Personal Finance

Worth buying back HOOPP years of service?

  • Last Updated:
  • Jan 16th, 2019 6:33 pm
Sr. Member
Jul 15, 2003
607 posts
GTA, Ontario

Worth buying back HOOPP years of service?

I've recently switched jobs and I am taking with me my old pension which I plan to transfer, however, I'm wondering if it is worth paying for the extra years of service.

Former pension
Years of Service: 5.08
Value: $34,916.67

HOOPP pension
Years of Service from Former Pension: 3.14
Value: $34,916.67

Years of Service: 1.94
Cost: $21,687.95

Is the 1.94 years of service worth $21,687.95? I can fund most of this by moving my couch potato profile to this (I'd be short roughly $4,000), but to fund it entirely by cash may be an issue. Right now my salary is mid $80,000, and will max at high $90,000 at my current role.

Some questions I assume will come up:

Age: 36
Do I plan to retire here: Unknown

The pension estimate tables look like this right now:

1) Partial transfer (not paying the difference): $3,490/mth at age 65
2) Full service purchase: $3,740/mth at age 65

So, the difference is $250/mth right now. Doing simple math means $21,687.95 / $250 = 87 months or 7 years. Does this mean it will be worth it if I live up to at least 72 or is there more that I need to consider?

7 replies
Deal Expert
User avatar
Jan 27, 2004
41227 posts
T.O. Lotto Captain
It depends on your circumstance.
If youre willing to burn that much money for the ability of a big pension... go ahead. Its not a bad idea if thats what you want. But your money is tied up for that purpose only.

I personally would just keep the money in my own tfsa and invest dilligently. It would at least give me flexibility
Deal Addict
Jan 9, 2010
1302 posts
I would. HOOPP is probably one of the richest and well managed pensions around. They just increased their benefits while a lot of DB pensions are struggling.
Deal Addict
User avatar
May 11, 2014
3333 posts
Iqaluit, NU
If you plan to work your way up in your current role or possibly a position that pays even higher that also works with HOOPP, then definitely. Your pension investment will be worth much more from the highest 5 annual earnings calculation.
Another thing to keep in mind is that you may decide to quit and go to a different job. At that time, you may want to withdraw the commuted value of the pension. If you have already averaged up higher income in your payscale, you will already see a larger cash out value from that alone.

If you do value having a cash account where you are free to withdraw as you please in your retirement, going RRSP and TFSA investment may be better.
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Jan 12, 2016
28 posts
Toronto, ON
I did a buyback. Just had to transfer my rrsp from Tangerine to HOOPP.
Sr. Member
User avatar
Jan 15, 2017
618 posts
You’re basically placing a bet that <total benefits received> will exceed <total contributions> up to your life expectancy.

At your age, it’s probably a safe bet, but use your own numbers to convince yourself.
Deal Fanatic
Nov 24, 2013
5706 posts
Kingston, ON
Having two years of extra service could be helpful too if you decided you wanted to retire, say, at age 55 with 24 years service, vs. 22. ... ment-table

You have 2 more years of earnings for the pension formula (higher pension) plus your early retirement reduction is less. It's a crystal ball question now, but later in life it could be one of those things you're "glad you did."
Sr. Member
Jul 15, 2003
607 posts
GTA, Ontario
Thanks for the feedback everyone.

If I think about my current situation, I'll likely just transfer my personal RRSPs and pay the $4,000 difference to top it up. I still have a fairly large contribution room available for my RRSPs to do any personal investments outside of the pension.

Note, my TFSA is already maxed at this time.