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9. Pension Adjustments

Page

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

New for 2015What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

GeneralGlossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

BackgroundSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8General Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Special Situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9RRSP Deduction Room . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

ResponsibilitiesEmployer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Pension Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Canada Revenue Agency (CRA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Calculating the PASummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Contributions for a Prior Year (Made During the Current Year) . . . . . . . . . .12Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Components of the BE calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132015 Maximum Value of BE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Calculating the BE (Part-time and Occasional Members) . . . . . . . . . . . . . . .14Member Works for Two Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Examples1—Full-time teacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152—Full-time and BE over maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . .153—Part-time teacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164—Part-time and BE over maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . .165—Occasional teacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

November 2015 9•1 Pension Adjustments


PageReporting the PA

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18Information Due by March 4, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Amended PAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18File Specifications for PA Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Contact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Special SituationsService in Excess of Total Days (TD)

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20Pensionable Earnings (PE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Retro-PaymentsSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Service in Year of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Terminated Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Deferred Salary Leaves Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Cancellations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

CPP ExemptSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26CPP Exempt Teachers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Example 1—Full-time teacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Example 2—Occasional/supply teacher earning less than YBE . . . . . . .27

StrikesSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Example 1—Full-time teacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Example 2—Part-time teacher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Example 3—Principal with extra days due to a strike . . . . . . . . . . . . . . .29

Prescribed EarningsSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30Reporting Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30PA Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30PA Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

Determining Amount of CreditSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31Credit Lost During the Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31Switch Between Calendars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Excess Service Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34



PageLTIP

BackgroundSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35Pensionable Earnings (PE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35Employer Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35Pension Board’s Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35PE Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

Calculating the PAPlan Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Length of Time on LTIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37LTIP and Sick-leave Bank Integrated . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Rehabilitative Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37LTIP Starts and Stops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

PA ExamplesSummary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Example 1—Member on LTIP for full year . . . . . . . . . . . . . . . . . . . . . . .39Example 2—Member on LTIP part of year . . . . . . . . . . . . . . . . . . . . . . .40Example 3—Administrator on LTIP part of year . . . . . . . . . . . . . . . . . . .41Example 4—Integrated LTIP plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Example 5—LTIP employee returns to rehabilitative employment . . . . .43

Historical Reference InformationRRSP Dollar Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44YMPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44BE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44PA Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45


Year’s Maximum Pensionable Earnings (YMPE)Increased to $53,600

RRSP Dollar Limit Increased to $24,930

Maximum Pension Adjustment (PA) Increased to $24,770

Maximum Benefit Entitlement (BE) Increased to $2,818.89

Increases to the RRSP dollar limit, maximum PA and maximum BE are in accordancewith the federal Income Tax Act (ITA).

PA Offset The offset used in the calculation continues to be $600.

CPP Offset The benefit entitlement (BE) calculation effective 2001 is:

BE = [(.0155 x lesser of PE or YMPE) + .02 x (greater of (PE or YMPE) - YMPE)]

x SC/TD

Excess Service CreditA member’s pensionable salary cannot include earnings for service in excess of full-time employment. If members have excess credit in a school year, don’t includeany portion of the earnings for service credit in excess of the total days as pension-able earnings. Please see example on page 9-34.

LTIP Plan AmendmentsUnder plan amendments made in 2001, there are no contributions required for members who begin to receive LTIP benefits on or after September 1, 2001.However, you still need to issue pension adjustments (PAs) for these members.Please refer to page 9-37 for details.

StrikesWhen calculating the PA for members who have been on strike, please refer to theinstructions on page 9-28.

What’s New

Reminders

Pension Adjustments

New for 2015



SecondmentsBeginning with the 2004/2005 school year, the lending employer for secondedemployees is solely responsible for pension reporting – the borrowing employer nolonger reports any service, contributions or PAs.

PA ReportingWe require PAs to be reported through the annual reporting process for the purpose of reporting PARs. We also require information on any amended PAs you issue.Refer to pages 9-18 and 9-19.

Pensionable Earnings (PE) for Members on LTIP We will provide you with the PE to be used in the PA calculation for members onLTIP. The PE is the pre-LTIP salary adjusted for the Consumer Price Index (CPI) –your LTIP employees’ PE amount for a calendar year is available from the TeacherInformation Management (TIM) system, our secure website (employers1.otpp.com).Please refer to pages 9-35 and 9-36.

Online PA CalculatorIf your payroll provider does not report PA information directly to us, you can down-load an Excel spreadsheet to help you calculate PAs. Go to the Resources section ofthe TIM to download the spreadsheet.

Employees Receiving WSIB benefitsIf you have employees receiving Workplace Safety and Insurance Board (WSIB) benefits, you are required to calculate a PA and report the amount on the employee’s T4.

If you have any questions, contact us.

ESA Leaves (pregnancy, parental and emergency leaves)Beginning with the 2010/11 school year, Teachers’ began managing the cost andcontributions for all leaves that fall under the Employment Standards Act (ESA).

For purchases made through us since the effective date, we will issue PAs.

Reminders, cont’d.

Pension Adjustments

New for 2015

Important �

Under ITA rules, the BE is a measure of a member’s pension earned in a calendaryear. It is used for PA calculation purposes.

Under the Teachers’ Pension Plan, the pension benefit at age 65 is reduced by an amount related to the CPP benefit. This offset is taken into account in the BE calculation.

The plan administrator must issue an exempt PSPA when a benefit improvement isintroduced which will increase the member’s eventual entitlement (e.g. reduction inthe CPP offset). The ITA was amended so that an exempt PSPA will reduce themember’s RRSP room in the year following the year it was issued.

The Federal income tax legislation and regulations which prescribe the rules governing taxation of retirement savings.

A member on LTIP is off work because of a disability, but retains active status in theTeachers’ Pension Plan. The PA calculation for members on LTIP requires specialconsiderations.

A PSPA is Canada Revenue Agency’s measure of the benefit increase accruing to the member for a prior year often as the result of a purchase of credit for that year. Itrepresents the sum of the additional pension credits that would have been included inthe member's pension credit if the upgraded benefit had actually been provided, orthe additional service actually credited. PSPAs do not apply to periods before 1990.

The PA represents Canada Revenue Agency’s measure of the value of pension earnedby the member in a pension plan in a calendar year. A PA only applies to taxpayerswho are members of a Registered Pension Plan or Deferred Profit Sharing Plan.

The Teachers’ Pension Plan registration number under the ITA is 0345785. Thisnumber should appear in box 50 of the 2015 T4 supplementary form issued toemployees who contributed to the Teachers’ Pension Plan.


General

Glossary

Benefit Entitlement(BE)

CPP Offset

Exempt PSPA

Income Tax Act (ITA)

Long-term IncomeProtection (LTIP)

Past ServicePension Adjustment(PSPA)

Pension Adjustment(PA)

Pension RegistrationNumber

The pension board reports a PAR for members who terminate membership in the planand receive a lump-sum termination benefit from the plan. The PAR recognizes thatPAs tend to be overstated for members who terminate at younger ages. The PAR wasintroduced in the February 1997 budget.

Earnings for the year from which pension contributions are required.

RRSP contribution room is established each year, based on the lesser of 18% of theprevious year’s earned income and the RRSP dollar limit, less the amount of the PAfor the previous year. The Canada Revenue Agency calculates this amount.

SC is the actual credit earned under the Teachers’ Pension Plan in the calendar year.In other words, SC is the number of days of pensionable credit the employer reportsthe member earned. It is a component of the BE and PA calculations.

The Ontario legislation governing the pension plan for teachers.

TD is the abbreviation for full-time equivalent credited service in a calendar year.The TD is the number of teaching days in the calendar year based on your schoolyear calendars (January 1 to August 31 plus September 1 to December 31 of the nextschool year). TD is a component of the BE and PA offset calculations.

The amount which a taxpayer may contribute to an RRSP and deduct for income taxpurposes for the year. It is determined under ITA rules based on earned income andthe PA. Canada Revenue Agency calculates this amount.

The amount established annually as a minimum amount of earnings on which CPPcontributions are not made.

The amount established annually as the maximum amount of earnings on which CPPcontributions are made.

Important!TD must be basedon a calendar yearvs. a school year.


General

Glossary

Pension AdjustmentReversal (PAR)

Pensionable Earnings(PE)

RRSP ContributionRoom

Service Credit (SC)

Teachers’ PensionAct (TPA)

Total Days (TD)

Unused ContributionRoom

Year’s BasicExemption (YBE)

Year’s Maximum Pensionable Earnings(YMPE)

The maximum deductible RRSP contribution is established each year based on theprevious year’s earned income, less an amount called a Pension Adjustment (PA) forthe previous year.

The PA only applies when the taxpayer is a member of a Registered Pension Plan(RPP) or a Deferred Profit Sharing Plan. The Teachers’ Pension Plan is an RPP.

The percentage allowed for tax deductible RRSP contributions is 18% of earnedincome in the previous year up to a maximum limit. This amount is then reduced bythe previous year’s PA plus any PSPA’s issued during the current year, resulting inthe amount which may be contributed in the year to an RRSP and deducted forincome tax purposes.

Any unused RRSP contribution room may be carried forward and used in future years.

Any exempt PSPAs issued as a result of a retroactive benefit improvements willreduce RRSP room in the following year. We, the plan administrator, issue exemptPSPA’s resulting from benefit improvements, not the employer.

Starting in 1998, any PAR issued to an individual will increase the amount of RRSProom available in that year by the amount of the PAR.

If a member contributes to the Retirement Compensation Arrangement (RCA), thePA calculation does not change.

Determining a PA generally involves two steps:

Step 1 Calculating the Benefit Entitlement (BE); then,

Step 2 Calculating and reporting the PA.

PARs are onlyissued to memberswho terminatemembership in theplan (i.e., they haveno active service).

RCA �


General

Background

Summary

General Procedure

Different PA rules must be applied in the following special situations:

• service in excess of the ‘Total Days’ (TD)

• retroactive payments

• CPP exempt service

• earnings below the Year’s Basic Exemption (YBE)

• when a member opts out of a self-funded leave

• legal strike or lockout

• LTIP

Overall Limit (before PA deduction)Each year, new RRSP contribution room is determined. The overall limit is the lesser of:

• 18% of the previous year’s earned income

• RRSP Dollar Limit for current year

Year RRSP dollar limit

2004 $15,5002005 $16,5002006 $18,0002007 $19,0002008 $20,0002009 $21,0002010 $22,0002011 $22,4502012 $22,9702013 $23,8202014 $24,2702015 $24,930


General

Background

Special Situations

Limits

Unused RRSP Overall limit PA PARs NET PSPAdeduction for for issued reported RRSP room from current previous in in deductionprevious year year current current limit foryear year (starting year year

in 1998)

To calculate a member’s RRSP deduction room for each year, Canada RevenueAgency uses this formula:

This amount can be contributed to an RRSP and be tax-deductible for the year. Ifmembers do not contribute the whole amount, the unused balance is carried forward.

* Overall limit minus PA cannot result in a negative number; in other words, a PA, on its own, cannot

result in negative RRSP deduction room.

(*

(


General

Background

RRSP Deduction Room

• Calculates and reports PAs on T4 slips (including LTIP) for each year by February 28th for all employees who have a benefit accumulating as a result of membership and credited service in an RPP. This responsibility is conferredupon employers under the ITA.

• Reports PA to OTPP (please refer to page 9-18).

• Amends PAs, files with CRA and reports to OTPP.

• Provides PA formula to employers.

• PA reporting for purchases of credit completed by April 30th of the year followingthe year in which the leave ended.

• PA reporting for ongoing purchases paid directly to the pension board.

• Calculates and reports PSPAs for purchases of credit.

• Calculates and reports exempt PSPAs for plan improvements.

• Calculates and reports any PARs for terminations of plan membership wherelump-sum benefits have been paid to the member.

• Provides employers with the PE to be used in the PA calculation for all memberswith LTIP service.

• Notifies employers when a PA amendment is required due to an excess creditrefund.

• Determines and informs taxpayers of unused RRSP deduction limit or “room” onthe annual notice of assessment.

• Updates members on their RRSP contribution room through the TIPS line whichis listed in the TI general guide available from CRA.


General

Responsibilities

Employer

Pension Board

Canada RevenueAgency (CRA)

Maximum PA $24,770

The PA represents Canada Revenue Agency’s measure of the value of pension earnedin the pension plan in the year. Canada Revenue Agency requires all employers tocalculate and report a PA for all members who have benefits accumulating as a resultof membership and earned service in an RPP.

• Round the PA to the nearest dollar (report rounded amount).

• Report the PA as nil for the year of death.

When you make an adjustment to the credit or salary for a prior calendar year, youmust issue an amended PA. Inform us of the amended PA amount so we can updatethe member’s record.

For example, if you remit contributions for a prior year (e.g., employer contributiondiscrepancy for post-1989 salary adjustments), you must recalculate the PA for thatyear. Issue an amended T4 for that year indicating the correct PA amount. To calcu-late the prior year’s PA, use the pensionable earnings (PE) and YMPE from the prioryear. Please refer to page 9-44.

Don’t confuse contributions made for a prior year with retroactive salary paymentswhich affect the current year’s PA calculations only.

PAThe annual PA is based on a measure of the pension earned for the year, called theBenefit Entitlement (BE).

* The $600 is referred to as the PA offset. If the member has less than a full year’s credited service with

an employer in a year, the PA offset is prorated based on credited service earned with the employer.

BEThe BE must be determined to calculate the PA. The BE, for PA calculation purposes, is the amount of lifetime pension earned in the year and payable from age 65.

Important �

Pension Adjustments

Calculating the PA


Summary

Contributions for aPrior Year (MadeDuring the CurrentYear)

Formulas

Important �

PA = 9 x BE - $600 x SC/TD

BE calculation

Use the above formula to calculate the BE for all members who have worked full-time with the same employer for the calendar year.

CPP OffsetThe 1.55% in the BE formula takes into account the CPP offset which is applied atage 65. The first part of the BE calculation = 2% (Benefit Accrual Rate) - 0.45% (CPP offset) = 1.55% = 0.0155 on earnings up to the YMPE.

Year’s Maximum Pensionable Earnings (YMPE)

2011 YMPE = $48,300

2012 YMPE = $50,100

2013 YMPE = $51,100

2014 YMPE = $52,500

2015 YMPE = $53,600

If the member does not contribute to CPP, the YMPE in the formula is zero. Pleaserefer to the “CPP Exempt” section on page 9-26 for examples.

Pensionable Earnings (PE)For full-time members, the year’s Pensionable Earnings (PE) are used, not the actualor averaged earnings. For example, night or summer school earnings for full-timeteachers are not included in pensionable earnings.

For teachers who work less than full-time, use annualized pensionable earnings (PE) to calculate the

BE. Please see the explanation on the next page.

Service Credit (SC)SC is the credited service earned in the year. For full-time members, the total creditearned in a calendar year is the same as the Total Days (TD). For full-time members,SC cannot exceed TD. For part-time members, please see the explanation on the next page.

[(.0155 x lesser of PE or YMPE) + .02 x (greater of (PE or YMPE) -

YMPE)] x SC/TD

Pension Adjustments

Calculating the PA


Formulas, cont’d.

Maximum BE $2,818.89

Components of theBE Calculation

SC cannot exceed TD.

Important ��

The maximum BE for PA reporting purposes is $2,818.89, even if the member earnspension in excess of this amount.

A BE of $2,818.89 results in a maximum PA of $24,770 when using the $600 offset.

Calculate the annualized earnings

PE = pensionable earnings actually paid

TD = available pensionable service for the calendar year (the total number of pensionable teaching days in the calendar year based onyour school-year calendars)

SC = the number of days of pensionable credit the member earned

Example • member worked and employer paid member for 97 days of pensionable service

• PE = $30,000

• TD for employer = 194

Calculate the BE by using the annual salary rate as if the member had a full year ofcredited service, then prorate the BE back to less than a full year:

$30,000 x 194/97 = $60,000

2015 BE = [.0155 x $53,600.00 + .02 x ($60,000.00 - $53,600.00)] x 97/194= ($830.80 + $128.00) x 97/194= $479.40

For members who work less than full-time and whose annualized earnings are high,there is another possible limiting factor which we’ve demonstrated in example 4 on page 9-16.

If a member works for two employers, each employer calculates the PA separately.Therefore, if you have an employee who has worked somewhere else during theyear, calculate the PA based only on the employment at your school board. You don’thave to co-ordinate the calculation with the other employer.

Annualized earnings = PE X TD/SC

Pension Adjustments

Calculating the PA


2015 MaximumValue of BE

Calculating the BE(Part-time and Occasional Members)

TD is the totalnumber of teachingdays in the calen-dar year based onyour school-yearcalendars.

Member Works forTwo Employers


-Assume:• full-time member who earns a full year of credit • TD = 197 days• 2015 PE = $65,000

BE = [.0155 x $53,600.00 + .02 x ($65,000.00 - $53,600.00)] x 197/197= ($830.80 + $223.00) x 197/197= $1,058.80

PA = 9 x $1,058.80 - ($600.00 x 197/197)= $9,529.20 - $600.00= $8,929.20= $8,929

Assume:• full-time member who earns a full year of credited service• TD = 197 days• 2015 PE = $156,000

BE = [.0155 x $53,600.00 + .02 x ($156,000.00 - $53,600.00)] x 197/197= ($830.80 + $2,048.00) x 197/197= $2,878.80

Maximum BE = $2,818.89 for 2015

PA = 9 x $2,818.89 - ($600.00 x 197/197)= $25,370.01 - $600.00= $24,770

Remember!Round the PA tothe nearest dollar.

Calculating the PA

Examples


Example 1Full-time teacher

Example 2Full-time and BE over maximum

Assume:• member works part-time • TD = 196 days• SC = 98 (number of days employer paid member for pensionable service)• 2015 PE = $45,000

Annualized salary = $45,000 x 196/98 = $90,000

BE = [.0155 x $53,600.00 + .02 x ($90,000.00 - $53,600.00)] x 98/196= ($830.80 + $728.00) x 98/196= $779.40

PA = 9 x $779.40 - ($600.00 x 98/196)= $7,014.60 - $300.00= $6,715

Assume:• member works part-time• 2015 PE = $79,000• TD = 196• SC = 98 (number of days employer paid member for pensionable service)


BE = [.0155 x $53,600.00 + .02 x ($158,000.00 - $53,600.00)] x 98/196= ($830.80 + $2,088.00) x 98/196= $1,459.40

The maximum BE for a part-time teacher is $2,818.89 x SC/TD Therefore, for this example, the maximum BE = $2,818.89 x 98/196

= $1,409.45

PA = 9 x $1,409.45 - ($600.00 x 98/196)= $12,685.01 - $300.00= $12,385

Calculating the PA

Examples


Example 3Part-time teacher

Example 4Part-time and BE over maximum


Assume:• member is an occasional teacher• TD = 198 days• 2015 PE = $18,000• SC = 50 (number of days employer paid member for pensionable service)


BE = [.0155 x $53,600.00 + .02 x ($71,280.00 - $53,600.00)] x 50/198= ($830.80 + $353.60) x 50/198= $299.09

PA = 9 x $299.09 - ($600.00 x 50/198)= $2,691.82 - $151.52= $2,540

Calculating the PA

Examples


Example 5Occasional teacher

In accordance with Pension Adjustment Reversal (PAR) legislation, we must collectPA information each calendar year for all members who have contributed to our plan.The PAR, which is intended to ensure a terminating plan member does not lose toomuch RRSP room, will be calculated for members who terminate their membership inthe plan and receive the lump-sum value of their benefit in 1997 or later.

We also require information on any amended PAs you issue for 1997 or later.

Payroll-based reporting (PBR) and Web-based reporting (WBR)Ceridian and ADP report PA information directly to us. If you don’t use one of thesepayroll providers, you must run the PA program and provide this information to us byMarch 4, 2016.

The information we will require includes:

• SIN

• Employer number

• Calendar year

• PA amount

If you are providing us with your own spreadsheet, please organize the information inthe same order as listed above.

To help you calculate PA amounts for the current or previous years, go to theResources section of TIM and use the PA calculator. The downloadable Excelspreadsheet contains all the required formulas and will be updated annually.

Annual-based reporting (ABR)If you wish to report your PA figures through the regular annual reporting process,please contact us for more information.

If you’re unable to make the change to include the PA amount, you can report the PAinformation in a separate file from your salary, service credit and contribution infor-mation. See the next page for the file layout.

When you make an adjustment to credit or salary for a prior calendar year, you mustalso issue an amended pension adjustment (PA) to CRA. This only applies to thoseyears we’ve collected (i.e., only amendments for the 1997 reporting year and after).

We need PA amountsto calculate PARs.

Pension Adjustments

Reporting the PA


Summary

Information Due byMarch 4, 2016

Amended PAs

Online PA calculator ��

Important��

Inform us of the amended PA so we can update our records as well. We need to havethe amended PA on file in the event we need to issue a pension adjustment reversal(PAR) or past service pension adjustment (PSPA).

You can send us a correspondence in TIM with the amended PA for an individualemployee. Please provide us with the:

• member’s SIN

• employer number

• calendar year

• original PA

• amended PA

If you amend a significant number of PAs (system errors, etc.), please contact us forthe file specifications to report the amended PAs electronically.

If you report the PA information separately from your annual report, refer to the layout below.

Header Layout

Description Type Length Digits Decimals Position Value Sample

Provider Alpha 4 1-4 ADP

Date Generated Num 8 8 0 5-12 20090201

Total Detail Num 9 9 0 13-21 8965

Filler 59 22-80 Blank

Detail Layout (one per member)

Description Type Length Digits Decimals Position Value Sample

SIN Num 9 9 0 1-9 425854769

Employer Num 5 5 0 10-14 32018

Calendar Year Num 4 4 0 15-18 2009

PA Amount Num 5 5 0 19-23 1345

Filler 57 24-80 Blank

Note: The header is for control total purposes only. Therefore, it’s only required when you’re

submitting for multiple employers.

For general information related to the reporting requirements for PAs, please contactus. We will also answer any technical questions related to file specifications andtransmissions.

Pension Adjustments

Reporting the PA


Amended PAs, cont’d.

Contact

File Specificationsfor PA Reporting

Special Situations

Service in Excess of Total Days (TD)

A member’s pensionable salary cannot include earnings for service in excess of full-time employment. The most common situations for excess to occur is where amember holds multiple concurrent positions or when they have a full year of creditin regular employment and also teach night or summer school.

It’s best that you avoid reporting service in excess of full-time employment whenever possible. For example, as the per diem earnings for night or summerschool are usually less than for full-time contract earnings, you do not need to deduct contributions on those earnings. However, if the opposite is the case, themember may request these deductions.

Less than Full YearIf the member has less than a full year of credited service (for example, part-time oron a leave of absence), consider summer, night school or any other earnings asPensionable Earnings (PE) up to the Total Days at your board, requiring contribu-tions to be deducted and a PA reported.

Full YearIf a member has a full year of credited service from regular employment, only con-sider the salary for the regular full-time employment as the PE in the PA calculation.

If a member participated in a legal strike or lockout, use full salary (including salarylost during the strike) and full credit to calculate the PA. Please refer to page 9-28.

More than Full YearThere are times when a member may fall under two different calendars during aschool year. For example, a member may work full-time at an adult day school andalso work occasionally teaching night school.

To ensure the member doesn’t lose any RRSP contribution room, do not include anyportion of the earnings for the service credit in excess of the TD for their full-timeemployment as PE. Please see example on page 9-34.

If excess service was reported and used in the PA calculation, you may have toamend the PA to exclude the excess service. We’ll inform you if this scenario occurs,and work with you to amend the PA.

Service Creditcannot be greaterthan Total Days.

Legal strike or lockout�


Summary

PensionableEarnings (PE)

When a retroactive salary payment is made to a member, it may include an amountfor service in a previous year. The retroactive payment, the related deductions andthe PA are reported on the member’s T4 for the year in which the payment is made.

If the member has credited service in the year in which the retroactive payment ismade, include the full amount of the retroactive payment in the year of payment asPensionable Earnings (PE) when calculating the PA for the year.

Example 1Assume:• full-time member who earns a full year of credited service

• 2015 PE = $56,500

• member also receives a retro-payment of $12,000 relating to a previous year

• TD = 193 days

• PE = $56,500 + $12,000 = $68,500

BE = [.0155 x $53,600.00 + .02 x ($68,500.00 - $53,600.00)] x 193/193= ($830.80 + $298.00) x 193/193= $1,128.80

PA = 9 x $1,128.80 - ($600.00 x 193/193)= $10,159.20 - $600.00= $9,559

Special Situations

Retro-Payments


Summary

Service in Year of Payment

Example 2Assume:• member works part-time for the year

• TD = 194 days

• member receives a $10,000 retro-payment relating to a previous year

• SC = 116 (number of days employer paid member for pensionable service)

• 2015 PE = $35,000

Annualized salary = $35,000 x 194/116 = $58,534.48

PE for PA calculation = $58,534.48 + $10,000 = $68,534.48

BE = [.0155 x $53,600.00 + .02 x ($68,534.48 - $53,600.00)] x 116/194= ($830.80 + $298.69) x 116/194= $675.36

PA = 9 x $675.36 - ($600.00 x 116/194)= $6,078.28 - $358.76= $5,720

If the member terminated employment or retired in a previous year and as a result hasno credited service in the current year, and the retro-payment is for that previousyear(s), add the amount to the remuneration of the previous years as an increase in PE.

The procedure is:

• re-calculate the PA for each of the affected previous year(s)

• deduct original PA reported from re-calculated PA for each year

• report the total difference as a PA on the T4 for the year that the payment is made

• inform us of the new PA amount

If the difference is less than $250, it’s not necessary to report the PA unless requestedby the member.

Special Situations

Retro-Payments

Do not annualizethe retro-payment,only annualize theregular pensionableearnings.

Exception � �


Service in Year of Payment, cont’d.

TerminatedEmployment

Example 3• full-time member 2014

• 2014 PE = $50,000

• original 2014 PA = $6,375

• member terminated employment at the end of 2014

• 2015 retro-payment for 2014 = $10,000

• 2014 PE now equals $50,000 + $10,000 = $60,000

• TD 2014 = 193 days

Recalculate the PA for 2014:

BE = [.0155 x $52,500.00 + .02 x ($60,000.00 - $52,500.00] x 193/193= ($813.75 + $150.00) x 193/193= $963.75

PA = 9 x $963.75 - ($600.00 x 193/193)= $8,673.75 - $600.00= $8,074

Recalculated PA for 2014 = $8,074Original PA for 2014 = $6,375PA reported on the 2015 T4 = $1,699

Special Situations

Retro-Payments


TerminatedEmployment, cont’d.

For our purposes, a deferred salary leave is a leave which meets the requirements of aprescribed plan as defined in regulation 6801 of the ITA.

Periods of reduced pay include X/Y plans or salary deferral arrangements duringwhich the member receives a reduced salary, but do not include self-funded leaves.Pension plan contributions are now required on the total contract salary and mem-bers’ records should reflect full service credit every year, including the year on leave.

As a result, the corresponding PA should be based on the total contract salary for theyear and not the amount paid to the member. This includes the year of the leave. Donot remit contributions or report full salary unless the reduced salary arrangementmeets these requirements.

Interest paid on the holdback is not considered to be PE for PA calculating andreporting purposes.

The only time these reduced pay situations require special PA consideration is in theevent of a cancellation. When a cancellation occurs, the hold-back and interest is notconsidered Pensionable Earnings (PE) for PA calculating and reporting purposes.

If the arrangement is cancelled before the leave is taken in the final year, the hold-back is paid to the member. Do not report a PA on the hold-back because the PA wasalready reported on the full contract amount during the deferral period.

Member on X/Y plan

• Member is on a 4/5 leave

• Full contract grid salary = $60,000

• Member is paid $48,000

• Member defers $12,000 (20%) each year to fund leave year

• TD = 198

• SC = 198 (actual credit earned by member)

Special Situations

Deferred Salary Leaves


Summary

Cancellations

Example

Note � �

Important � �

PA in year 1 (2015) BE = [.0155 x $53,600.00 + .02 x ($60,000.00 - $53,600.00)] x 198/198

= ($830.80 + $128.00) x 198/198= $958.80

PA = 9 x $958.80 - ($600.00 x 198/198)= $8,629.20 - $600.00= $8,029

PA for subsequent years Use the full contract salary before deferral to calculate the PA instead of the amountpaid to the member (the full contract salary amount may change for various reasons).

In the year of the leaveAssume the member’s full contract grid salary is now increased to $60,250.Therefore, use a PE of $60,250 in the PA calculation as contributions are deductedfrom this amount.

Special Situations

Deferred Salary Leaves


Example, cont’d.

Certain individuals are exempt from paying CPP contributions and receiving CPPbenefits and this affects their PA calculation.

Teachers are exempt if they are any of the following:

• over 65 years old (but under 70) and have received a CPP Notice of Entitlement from the government or are receiving a disability pension

• over 70 years of age (for CPP purposes, this means the month following 70th birthday)

• members of a religious order who have taken a vow of perpetual poverty

• receiving LTIP benefits

• an Indian (as defined in the Indian Act) who are exempt from taxation

• earning less than the YBE ($3,500 in 2015) for the year from a particular employer

Assume:

• teacher is a member of a religious order and has taken a vow of perpetual poverty

• 2015 PE = $54,000

• TD = 194 days

Due to CPP exempt status, the full 2% benefit formula applies to all earnings for PApurposes.

BE = (.02 x $54,000.00) x 194/194= $1,080

PA = 9 x $1,080.00 - ($600.00 x 194/194)= $9,720.00 - $600.00= $9,120

If this teacher was not a member of the religious order, the PA would be:

BE = [.0155 x $53,600.00 + .02 x ($54,000.00 - $53,600.00)] x 194/194= $838.80 x 194/194= $838.80

PA = 9 x $838.80 - ($600.00 x 194/194)= $7,549.20 - $600.00= $6,949

Note: The CPP offset caused this difference.

Special Situations

CPP Exempt


Summary

CPP ExemptTeachers

Example 1Full-time teacher(CPP exempt employee)

Assume:• teacher works on an occasional/supply teaching basis only

• TD = 195 days

• 2015 PE = $3,020 [which is less than the 2015 Year’s Basic Exemption (YBE) of $3,500]



BE = (.02 x $49,075.00) x 12/195= $981.50 x 12/195= $60.40

PA = (9 x $60.40) - ($600.00 x 12/195)= $543.60 - $36.92= $507

Always use the CPP exempt formula when the salary you pay a teacher is below theYBE ($3,500), even if the person contributes to CPP.

Special Situations

CPP Exempt

Treat part-time teach-ers earning less thanYBE the same.

Important ��


Example 2Occasional/supply teacher earning less than YBE

If the members participate in a legal strike or lockout, use the salary and credit themember would have earned, had there not been a strike, in the PA calculation.

If a member participates in a labour dispute other than a legal strike or lockout (e.g.,walkout or political protest), they do not receive credit in our plan for the lost service.Therefore, do not include the credit lost and ensure the salary used in the PA calcu-lation reflects the salary paid.

Assume:

• member works full-time with a grid salary of $60,000


• due to a legal strike of 10 days, their salary paid is reduced to $56,954.31

• TD = 197 days

The PA is calculated on 197 days with pensionable salary of $60,000. If the strikehad not occurred, the teacher would have earned $60,000 of salary. This is the salarywhich corresponds to the full service credit of 197 days.

BE = [.0155 x $53,600.00 + .02 x ($60,000.00 - $53,600.00)] x 197/197= ($830.80 + $128.00) x 197/197= $958.80

Note that the BE calculation is not pro-rated because no credit is lost due to the strike.

PA = 9 x $958.80 - ($600 x 197/197)= $8,629.20 - $600.00= $8,029

Special Situations

Strikes

Walkout or politicalprotest �

RememberUse the full salary themember earned ��


Summary

Example 1Full-time teacher

Assume:• member works half-time (@50%) with a grid salary of $60,000 (@100%) over

the year


• due to a legal strike of 10 days (@100%) the salary is reduced to $26,907.20

• TD = 194 days

If the strike had not occurred, the teacher would have earned $30,000. This is the salary which cor-

responds to the full service credit of 97 days.


BE = [.0155 x $53,600.00 + .02 x ($60,000.00 - $53,600.00)] x 97/194= ($830.80 + $128.00) x 97/194= $479.40

PA = 9 x $479.40 - ($600.00 x 97/194)= $4,314.60 - $300.00= $4,015

Assume:• school board added 5 instructional days to their calendar in the 2015 Y1 period

because they had a 15-day strike in the fall of 2014

• Principal did not participate in the strike (i.e., full credit)

• annual salary of $118,000 based on 194 days of teaching

• worked another 5 days as a result of a modified school calendar

• earned an additional $6,082.47 for the extra 5 days

• 2015 PE = $118,000 + $6,082.47 = $124,082.47

• TD = 194 + 5 = 199 days

BE = [.0155 x $53,600.00 + .02 x ($124,082.47 - $53,600.00)] x 199/199= ($830.80 + $1,409.65) x 199/199= $2,240.45

PA = 9 x $2,240.45 - ($600.00 x 199/199)= $20,164.04 - $600.00= $19,564

Special Situations

Strikes


Example 2Part-time teacher

Example 3Principal with extra daysdue to a strike

The ITA regulations permit temporary periods of absences or reduction of pay asnotional amounts that may be included in compensation. These earnings are calledprescribed earnings and must be tracked against the mandatory purchase limits.

Prescribed earnings are considered a purchase made through the employer. Theemployee is absent from work and not being paid. Since the lost salary is pension-able, it becomes prescribed earnings. Examples of prescribed earnings include shortabsences (absences that span five or fewer consecutive days) or short-term disabilitytop-ups (i.e., the 10% on top of the short term rate).

Report credited service and remit contributions for contractual employees based onpensionable salary the employee would have earned during the absence or the short-term disability. See section 10, Absences from Employment, page 10-5 for specificreporting instructions for various employment situations.

Use the full salary and credit reported to calculate the PA, including service for shortabsences and other prescribed earnings.

Under the ITA, short absences that are unpaid must be included in the five-year maximum for which members are entitled to buy back credit over their career. Seesection 10, Absences from Employment, page 10-25 for reporting instructions.

Special Situations

Prescribed Earnings


Summary

Reporting Procedure

PA Calculation

PA Tracking

The service used in the PA calculation depends on the credit established in the plan.

The SC/TD part of the BE formula is the number of days you paid the teacher forpensionable service over the total number of employment days in the calendar yearfor that position at your board.

You may encounter particular difficulties in determining credit if a member changescalendars during the year.

For employees who lose credit during the year, the SC/TD part of the BE calculationis number of days you paid the employee for pensionable service over the totalemployment days in the calendar year for that position at your board. Please seeexamples 1 to 5 on pages 9-15 to 9-17.

Example 1Assume:• Employee works less than a full year• TD = 261 days• 2015 PE = $75,000• SC = 257 (number of days employer paid member for pensionable service)


BE = [.0155 x $53,600.00 + .02 x ($76,167.32 - $53,600.00)] x 257/261 = ($830.80 + $451.35) x 257/261= $1,262.50

PA = 9 x $1,262.50 - ($600.00 x 257/261)= $11,362.47 - $590.80= $10,772

Special Situations

Determining Amount of Credit


Summary

Credit Lost Duringthe Year

Example 2Assume:• Employee works less than a full year• TD = 215 days• 2015 PE = $70,000• SC = 209 (number of days employer paid member for pensionable service)


BE = [.0155 x $53,600.00 + .02 x ($72,009.57 - $53,600.00)] x 209/215 = ($830.80 + $368.19) x 209/215= $1,165.53

PA = 9 x $1,165.53 - ($600.00 x 209/215)= $10,489.78 - $583.26= $9,907

Special Situations



Credit Lost Duringthe Year, cont’d.

Occasionally a member switches employment calendars.

In the year that a member switches from one type of employment to another, consid-er this as two separate periods. Calculate a PA for the pensionable earnings undereach calendar.

When completing the employee’s T4, add the two separate PAs and report one totalPA. For more details on how to calculate part-time PAs, please see examples 3 and 4on page 9-16.

ExampleAssume:

• member switches calendars due to a promotion

• member is a teacher from January 1, 2015 to June 30, 2015

• switches to an administrative position effective September 1, 2015

• pensionable earnings to June 30 = $54,000

• pensionable earnings from September 1 = $51,931.50

• SC from January 1 to June 30 = 120 days

• SC from September 1 to December 31 = 86 days

• TD for teaching calendar = 196 days

• TD for administrative calendar = 260 days

PA while a teacherAnnualized salary is $54,000 x 196/120 = $88,200

BE = [.0155 x $53,600.00 + .02 x ($88,200.00 - $53,600.00)] x 120/196= ($830.80 + $692.00) x 120/196= $932.33

PA = 9 x $932.33 - $600.00 x 120/196= $8,390.94 - $367.35 = $8,024

Special Situations



Switch Between Calendars

Special Situations


Switch Between Calendars, cont’d.

PA while an administratorAnnualized salary is $51,931.50 x 260/86 = $157,002.21

BE = [.0155 x $53,600.00 + .02 x ($157,002.21 - $53,600.00)] x 86/260= ($830.80 + $2,068.04) x 86/260= $958.85

The maximum BE for a part-time teacher is $2,818.89 x SC/TD Therefore, for this example, the maximum BE = $2,818.89 x 86/260 = $932.40

PA = 9 x $932.40 - ($600.00 x 86/260)= $8,391.62 - $198.46 = $8,193

Total PA = $8,024 + $8,193= $16,217

Occasionally a member holds multiple positions and may accumulate excess service credit.

ExampleAssume:• Employee works full-time as an adult day school teacher

• TD = 194 days• 2015 PE = $70,000• SC = 194 (number of days employer paid member for pensionable service)

• Employee also works as a night school teacher• TD = 194 days• 2015 PE = $7,216• SC = 20 (number of days employer paid member for pensionable service)

Even though the member has 214 days of service credit in the school year, only consider the salary for the full-time employment as the PE in the PA calculation.

BE = [.0155 x $53,600.00 + .02 x ($70,000.00 - $53,600.00)] x 194/194 = ($830.80 + $328.00) x 1= $1,158.80

PA = 9 x $1,158.80 - ($600.00 x 194/194)= $10,429.20 - $600.00= $9,829

Excess ServiceCredit


To calculate the PA for members receiving LTIP payments, you will need to know:

• PE to use in the PA calculation (available in the LTIP section on TIM, our securewebsite, at employers1.otpp.com)

• when LTIP payments started or stopped

For active members on LTIP, the Canada Revenue Agency (CRA) requires that thePA is calculated as if the member had received the Pensionable Earnings (PE) thatwould have been earned had he or she continued working in the year for which thePA is being calculated.

CRA’s reason for basing the PA calculation on the earnings that would have beenearned had the member been employed is that there is a possibility the member will return to employment and be paid at the going rate for the last five years before retirement.

To Teachers’You must report contributions received from the carrier on the LTIP member’s behalf.

To Members and Canada Revenue Agency Responsibilities to report the PA, as determined by CRA, include the following:

• reporting on the T4 contributions received from the carrier and the member whichare forwarded to the pension board, for the calendar year

• it is helpful to indicate somewhere on the T4 that the member is disabled, becausethe PA and the contributions reported for members on LTIP are not related to earnings reported in box 14 of the T4, if any

Although we will provide you with the salary (PE) and credit (SC) information you require for any LTIP PA calculations, please verify the reasonability of the service reported.

We will provide you with the Pensionable Earnings (PE) to use in the PA calculation.The PE is the pre-LTIP salary amount adjusted for the Consumer Price Index (CPI),if applicable.

LTIP

Background


Summary

PensionableEarnings (PE)

Employer Reporting

You must calculatePAs and issue T4sfor all members onLTIP, even if LTIPis non-contributory.

Pension Board’sRole

Please obtain your LTIP employees’ PE amount for a calendar year from TIM, oursecure website:

1. Sign in to employers1.otpp.com

2. Select LTIP > Pensionable Earnings > applicable year

The PE amount is calculated based on the information we have received from you (asdisplayed in the table). Please review the information to ensure it is correct as report-ed. Where a start or end date is populated, ensure the credit is accurate for thoseemployees who were not on LTIP for the full calendar year.

If any of the data is incorrect, call one of your team members—they will make thenecessary changes and have the PE values recalculated. You should see the changesonline within 24 hours.

The online information replaces the Pensionable Earnings Report for LTIP we used to send each January. For more information on how we adjust the pre-LTIP salary forCPI, contact us.

Verify information�

Replaces paper report ��

LTIP

Background


PE Calculation

Under plan amendments made in 2001, there are no contributions required for mem-bers who begin to receive LTIP benefits on or after September 1, 2001. However,employers still need to issue pension adjustments (PAs) for these members.

When calculating the PA for members on LTIP, determine which category they fallinto:

Category 1 On LTIP for the full calendar year (not first year on LTIP) and have been on LTIP for a number of years prior to the year being reported (see example 1)

Category 2 Employed for part of the year and started LTIP during the calendar year (see examples 2 and 3)

Category 3 Employed with integrated sick-leave and LTIP during the calendar year (see example 4)

Category 4 On LTIP for part of the year and then returned to employment (see example 5)

When members receive a portion of their salary from their integrated or accumulatedsick leave plans and the rest from their LTIP benefits, we consider them active mem-bers on LTIP once they begin receiving any LTIP benefits from their insurance carri-er. In these situations, you do not need to report any sick leave credit.

As long as the member continues to receive full or partial LTIP payments, a return toemployment does not affect the PA calculation. Continue to treat the member as anLTIP member for PA purposes, even if CPP contributions are made (see example 5).

LTIP

Calculating the PA


Plan Amendments

LTIP and Sick-leaveBank Integrated

RehabilitativeEmployment

Length of Time on LTIP

The basic formulas are the same as for other members:

Year LTIP StartsIn the year that the LTIP payments start, consider two periods:

• PE for the period of employment from commencement to when the LTIP payments start

• PE for the period after the LTIP payments start

Following YearsUse the pre-LTIP salary adjusted for the Consumer Price Index (CPI) as the PE inthe PA calculation. This salary amount is available online at employers1.otpp.com(LTIP > Pensionable Earnings > 2015).

Year LTIP CeasesIn the year LTIP payments cease and the member returns to full-time employment,consider two periods:

• PE for the period while the member is on LTIP

• PE for the period after the LTIP stops and the member is employed

If the member retires, calculate the PA for the credited service days to the retirementdate. If the member dies in the year, no PA is reported.

Prorate PA OffsetIn a year where an employee starts or ceases LTIP, the PA offset ($600) in the PAcalculation is prorated between the credited service based on employment and credit-ed service based on pre-LTIP salary adjusted for the CPI.

PA = 9 x BE - $600 x SC/TD

BE = [(.0155 x lesser of PE or YMPE) +

.02 x (greater of (PE or YMPE) - YMPE)] x SC/TD

LTIP

Calculating the PA


LTIP Starts andStops

Example: 1 – member disabled before 2015 and on LTIP for the full year

2 – member disabled during the year

3 – administrator disabled during the year

4 – same as #2, except LTIP benefits (60%) are integrated withsick-leave bank (40%)

5 – member has been disabled for several years, pre-LTIP salaryhas been adjusted for top-up and member returns to work on a rehabilitative basis

Assume:

• LTIP pensionable earnings = $64,071 (from Pensionable Earnings report on TIM)

• member did not contribute to CPP, therefore the YMPE is nil

BE = (.0155 x nil) + (.02 x $64,071)= $1,281.42

PA = 9 x $1,281.42 - $600.00= $11,532.78 - $600.00= $10,933

Indicate“disability”on the T4.

LTIP

PA Examples


Summary

Example 1Member on LTIP for full year

Assume:• employed to June 13 in 2015

• disabled pursuant to LTIP agreement June 14

• salary earned to June 13 = $35,985.36 (per payroll records)

• salary rate to August 31 = $65,860 per annum

• SC up to June 13 = 106 (number of days employer paid member for pensionable service)

• SC from June 14 to June 30 for LTIP = 10 days

• SC from September 1 to December 31 for LTIP = 78 days

• LTIP pensionable earnings = $30,377.76 (from Pensionable Earnings report on TIM)

• TD = 194 days

PA while employedAnnualized salary is $35,985.36 x 194/106 = $65,860

BE = [.(0155 x $53,600.00) + .02 x ($65,860.00 - $53,600.00)] x 106/194= ($830.80 + $245.20) x 106/194= $587.92

PA = 9 x $587.92 - ($600.00 x 106/194)= $5,291.28 - $327.84 = $4,963

PA while on LTIPAnnualized LTIP salary is $30,377.76 x 194/88 = $66,969.15

BE = [(.0155 x nil*) + (.02 x $66,969.15)] x 88/194= $1,339.38 x 88/194= $607.55

PA = 9 x $607.55 - ($600.00 x 88/194)= $5,467.95 - $272.16= $5,196

* This part of the BE calculation will always be “nil” while on LTIP.

Total PA = $4,963 + $5,196 = $10,159

LTIP

PA Examples


Example 2Member on LTIP part of year

Tip �

Assume same situation as in example 2 except member is an administrator.

• TD = 260 days

• salary earned to June 13 is $49,455 (per payroll records)

• salary rate to June 30 = $109,900 per annum in second year

• SC up to June 13 = 117 (number of days employer paid member for pensionable service)

• SC from June 14 to August 31 for LTIP = 57 days

• SC from September 1 to December 31 for LTIP = 86 days


PA while employedAnnualized salary is $49,455 x 260/117 = $109,900

BE = [(.0155 x $53,600.00) + .02 x ($109,900.00 - $53,600.00)] x 117/260= ($830.80 + $1,126.00) x 117/260= $880.56

PA = 9 x $880.56 - ($600.00 x 117/260)= $7,925.04 - $270.00 = $7,655

PA while on LTIPAnnualized LTIP salary is $61,062.97 x 260/143 = $111,023.58

BE = (.02 x $111,023.58) x 143/260= $2,220.47 x 143/260= $1,221.26

PA = 9 x $1,221.26 - ($600.00 x 143/260)= $10,991.33 - $330.00= $10,661

Total PA = $7,655 + $10,661= $18,316

LTIP

PA Examples


Example 3Administrator on LTIPpart of year

Assume:• employer/member has an integrated LTIP plan (member pays full premium for

LTIP coverage and receives benefits exempt from tax and non-CPP liable)

• employer has agreed to pay member 100% of salary when member commences LTIP until sick-leave bank is exhausted

• member was to reimburse employer for 60% directly from carrier and have 40%applied against sick-leave bank

• employer decided it was better to receive 60% directly from carrier as members were slow in reimbursing employer when LTIP was paid to member

• salary earned to May 15 = $22,000

• LTIP benefits begin on May 16

• continued on integrated sick leave until June 2; 100% LTIP benefits after sick leave ended

• TD = 194 days


Calculate two PAs based on the following time periods and credited service, and addthe two PAs to arrive at the total PA for the year.

PA for period before any LTIP benefits• January 1 to May 15 (85 days credited service)

• Annualized salary is $22,000 x 194/85 = $50,211.76

BE = [(.0155 x $50,211.76) + .02 x ($53,600.00 - $53,600.00)] x 85/194= ($778.28 + $0) x 85/194= $341

PA = 9 x $341 - ($600 x 85/194)= $3,069 - $262.89= $2,806

LTIP

PA Examples


Example 4Integrated LTIP plan

PA while on LTIP• For balance of the year while on LTIP (194 - 85 = 109 days credited service)

• Annualized salary is $28,691.16 x 194/109 = $51,065

BE = [(.0155 x nil) + (.02 x $51,065)] x 109/194= $1,021.30 x 109/194= $573.82

PA = 9 x $573.82 - ($600 x 109/194)= $5,164.41 - $337.11= $4,827

Total PA = $2,806 + $4,827= $7,633

Assume:• member has been on LTIP for some years

• LTIP pensionable earnings = $52,000 (from Pensionable Earnings report on TIM)

• TD = 195 days

PA calculation for entire year

BE = (.0155 x nil) + (.02 x $52,000)= $1,040

PA = 9 x $1,040 - $600= $9,360 - $600= $8,760

Notes on rehabilitative employmentIt is not necessary to do a separate calculation to reflect rehabilitative employment.In this example, the member received LTIP payments throughout the year; therefore,you do not need to consider the partial employment at year end.

If the member’s disability ceased, LTIP payments ceased and regular employmentresumed, calculate the PA as shown in LTIP examples 2 and 3 on pages 9-40 and 9-41.

LTIP

PA Examples


Example 4, cont’d.

Example 5LTIP employee returns to rehabilitative employment

Year’s Maximum Pensionable Earnings (YMPE)

2005 = $41,100

2006 = $42,100

2007 = $43,700

2008 = $44,900

2009 = $46,300

2010 = $47,200

2011 = $48,300

2012 = $50,100

2013 = $51,100

2014 = $52,500

Pension Adjustments

Historical Reference Information

Year RRSP dollar limit

2008 $20,0002009 $21,0002010 $22,0002011 $22,4502012 $22,9702013 $23,8202014 $24,270


RRSP Dollar Limits

YMPE

BE Year Maximum BE Year Maximum BE1990 to 2003 $1,722.22 2009 $2,444.442004 $1,833.33 2010 $2,494.442005 $2,000.00 2011 $2,552.222006 $2,111.11 2012 $2,646.672007 $2,222.22 2013 $2,696.672008 $2,333.33 2014 $2,770.00

PA formula from 1990 to 1996

PA formula 1997 and onwards

Year Maximum PA 1997 to 2003 $14,9002004 $15,9002005 $17,4002006 $18,4002007 $19,4002008 $20,4002009 $21,4002010 $21,8502011 $22,3702012 $23,2202013 $23,6702014 $24,330

Pension Adjustments

Historical Reference Information

PA = 9 x BE - $1000


PA Formula

PA = 9 x BE - $600

9. pension adjustments - docs.otpp.comdocs.otpp.com/hb_section9.pdf · (rpp) or a deferred profit...

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