How pension contributions work
You contribute to your pension through automatic payroll deductions. Your employer also contributes to your pension.
How much do I contribute?
As an active member, you contribute to your pension through automatic deductions from each paycheque. (If you have reached 35 years of pensionable service or are on long-term disability, you may no longer be contributing.)
The amount of these contributions depends on:
- how much you earn in relation to the year's maximum pensionable earnings (YMPE), and
- whether you are in Group 5
The contribution rate for all plan members (except Group 5) is:
- 8.5% of your salary up to and including the YMPE
- 10.0% of your salary above the YMPE
In 2018, the YMPE was $55,900. If your annual salary was $60,000, your annual pension contribution in 2018 would be $5,161.50. This is calculated as follows:
8.5% x $55,900 = $4,751.50
10.0% x ($60,000-$55,900) = $410.00
The contribution rate for group 5 members is:
- 10.44% of your salary up to and including the YMPE
- 11.94% of your salary above the YMPE
In 2018, the YMPE was $55,900. If your annual salary was $60,000, your annual pension contribution in 2018 would be $6,325.50. This is calculated as follows:
10.44% x $55,900= $5,835.96.
11.94% x ($60,000-$55,900) = $489.54
Your contribution includes a portion (1.53 per cent for most members, 1.95 per cent for members in Group 5) that is transferred to a fund called the inflation adjustment account.
This account is used to pay for cost-of-living adjustments, or COLA, on current retiree pensions. COLA is not guaranteed but, once granted, becomes part of your basic pension.
You may also be contributing to a special agreement.
If you have 35 years of pensionable service, you will no longer contribute to the plan. However, you are an active plan member until you leave your job or retire.