOOPP website: HOOPP s website, located at hoopp.com, contains a summary of the Plan s features, investment and funding information, and corporate information as well as member forms, booklets, information sheets and fact sheets. HOOPP Connect: A self-serve website to connect members with their personal information and perform inquiries and transactions including a Secure Participant Mailbox (SPM). Your Plan At Work: This quarterly newsletter is distributed to members to provide them with important news about HOOPP plan changes, important reminders, responses to frequently asked questions and helpful tips Pensioners HOOPP maintains contact with pensioners and deferred pensioners to provide them with relevant news about their pension. Personalized pension statements: In March of each year, every pensioner is sent a personalized statement that shows what their gross pension will be effective April 1, when cost of living adjustments (COLA) are applied. Deferred pensioners also receive a statement. Statements are mailed directly to pensioners and deferred pensioners or sent to their Secure Participant Mailbox (SPM) if they have signed up and chosen this preference. Bulletin: This annual newsletter, which includes general information about HOOPP, is enclosed with the annual statements sent to HOOPP pensioners and deferred pensioners. The bulletin is also available on hoopp.com. HOOPP website: HOOPP s website, located at hoopp.com, contains a summary of the Plan s features, investment and funding information, corporate information, and pensioner forms. HOOPP Connect: A self-serve website to connect pensioners with their personal information and perform inquiries and transactions including a Secure Participant Mailbox (SPM). 96 Employer Administration Manual

97 Appendix A: Glossary A Absence a period of time that a member is absent from work that is not an employer-approved leave. Active member a member who is accruing contributory service or who is on a leave. Affidavit a written declaration sworn to be true and made under oath before a commissioner for taking oaths, a lawyer or notary public. Annualized earnings (AE) these are earnings a member is credited with in a calendar year that count toward their HOOPP pension. If a member works part-time or less than one full year, their annualized earnings will be based on what they would earn if they worked full-time for the whole year. Average annualized earnings (AAE) the highest average of a member s annualized earnings during any consecutive period(s) of five years of eligibility service before the member s HOOPP benefit is calculated. Benefits are calculated when a member retires, terminates or passes away. Average YMPE this is the average of the year s maximum pensionable earnings (YMPE) for the three years before a member s HOOPP benefit is calculated. Benefits are calculated when a member retires, terminates, or dies. B Basic lifetime pension this is the monthly lifetime payment members receive from HOOPP at retirement, based on HOOPP s defined benefit pension formula. This does not include the bridge benefit for early retirees. Beneficiary under provincial pension legislation, a member s qualifying spouse is automatically their primary beneficiary. If a member does not have a qualifying spouse, or if spousal benefits have been waived, the member can name any person, persons, organization or their estate as their primary beneficiary. Secondary beneficiary if a member s qualifying spouse predeceases them, their designated nonspouse beneficiary (a person, persons, organization or their estate) will receive any death benefit that may be payable after the member and their spouse have died. Bridge benefit this is a monthly payment that supplements a member s basic lifetime HOOPP pension until age 65 when government pensions normally begin. Buyback HOOPP allows members to buy back eligible periods of time in the past, so that the service they purchase can count towards their HOOPP pension. C Commuted value this is the amount of money needed now to pay a member s pension in retirement, based on their service and earnings to date. The commuted value fluctuates with changes in factors such as a member s age and interest rates. Employer Administration Manual 97

98 Contributory service this is the length of time, measured in years and part years that a member has contributed to HOOPP. It includes any past service the member buys, service transferred into HOOPP, or service that may be credited should a member be disabled. D Date of registration the date a member enrols in the Plan. This is the date of hire for new full-time employees. Defined benefit plan in a defined benefit plan, members' benefits are determined by a formula usually based on years of service times earnings, rather than by the investment returns made on their pension contributions. Disability pension this is the unreduced monthly pension payable to a member who has been assessed as totally and permanently disabled. Divestment a sale, assignment, or disposition of business. E Eligibility service Eligibility service is used to determine the reduction applied to a member s pension if they decide to take early retirement and is based on their years of membership in the Plan, plus any service purchased or transferred into the Plan, minus any non-contributory leave periods or periods during which they were not employed by a HOOPP employer. F Free accrual this is service for which neither a member nor their employer make contributions. Free accrual can be credited to a member during a health leave if the member submits medical evidence that shows they meet HOOPP s definition of partially disabled, totally disabled or totally and permanently disabled. Full-time equivalent (FTE) the normal full-time hours and salary associated with a position. H HOOPP Connect the self-service website for members and pensioners. They can access pension information, perform inquiries and transactions at their convenience, and receive their annual statements through their Secure Participant Mailbox (SPM). I Inactive member a member who has changed from full-time to part-time employment and has chosen not to contribute to HOOPP. Income Tax Act (ITA) federal legislation that establishes and governs tax rules for employers and pension plans. 98 Employer Administration Manual

99 L Layoff a period of time when an employee s employment is suspended, either temporarily or permanently. Members permanently laid off must terminate their HOOPP membership. Members on temporary layoffs are treated the same as those on a leave. Leave a period of time when a member is absent from work. In most cases a leave must be approved by a member's employer. Locked-in retirement account (LIRA) formerly called a locked-in RRSP, this is a tax-deferred retirement savings arrangement for locked-in funds transferred out of a pension plan upon terminating from the Plan. Locked-in retirement income fund (LRIF) this is a tax-deferred retirement savings arrangement for locked-in funds transferred out of a pension plan upon terminating from the Plan. It has different withdrawal rules than a LIRA. Life income fund (LIF) this is a tax-deferred retirement savings vehicle - similar to a registered retirement income fund - for locked-in RRSP funds or transfers directly from registered pension plans (such as HOOPP). Lockout a period during which an employee is prevented from working. Members can choose to make contributions for lockout periods without the approval of their employer. M Major Ontario Pension Plans (MOPPs) Portability Agreement this is an agreement that sets out the terms and conditions for the transfer of pension service for employees who move between many employers and pension plans in the Ontario public sector. Member a person who is either accruing contributory service, on a leave, or is entitled to a current or future benefit under the Plan. Minor a person under the age of 18 (Ontario s age of majority). N Normal retirement date when a member turns age 65. P Partially disabled a member who has a medically certifiable physical or mental impairment that HOOPP has determined currently prevents them from doing their own job. Part-time employee any employee who works less than full-time hours or who is not classified as fulltime by their employer. This group includes part-time, contract, temporary, casual and all other employees not classified as full-time by their employer. Past service pension adjustment (PSPA) the deemed value of pension benefits purchased in one year for service in a previous year or years. Employer Administration Manual 99

100 Pension adjustment reversal (PAR) restores RRSP contribution room to members when the value of the benefits they transfer out of HOOPP is less than the sum of the PAs and PSPAs they received during the years after 1989 when they accrued the benefits. Pension adjustments (PA) the deemed value of the benefits a member earns every year in a registered pension plan such as HOOPP. Pension Benefits Act provincial legislation that governs all pension plans in Ontario. Pensionable earnings wages, salary and other amounts paid for hours, weeks, or other specific periods of time for which a member is employed, and that form a regular and integral part of the member s remuneration. Plan means the Healthcare of Ontario Pension Plan (HOOPP). Plan membership the length of time a member has belonged to HOOPP. It also reflects any past service a member buys, service transferred into HOOPP, or membership gained through a special group transfer, such as a divestment. Portability the process of moving a member s pension benefits from one retirement plan to another. Q Qualifying spouse a member s qualifying spouse is defined as someone who, when the determination is needed: is legally married to the member, but not separated from them, or has been living with the member continuously in a conjugal relationship for at least a year; or is the mother or father (natural or adoptive) of the member s child and lives with the member in a relationship of some permanence. Qualifying period the first 15 weeks of an employer-approved health leave. R Reciprocal transfer the transfer of contributory service between HOOPP and other pension plans that are party to a reciprocal transfer agreement with HOOPP. Reciprocal transfer agreement set of terms between two or more registered pension plans to allow the transfer of pension benefits. Refundable contributions under provincial pension legislation, a member cannot pay for more than half of the value of their pension. At the time a member retires, terminates membership in HOOPP, or dies (before retirement), HOOPP will calculate the commuted value of the member's pension and compare that amount with the required contributions the member has made to the Plan, plus interest on those contributions. If the member's contributions and interest are more than half of the value of their pension, the extra amount will be refunded to the member. These returned contributions are known as refundable contributions. Payment of refundable contributions does not reduce a member's commuted value. 100 Employer Administration Manual

101 Registered retirement savings plan (RRSP) a savings arrangement that allows tax sheltered savings for Canadians in accordance with the Income Tax Act. Retire to cease employment and apply for a monthly pension. Retired and Retirement have corresponding meanings. Retirement compensation arrangement (RCA) a trust fund created to hold the contributions and pay pension benefits which are in excess of the limits set by the Income Tax Act. Retroactive pay pay that an employer pays an employee for past periods of employment. When HOOPP employers pay a HOOPP member retroactively, the contribution rates used to determine contributions are the rates that were in effect for the year to which the retroactive pay amount applies. S Severance pay a payment made to a terminated employee. Severance pay is considered pensionable earnings if it is paid as a salary continuance but is not considered pensionable if paid in a lump sum. Shortened life expectancy (SLE) a member who is confirmed to have a life expectancy of less than two years may apply to receive a lump sum payment in the amount of their remaining benefit with HOOPP. Spousal waiver a FSCO form used by a member s qualifying spouse to waive their right to a joint and survivor benefit. Signing and submitting the waiver indicates their understanding and agreement that there will be no benefits payable. Statutory declaration a written statement of facts a person signs and solemnly declares to be true before a lawyer, notary public, justice of the peace or commissioner of oaths. Strike a period during which an employee is absent from their workplace and/or duties due to an employer/employee dispute. Members can choose to make contributions for strike periods without the approval of their employer. T Temporary periods of reduced earnings a designated time during which a member works fewer hours and/or earns less than their normal earnings. With employer approval, members may top up their contributions during a period of reduced earnings. Termination of employment occurs when a member ceases to be employed and becomes entitled to termination options. Termination notice period legal notice period as required under the Employment Standards Act or a collective agreement, or the last day of salary continuance. Totally disabled a member who has a condition causing physical or mental impairment that prevents them from engaging in any employment for which the member is reasonably suited by virtue of the member s education, training or experience. Employer Administration Manual 101

102 Totally and permanently disabled a member who has a condition causing physical or mental impairment that prevents them from engaging in any employment for which the member is reasonably suited by virtue of the member s education, training or experience and that can reasonably be expected to continue for the remainder of the member s lifetime. Transition benefit this benefit supplements a member s basic lifetime HOOPP pension until age 65 when government pensions normally begin. To receive this benefit, members must have been age 55 by December 31, 2005 and met certain criteria. No new members qualify for this benefit after December 31, U Universal payroll deduction method this is a six step method for calculating required contributions. V Vested to be vested means a member is entitled to receive a future pension. Anyone who is a member of the Plan on or after July 1, 2012 is vested. W Weekend workers HOOPP members who work 30 hours per week but are paid for 37.5 hours. They receive full contributory service as though they worked 37.5 hours. Y Year s maximum pensionable earnings (YMPE) the YMPE is set each year by the federal government, based on the average wage in Canada. 102 Employer Administration Manual

103 Appendix B: PA guide B.1 How to use the PA guide HOOPP has developed this guide to help you meet the requirements of the Income Tax Act for the calculation and reporting of Pension Adjustments (PAs). The guide also includes basic information about Past Service Pension Adjustments (PSPAs) and Pension Adjustment Reversals (PARs), and replaces any other guides published by HOOPP on the subject. Because government tax rules are subject to change, you are advised to read the employer tax guides published annually by the Canada Revenue Agency (CRA). Make sure you follow the tax guide rules for multi-employer defined benefit pension plans rather than those for single employer pension plans or defined contribution pension plans, which are different. B.2 What are PAs, PSPAs and PARs? PAs, PSPAs, and PARs create a link between the tax-sheltered pension benefits people build in registered pension plans, such as the HOOPP, and the contributions they are eligible to make to registered retirement savings plans (RRSPs). PAs and PSPAs were introduced under the Income Tax Act in 1990 as part of an effort designed to give all Canadians the same basic tax breaks and contribution room for their retirement savings. A PA represents the deemed value of pension benefits earned by an employee in a year, while a PSPA represents the deemed value of pension benefits credited to an employee in one calendar year for service earned in a previous calendar year or years. A PSPA must be approved by the CRA for all reciprocal transfer agreements in respect of service that is credited to a member in 1990 or later years. A PSPA arises when a benefit for a previous period of pensionable service is improved or when past service is credited to a member. A PSPA is the additional pension credit that would have been included in the PA if the upgraded benefits had actually been provided, or the additional service credited, in those previous years. The amount a member pays for past-service benefits will not likely equal the PSPA associated with the benefits because the PSPA measures the value of the past-service benefits, rather than how much it costs to pay for the benefits. A PSPA will usually reduce a member s RRSP contribution room for the year it is reported. Pension adjustment reversals (PARs) are designed to make the PA system fairer by restoring some RRSP contribution room to terminating members who transfer their benefits out of a registered pension plan before retirement. A PAR will result if the value of a member's termination benefit for years of service after 1989 is less than the sum of the PAs and PSPAs they received for that service. PA calculator HOOPP has created a PA calculator available through ESE2. Employer Administration Manual 103

104 B.3 Responsibilities for reporting PAs, PSPAs and PARs Employer responsibilities Calculating PAs for each employee who contributed to HOOPP during the reporting year. PAs are reported to employees on their annual T4 slips; they are also reported to HOOPP when a member terminates their employment, or retires. Providing, within applicable deadlines, information HOOPP or other pension plans (in the case of pension transfers) need to meet legal requirements for the calculation of PSPAs and PARs. Issuing revised PAs for members whose weeks of contributory service have been rolled back by HOOPP to the annual maximum a member can build in a year (members may exceed the limit if they work at more than one employer). Providing information in the Member Data Collection module within ESE2 to calculate PAs for employees who qualify for free accrual - contributory service that they are credited with while disabled, and where member and employer contributions have been waived. Providing the information HOOPP needs to help you meet tax reporting requirements for members who contribute to the Plan's retirement compensation arrangement (RCA). HOOPP responsibilities Calculating PAs for you to provide to members who are credited with free accrual while they are disabled, based on information you provide. Calculating a PSPA for members who buy back past service or who transfer benefits into HOOPP from another pension plan. Calculating and sending PARs to both the CRA and a terminated member. CRA responsibilities Notifying members directly when a PSPA cannot be certified because they have insufficient unused RRSP contribution room and explaining the options available, if any. Calculating the amount each individual can contribute to an RRSP every year based on their income and reported PAs, PSPAs, and PARs. Reporting RRSP contribution room and unused RRSP contribution room on the Notice of Assessment each employee receives after they have filed their tax return each year. Member responsibilities Ensure RRSP contributions do not exceed the limits imposed by the CRA as indicated on their Notice of Assessment. B.4 How RRSP contribution room is calculated To determine how much a member is eligible to contribute to an RRSP every year, the CRA looks at their total earned income in that calendar year and subtracts any PAs and PSPAs reported for the previous year, plus any PARs reported, plus any RRSP contribution room carried forward from previous years. The result is the member s current year RRSP contribution room. The CRA must do this calculation because neither HOOPP nor an employer has all the information required to calculate a member's RRSP contribution room. For example, the member could have earned income from another source or received a PA, PSPA or PAR from another source. 104 Employer Administration Manual

105 B.5 Who gets a PA? You must calculate a PA for every active, terminated, and retired member of HOOPP who earned a pension benefit while employed during the previous calendar year. A PA must be calculated for members who receive free accrual from HOOPP while they are disabled because their pension benefit continues to grow. Free accrual is contributory service for which neither member nor employer contributions are made. The Member Data Collection module within ESE2 calculates PAs for members who are receiving free accrual and will report the PAs to employers at the beginning of each calendar year. Employers must report the PAs on members' T4 slips. You are required to report a PA on the T4 slip of every current and previous employee who earned a pension benefit while they were employed during the previous calendar year. You must also report PAs on member event forms (termination, for example) for the current year and, if not already reported, for the previous year. PAs must be reported when a member terminates their employment in the middle of a calendar year so that HOOPP is able to meet legislated deadlines for the reporting of PARs. When PAs are not reported on these forms, the payment of benefits may be delayed. You do not need to calculate PAs for employees who, during the reporting year: Were not members of HOOPP Earned no pension benefits because they were inactive Did not contribute to HOOPP at your organization, or Met HOOPP s six-month deadline for remitting contributions for a leave in a previous year but the contributions were received after April 30 in the current year (a PSPA will be required) B.6 Revising PAs If an error greater than or equal to $250 is discovered in a PA after the T4 has been issued to the member and filed with the CRA, you must submit an amended T4 showing the revised PA amount as well as all the other information reported on the original T4 slip (even if none of the other information changed). You should also advise HOOPP of the change by providing, in a letter, the member's name, social insurance number, and the new PA. Note: If an error is discovered in the information on which a PA is based, such as the contributions a member made during the year, you must correct the error and report all corrected information to HOOPP. B.7 Dates to remember Early December January February 28 April 30 Member Data Collection (MDC) available. Included with it are the tools needed for calculating PAs for members who received free accrual during the year. Submission of Member Data Collection (MDC) data to HOOPP. Deadline for employers to issue T4s to members and the CRA. Deadline for members to file their income tax returns. Employer Administration Manual 105

106 Late spring The CRA calculates and notifies Plan members of current year's RRSP contribution room, via their individual Notice of Assessment forms. B.8 Calculating 2015 PAs Employers should use the following formula to calculate PAs for members who build pension benefits in HOOPP in The formula should be prorated to reflect retirements or terminations before the end of Failing to report a PA on a member event smart form (i.e., termination) will delay the payment of a benefit to the member. As well, HOOPP must meet the legislated deadlines for reporting of PARs and for terminations; the PA is required to calculate the PAR. Example 1 (member works full-time) The CRA currently limits the annual pension amount a member can build in a defined benefit registered pension plan. In 2015 the maximum benefit is $2, If the member's benefit entitlement is greater than this amount, use $2, The maximum PA for 2015 is $24,770. This example assumes the member works full-time and receives 52 weeks of contributory service in 2015, and has annualized earnings of $55,000. The 2015 YMPE is $53,600. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,818.89} = (52 52) minimum of {[(.015 $53,600) +.02 ($55,000 - $53,600)] or $2,818.89} = (52 52) minimum of {[(.015 $53,600) + (.02 $1,400)] or $2,818.89} = (52 52) minimum of {[$804 + $28] or $2,818.89} = (52 52) minimum of $832 or $2, = (52 52) $832 = $832 (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $832) - [(52 52) $600] = $7,488 - [(52 52) $600] = $7,488 - $600 = $6,888 (The PA is rounded to the nearest dollar) Example 2 (member works part-time) This example assumes that the member works part-time and receives 26 weeks of contributory service in 2015 and has annualized earnings of $55,000. The 2015 YMPE is $53,600. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) 106 Employer Administration Manual

107 BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,818.89} = (26 52) minimum of {[(.015 $53,600) +.02 ($55,000 - $53,600)] or $2,818.89} = (26 52) minimum of {[(.015 $53,600) + (.02 $1,400)] or $2,818.89} = (26 52) minimum of {[$804 + $28] or $2,818.89} = (26 52) minimum of $832 or $2, = (26 52) $832 = $416 (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $416) - [(26 52) $600] = $3,744 - [(26 52) $600] = $3,744 - $300 = $3,444 (The PA is rounded to the nearest dollar) Example 3 (high income earner) This example assumes the member works full-time and receives 52 weeks of contributory service in 2015, and has annualized earnings of $200,000. The 2015 YMPE is $53,600. Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,818.89} = (52 52) minimum of {[(.015 $53,600) +.02 ($200,000 - $53,600)] or $2,818.89} = (52 52) minimum of {[(.015 $53,600) + (.02 $146,400)] or $2,818.89} = (52 52) minimum of {[$804 + $2,928] or $2,818.89} = (52 52) minimum of $3,732 or $2, = (52 52) $2, = $2, (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $2,818.89) - [(52 52) $600] = $25,370 - [(52 52) $600] = $25,370 - $600 = $24,770 (The PA is rounded to the nearest dollar. This is the highest PA amount that can be reported for 2015.) In this example, the member's income works out to a benefit entitlement amount that would have exceeded the 2015 CRA limit of $2, per year. The benefit entitlement (for PA purposes only) is therefore capped at $2,818.89; the PA in turn works out to the 2015 maximum PA of $24,770. Employer Administration Manual 107

108 Example 4 (high income, works part-time) This example assumes a member is working part -time and receives 26 weeks of contributory service in 2015, with annualized earnings of $200,000. The 2015 YMPE is $53,600. Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,818.89} = (26 52) minimum of {[(.015 $53,600) +.02 ($200,000 - $53,600)] or $2,818.89} = (26 52) minimum of {[(.015 $53,600) + (.02 $146,400)] or $2,818.89} = (26 52) minimum of {[$804 + $2,928] or $2,818.89} = (26 52) minimum of $3,732 or $2, = (26 52) $2, = $1, (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $1,409.45) - [(26 52) $600] = $12, [(26 52) $600] = $12, $300 = $12, (The PA is rounded to the nearest dollar) B.9 Calculating 2014 PAs Employers should use the following formula to calculate PAs for members who build pension benefits in HOOPP in The formula should be prorated to reflect retirements or terminations before the end of Failing to report a PA on a member event smart form (i.e., termination) will delay the payment of a benefit to the member. As well, HOOPP must meet the legislated deadlines for reporting of PARs and for terminations; the PA is required to calculate the PAR. Example 1 (member works full-time) The CRA currently limits the annual pension amount a member can build in a defined benefit registered pension plan. In 2014 the maximum benefit is $2, If the member's benefit entitlement is greater than this amount, use $2, The maximum PA for 2014 is $24,330. This example assumes the member works full-time and receives 52 weeks of contributory service in 2014, and has annualized earnings of $55,000. The 2014 YMPE is $52,500. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,770} = (52 52) minimum of {[(.015 $52,500) +.02 ($55,000 - $52,500)] or $2,770} = (52 52) minimum of {[(.015 $52,500) + (.02 $2,500)] or $2,770} = (52 52) minimum of {[$ $50] or $2,770} 108 Employer Administration Manual

109 = (52 52) minimum of $ or $2,770 = (52 52) $ = $ (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $837.50) - [(52 52) $600] = $7, [(52 52) $600] = $7, $600 = $6, (The PA is rounded to the nearest dollar) Example 2 (member works part-time) This example assumes that the member works part-time and receives 26 weeks of contributory service in 2014 and has annualized earnings of $55,000. The 2014 YMPE is $52,500. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,770} = (26 52) minimum of {[(.015 $52,500) +.02 ($55,000 - $52,500)] or $2,770} = (26 52) minimum of {[(.015 $52,500) + (.02 $2,500)] or $2,770} = (26 52) minimum of {[$ $50] or $2,770} = (26 52) minimum of $ or $2,770 = (26 52) $ = $ (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $418.75) - [(26 52) $600] = $3, [(26 52) $600] = $3, $300 = $3, (The PA is rounded to the nearest dollar) Example 3 (high income earner) This example assumes the member works full-time and receives 52 weeks of contributory service in 2014, and has annualized earnings of $200,000. The 2014 YMPE is $52,500. Step 1: Calculate the member's benefit entitlement (BE) Employer Administration Manual 109

110 BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,770} = (52 52) minimum of {[(.015 $52,500) +.02 ($200,000 - $52,500)] or $2,770} = (52 52) minimum of {[(.015 $52,500) + (.02 $147,500)] or $2,770} = (52 52) minimum of {[$ $2,950] or $2,770} = (52 52) minimum of $3, or $2,770 = (52 52) $2,770 = $2,770 (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $2,770.00) - [(52 52) $600] = $24,930 - [(52 52) $600] = $24,930 - $600 = $24,330 (The PA is rounded to the nearest dollar. This is the highest PA amount that can be reported for 2014.) In this example, the member's income works out to a benefit entitlement amount that would have exceeded the 2014 CRA limit of $2,770 per year. The benefit entitlement (for PA purposes only) is therefore capped at $2,770; the PA in turn works out to the 2014 maximum PA of $24,330. Example 4 (high income, works part-time) This example assumes a member is working part -time and receives 26 weeks of contributory service in 2014, with annualized earnings of $200,000. The 2014 YMPE is $52,500. Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,770} = (26 52) minimum of {[(.015 $52,500) +.02 ($200,000 - $52,500)] or $2,770} = (26 52) minimum of {[(.015 $52,500) + (.02 $147,500)] or $2,770} = (26 52) minimum of {[$ $2,950] or $2,770} = (26 52) minimum of $3, or $2,770 = (26 52) $2,770 = $1,385 (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $1,385) - [(26 52) $600] = $12,465 - [(26 52) $600] = $12,465 - $300 = $12,165 (The PA is rounded to the nearest dollar) 110 Employer Administration Manual

111 B.10 Calculating 2013 PAs Employers should use the following formula to calculate PAs for members who build pension benefits in HOOPP in The formula should be prorated to reflect retirements or terminations before the end of Failing to report a PA on a member event smart form (i.e., termination) will delay the payment of a benefit to the member. As well, HOOPP must meet the legislated deadlines for reporting of PARs and for terminations; the PA is required to calculate the PAR. Example The CRA currently limits the annual pension amount a member can build in a defined benefit registered pension plan. In 2013 the maximum benefit is $2, If the member's benefit entitlement is greater than this amount, use $2, The maximum PA for 2013 is $23,670. This example assumes the member works full-time and receives 52 weeks of contributory service in 2013, and has annualized earnings of $55,000. The 2013 YMPE is $51,100. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,696.67} = (52 52) minimum of {[(.015 $51,100) +.02 ($55,000 - $51,100)] or $2,696.67} = (52 52) minimum of {[(.015 $51,100) + (.02 $3,900)] or $2,696.67} = (52 52) minimum of {[$ $78] or $2,696.67} = (52 52) minimum of $ or $2, = (52 52) $ = $ (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $844.50) - [(52 52) $600] = $7, [(52 52) $600] = $7, $600 = $7,001 (The PA is rounded to the nearest dollar) B.11 Calculating 2012 PAs Employers should use the following formula to calculate PAs for members who build pension benefits in HOOPP in The formula should be prorated to reflect retirements or terminations before the end of Failing to report a PA on a member event smart form (i.e., termination) will delay the payment of a benefit to the member. As well, HOOPP must meet the legislated deadlines for reporting of PARs and for terminations; the PA is required to calculate the PAR. Example The CRA currently limits the annual pension amount a member can build in a defined benefit registered pension plan. In 2012 the maximum benefit was $2, Employer Administration Manual 111

112 If the member's benefit entitlement was greater than this amount, use $2, The maximum PA for 2012 was $23,220. This example assumes the member works full-time and receives 52 weeks of contributory service in 2012, and has annualized earnings of $55,000. The YMPE for 2012 was $50,100. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,646.67} = (52 52) minimum of {[(.015 $50,100) +.02 ($55,000 - $50,100)] or $2,646.67} = (52 52) minimum of {[(.015 $50,100) + (.02 $4,900)] or $2,646.67} = (52 52) minimum of {[$ $98] or $2,646.67} = (52 52) minimum of $ or $2, = (52 52) $ = $ (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $849.50) - [(52 52) $600] = $7, [(52 52) $600] = $7, $600 = $7,046 (The PA is rounded to the nearest dollar) B.12 Calculating 2011 PAs Employers should use the following formula to calculate PAs for members who build pension benefits in HOOPP in The formula should be prorated to reflect retirements or terminations before the end of Failing to report a PA on a member event smart form (i.e., termination) will delay the payment of a benefit to the member. As well, HOOPP must meet the legislated deadlines for reporting of PARs and for terminations; the PA is required to calculate the PAR. Example The CRA currently limits the annual pension amount a member can build in a defined benefit registered pension plan. In 2011 the maximum benefit was $2, If the member's benefit entitlement was greater than this amount, use $2, The maximum PA for 2011 was $22,370. This example assumes the member works full-time and receives 52 weeks of contributory service in 2011, and has annualized earnings of $55,000. The 2011 YMPE is $48,300. The PA is calculated as follows: Step 1: Calculate the member's benefit entitlement (BE) BE = (weeks reported 52) minimum of {[(1.5% AE* up to YMPE) + (2% AE* above YMPE)] or $2,552.22} 112 Employer Administration Manual

113 = (52 52) minimum of {[(.015 $48,300) +.02 ($55,000 - $48,300)] or $2,552.22} = (52 52) minimum of {[(.015 $48,300) + (.02 $6,700)] or $2,552.22} = (52 52) minimum of {[$ $134] or $2,552.22} = (52 52) minimum of $ or $2, = (52 52) $ = $ (*AE = annualized earnings) Step 2: Use the BE to calculate the member's PA PA = (9 BE) - [(weeks reported 52) $600] = (9 $858.50) - [(52 52) $600] = $ [(52 52) $600] = $ $600 = $7127 (The PA is rounded to the nearest dollar) Employer Administration Manual 113

114 Appendix C: Change log This Administration Manual is regularly updated to reflect changes in policies, procedures, legislation and more. Significant changes will be logged in this appendix and announced to employer contacts on ESE2 and by broadcast . Date of change Description of change Sections affected Mar. 18, 2016 Updates to privacy sections: privacy information provided to members by employer. 3.1, 3.5, 8.3, 12.2 Feb. 2, 2016 Update to PA reporting threshold. B.6 Oct. 1, 2015 Updates to administration of disability benefits. 7.1, 7.2, 7.3 Oct. 1, 2015 Updated enrolment rules for part-time (and non full-time) employees. 2.3, 3.2, 3.3, 3.4, 3.5, 3.9, 6.1 Mar. 31, 2015 Updated health leave process. 7.3 Dec. 11, 2014 Example PA calculations added for 2015 and B.8, B.9 Nov. 12, 2014 Added 2015 YMPE 4.1, 4.5 Oct. 29, 2014 Sep. 25, 2014 June 5, 2014 Addition of new leave types: Organ donor leave Family caregiver leave Critically ill child care leave Crime-related child death and disappearance leave Clarification of process for retired members re-enrolling in HOOPP. Removed references to obsolete Special Circumstances Enrolment Form , 3.5, , 3.2, 3.5, 6.3, 9.6 May 8, 2014 Ontario Photo Card added as proof of age document. 8.3 Dec. 19, 2013 Admin Manual restatement. all 114 Employer Administration Manual

115 Index A Annual Report, 92, 94 B beneficiary, 17, 18, 19, 65, 74, 78, 79, 87, 88, 89, 91, 92, 97 Board of Trustees, 7, 8 bridge benefit, 65, 74, 77, 82, 87, 88, 89, 97 buyback, 17, 32, 33, 39, 41, 46, 48, 49, 50, 52, 53, 54, 55, 56, 57, 58, 60, 63, 92 C communications support, 93 commuted value, 59, 60, 61, 62, 73, 87, 88, 97, 100 contribution rate, 7, 20, 21, 22, 23, 24, 25, 26, 27, 29, 32, 33, 35, 36, 39, 67, 85, 101 contributions employee, 40, 44 employer, 19, 32, 40, 43, 44, 52, 53, 104, 105 D date of employment, 17 date of registration, 17 deemed earnings, 41, 49, 51, 54, 70, 84 disability pension, 64, 65, 69, 70, 77, 89 disclosure of information, 11 divestment, 16, 17, 19, 54, 55, 62, 63, 100 E early retirement, 63, 65, 77, 78, 81, 82, 89, 98 employer contributions, 19, 32, 40, 43, 44, 52, 53, 104, 105 Employer Request for Pension Estimates, 82, 86, 91 Employment Standards Act, 43, 47, 51, 83, 101 enrolments, 16, 17 F family law, 93 free accrual, 33, 64, 65, 66, 68, 69, 70, 74, 104, 105 full-time, 10, 11, 12, 14, 17, 19, 20, 21, 23, 24, 25, 26, 27, 29, 30, 35, 40, 48, 56, 68, 71, 90, 98, 112 H hoopp.com, 63, 76, 81, 82, 86, 92, 93, 94, 95, 96 J joint-funding, 41 L last day at work, 43, 84 layoff, 43, 53, 55 leaves, 38, 46, 47, 48, 49, 51, 53, 84, 94 locked-in retirement account, 57, 62 lockout, 48, 99 M Major Ontario Pension Plans, 58, 99 make whole charge, 45 Member Request for Pension Estimates, 82, 86 missed contributions, 19, 40 N new employees, 19, 63 new hires, 14, 19 P parental leave, 22, 46, 47, 50, 51, 52 part-time, 11, 14, 15, 17, 20, 21, 22, 24, 26, 40, 41, 49, 56, 68, 71, 84, 90, 95, 97, 98 past service pension adjustment, 46, 50, 58, 60, 62 pension adjustment reversal, 62, 73 pension adjustments, 40, 45 pension estimate, 82, 86 pension statement, 96 pregnancy leave, 47, 51 R reciprocal transfer, 59, 60, 61, 63, 100, 103 re-enrolling, 75 registered retirement savings plan, 60, 103 rehabilitation program, 65 remittance, 36, 42, 52, 80 retirement compensation arrangement, 39, 45, 104 Retirement Notice, 69, 70, 79, 81, 83, 84, 85, 86 retroactive pay, 22, 33, 34, 35, 36, 38, 45, 70, 84, 85, 101 health leave, 22, 26, 33, 45, 53, 64, 66, 67, 68, 69, 98, 100 Employer Administration Manual 115

116 S Section 80, 17 severance package, 43, 71, 83 severance pay, 43, 83 shortened life expectancy, 77, 79, 80 spousal waiver, 18, 65 strike, 47, 48, 55, 101 T temporary periods of reduced earnings, 33, 54, 84 termination, 22, 36, 38, 42, 43, 55, 61, 62, 63, 69, 70, 71, 72, 73, 74, 77, 80, 83, 91, 92, 94, 101, 103, 105, 111, 112 termination notice period, 43, 70, 83 transfer out, 73, 100 transition benefit, 73, 76, 82 trustees, 7 U universal payroll deduction method, 21, 22, 23, 28, 29, 40 W wage adjustments, 32 weekend workers, 12 Workplace Safety & Insurance Board, Employer Administration Manual