Personal Finance

OMERS question

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  • Jul 21st, 2020 6:36 pm
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[OP]
Newbie
Feb 22, 2015
88 posts
62 upvotes

OMERS question

I recently moved jobs and have OMERS pension from previous employer that I have the option to withdraw.

What I heard from colleagues is... OMERS benefit is only for me and spouse (60%) - and doesnt have any benefit for kids as survivor benefits. Suggestion is to move it out into RRSP so the money is still accessible and doesn't disappear... is that a good idea?

This has been my first job earning OMERS pension and still learning how these work! Any suggestions would greatly help... thanks in advance!
18 replies
Penalty Box
Dec 26, 2013
523 posts
170 upvotes
Ottawa
Im in the same boat as you, recently left my OMERS employer and like you have 6 months to choose what to do with it. Your options are to defer it, transfer it over to a LIRA or move it to another defined pension plan like HOOPP, OMERS etc, with a new employer. Moving it to another pension would be your best option imo. Deferring it would be my last choice, OMERS recently made a change where any credited service in a deferred plan post 2012 is not indexed for inflation, nor has any pre-retirement protection. Without indexing, your pension will remain at todays value which in 20 years from now wont be worth much. I will be transferring my pension over to a LIRA (locked in RRSP) with the rest split between my RRSP and cash. There is only a certain amount of your pension you can transfer over to a LIRA, this amount is different for everyone. I would of liked to have transferred this pension over to my other employers OMERS pension, however, OMERS told me I couldnt because I started with that employer 2 years prior to terminating this employment :(
[OP]
Newbie
Feb 22, 2015
88 posts
62 upvotes
wilyam wrote: Im in the same boat as you, recently left my OMERS employer and like you have 6 months to choose what to do with it. Your options are to defer it, transfer it over to a LIRA or move it to another defined pension plan like HOOPP, OMERS etc, with a new employer. Moving it to another pension would be your best option imo. Deferring it would be my last choice, OMERS recently made a change where any credited service in a deferred plan post 2012 is not indexed for inflation, nor has any pre-retirement protection. Without indexing, your pension will remain at todays value which in 20 years from now wont be worth much. I will be transferring my pension over to a LIRA (locked in RRSP) with the rest split between my RRSP and cash. There is only a certain amount of your pension you can transfer over to a LIRA, this amount is different for everyone. I would of liked to have transferred this pension over to my other employers OMERS pension, however, OMERS told me I couldnt because I started with that employer 2 years prior to terminating this employment :(
My new employer is also OMERS so I do have the option to merge - just not sure if its a good idea based on what has been fed from people I hear from! It has confused me a bit more. Some of the other colleagues I have heard from always take the money out of OMERS when they switch from one employer to another.

I did get the approval from CRA to allow full amount to be transferred to RRSP as I do have contribution room... so wont be paying any tax on the withdrawl... just the speculation around how the OMERS funds would do and the changing rules for sustaining the plan is getting me confused.

I still have 20+ years to retire... and so not sure if sticking around with OMERS for now is a good idea or move it out and see it growing (or sinking in this economy) would be good.
Penalty Box
Dec 26, 2013
523 posts
170 upvotes
Ottawa
Transfer it over to your new OMERS plan, its guaranteed income, comes with retirement benefits and will continue to grow in time as your best 5 years grow with your new employer.
Deal Addict
Dec 30, 2005
3063 posts
1350 upvotes
wilyam wrote: Transfer it over to your new OMERS plan, its guaranteed income, comes with retirement benefits and will continue to grow in time as your best 5 years grow with your new employer.
Question...would the best 5 years be considered at any point of your career, or is it your last 5 years before you retire for OMERS?

TIA
Penalty Box
Dec 26, 2013
523 posts
170 upvotes
Ottawa
yyz2hkg wrote: Question...would the best 5 years be considered at any point of your career, or is it your last 5 years before you retire for OMERS?

TIA
any 5 years, but chances are they would be your last.
Deal Addict
User avatar
Mar 9, 2012
3966 posts
2828 upvotes
Kitchener
yyz2hkg wrote: Question...would the best 5 years be considered at any point of your career, or is it your last 5 years before you retire for OMERS?

TIA
Yeah, as the user above me mentioned, 5-best of all years.

Ideally, you play the system and get your 5-best when you go for a management or director job. After you get those 5 years in, go down to a lower level supervisor, or see if you can get back into the union.
Why can't we all just get along?
Deal Addict
Jan 12, 2017
1637 posts
963 upvotes
I'm pretty sure the top 5 years aren't indexed, so you'd want them to be as close to your last year's before retirement as possible. Also, OT doesn't count to the pension.
jeff1970 wrote: Yeah, as the user above me mentioned, 5-best of all years.

Ideally, you play the system and get your 5-best when you go for a management or director job. After you get those 5 years in, go down to a lower level supervisor, or see if you can get back into the union.
Member
Jun 6, 2014
300 posts
129 upvotes
Toronto, ON
It depends on your age when you started working for your previous employer. But transferring it to the new employer will probably allow you to retire before age 65. Most plans are based on a combination of age and years of service that will determine the earliest retirement date, and by transferring it over, your previous years count.
[OP]
Newbie
Feb 22, 2015
88 posts
62 upvotes
icedtea365 wrote: It depends on your age when you started working for your previous employer. But transferring it to the new employer will probably allow you to retire before age 65. Most plans are based on a combination of age and years of service that will determine the earliest retirement date, and by transferring it over, your previous years count.
Thanks for your response... I only have 8 years of service with previous employer so I might not meet the requirements for early retirement... even with bridge benefit!
Deal Addict
User avatar
Mar 9, 2012
3966 posts
2828 upvotes
Kitchener
Chickennbeans wrote: I'm pretty sure the top 5 years aren't indexed, so you'd want them to be as close to your last year's before retirement as possible. Also, OT doesn't count to the pension.
OT never was, I don’t think. My OMERS is my hourly x 40 x 52 x 9.3%, IIRC.

However, I do believe everything you earned, at least up until 2022, is fully indexed. You probably already know that indexing is not guaranteed for earnings after 2022. So there is a lot of truth to what you say, unless you can retire before 2023.
Why can't we all just get along?
Deal Addict
Jan 12, 2017
1637 posts
963 upvotes
That is the rate when you're still contributing to CPP. After that, the contribution rate is 15-16% of your gross right off the top. Pretty hefty.

Technically, indexing isn't guaranteed after 2012. Conditional indexing applies to all pension benefits earned after 2012 and only pays out further indexing when OMERS is 'sufficiently funded'. Given OMERS having the highest contribution rates while still being the least funded of the major Ontario plans.... Not headed in a good directions, especially as the pensioners are increasing quicker due to boomers retiring and COVID.
jeff1970 wrote: OT never was, I don’t think. My OMERS is my hourly x 40 x 52 x 9.3%, IIRC.

However, I do believe everything you earned, at least up until 2022, is fully indexed. You probably already know that indexing is not guaranteed for earnings after 2022. So there is a lot of truth to what you say, unless you can retire before 2023.
Deal Addict
User avatar
Mar 9, 2012
3966 posts
2828 upvotes
Kitchener
Chickennbeans wrote: That is the rate when you're still contributing to CPP. After that, the contribution rate is 15-16% of your gross right off the top. Pretty hefty.

Technically, indexing isn't guaranteed after 2012. Conditional indexing applies to all pension benefits earned after 2012 and only pays out further indexing when OMERS is 'sufficiently funded'. Given OMERS having the highest contribution rates while still being the least funded of the major Ontario plans.... Not headed in a good directions, especially as the pensioners are increasing quicker due to boomers retiring and COVID.
Right. I guess I was thinking in my situation it turned out to be 9.3%. I believe the actual numbers are 9.0% for up to CPP max, and 14.6% for anything over that for NRA of 65, and 9.2% and 15.8% for NRA of 60.

And you're right, the contributions are insane, especially considering the employer has to match.

I think though you must be aware of the OMERS change for service years after 2022. Not something good.
Why can't we all just get along?
Penalty Box
Dec 26, 2013
523 posts
170 upvotes
Ottawa
jeff1970 wrote: .
I think though you must be aware of the OMERS change for service years after 2022. Not something good.
I don't believe the change has been finalized yet, but most other pensions have conditional indexing, HOOPP, OTPP etc. I'm have mixed feelings about it, if used correctly it could help protect the fund during turbulent times again, if used correctly and not abused. This, however, is different from what the OP is talking about with regards to deferring his/her pension, deferred pensions with OMERS have NO index protection on credited service post 2012. This is a huge distinction from conditional indexing.
Deal Addict
User avatar
Mar 9, 2012
3966 posts
2828 upvotes
Kitchener
wilyam wrote: I don't believe the change has been finalized yet, but most other pensions have conditional indexing, HOOPP, OTPP etc. I'm have mixed feelings about it, if used correctly it could help protect the fund during turbulent times again, if used correctly and not abused. This, however, is different from what the OP is talking about with regards to deferring his/her pension, deferred pensions with OMERS have NO index protection on credited service post 2012. This is a huge distinction from conditional indexing.
It's finalized:
.
Dear OMERS Plan members,

CUPE Ontario is profoundly disappointed to report to you that the OMERS Sponsor Corporation Board of Directors has voted in favour of eliminating the guaranteed indexing of your pension for service worked after December 31, 2022.

The “Shared Risk indexing” proposal passed. This means that for service worked after December 31, 2022, annual indexing for that portion of your OMERS pension could be reduced or even eliminated. It is especially bad for younger workers or new hires who will have to work most or all their career without getting the guaranteed indexing of their pension in retirement. Plan members who are already retired are not impacted by this change.

Indexing is the annual increase to your pension to keep up with the cost-of-living. Just like your union fights for wage increases, we must also fight for pension increases. Our living standards should improve, not decline. After a lifetime of work, workers expect to have a decent and secure retirement. That means having a pension that increases with the cost-of-living, so we don’t get farther and farther behind. Indexing is especially important for workers who don’t earn as much as they should. For example, the average pension for a CUPE school board worker after 30 years of service is only about $15,000/year.
That's just the partial email. Not sure if they can fight to change it back before the change happens.
Why can't we all just get along?
[OP]
Newbie
Feb 22, 2015
88 posts
62 upvotes
Thank you everyone for feedback and insights ... I am now leaning towards the decision to pull the money out of OMERS!
Have got to know quite a few things that I didn’t know before.
Jr. Member
Apr 6, 2020
109 posts
72 upvotes
Toronto
yyz2hkg wrote: Question...would the best 5 years be considered at any point of your career, or is it your last 5 years before you retire for OMERS?

TIA
best 5 CONSECUTIVE years... also, any time earned prior to 2023 change will be fully indexed, it's just the time you earn after the change that isn't guaranteed to be fully indexed
GTA Real Estate Agent
Deal Addict
Jan 12, 2017
1637 posts
963 upvotes
I wonder how shared risk impacts commuted value and buy back calculations roof contributions after 2021... If they assume 2%, might make sense for all pensioners to take commuted values rather than pensions. 2% seems fair, as due diligence on OMERS' part should meet at least this amount. Assuming less means they have no intention of honouring inflation as part of the plan.

That would cause the plan to implode at some point in the future.
mjkrealty wrote: best 5 CONSECUTIVE years... also, any time earned prior to 2023 change will be fully indexed, it's just the time you earn after the change that isn't guaranteed to be fully indexed
Newbie
Jul 26, 2009
55 posts
9 upvotes
Toronto
I had an OMERS pension too but was only with the company for 6 months. Commuted value was less than 6k. What would be the best option to take in this current economy?

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