Leaving an OMERS-covered job does not mean giving up the pension you have already earned. You may leave that benefit in OMERS and collect it later as a deferred pension rather than immediately starting retirement income or transferring the pension out of the plan.
- What Happens to Your OMERS Pension When You Leave?
- When Can You Start a Deferred OMERS Pension?
- Leaving Before Your Early Retirement Birthday Matters
- Can Your Deferred OMERS Pension Increase Before Retirement?
- What Happens If You Get Another OMERS Job?
- Do You Have to Take a Deferred Pension?
- Questions About Leaving OMERS Before Retirement
An OMERS deferred pension is the pension you have earned but leave in the plan after ending your OMERS employment. It remains there until you become eligible and choose to start it. Your age when you leave is important because leaving before your early retirement birthday can change some features attached to your pension.
What Happens to Your OMERS Pension When You Leave?
After your employment ends, OMERS provides the pension options available for your membership. Choosing a deferred pension means your earned benefit stays inside OMERS instead of being converted into a lump-sum transfer.
The pension does not become a personal investment account while you wait. It remains a defined benefit calculated from factors such as your credited service and earnings. Those components are explained more fully in how your OMERS pension is calculated.
Keeping the benefit in OMERS also means you retain the plan features that apply to your deferred pension. Depending on your service and circumstances, these can include future retirement income, survivor protection and inflation adjustments. The OMERS rules for members leaving an employer set out the available termination options and how they are handled.
When Can You Start a Deferred OMERS Pension?
Your earliest retirement age depends on your normal retirement age (NRA). An NRA 65 member can generally start an OMERS pension as early as age 55. An NRA 60 member can generally start at age 50.
Being old enough to start the pension does not necessarily mean you qualify for an unreduced amount. OMERS applies early-retirement eligibility rules based on factors such as age and service. Starting before your normal retirement age can therefore result in a reduced pension when the requirements for an unreduced pension have not been met.
The OMERS pension calculation and early-retirement rules explain how the applicable reduction is determined.
Leaving Before Your Early Retirement Birthday Matters
Special rules can apply when you leave an OMERS employer before your early retirement birthday, which is generally 55 for an NRA 65 member and 50 for an NRA 60 member.
For affected members, service earned before January 1, 2013 and service earned from January 1, 2013 onward are treated differently. The pre-2013 portion retains pre-retirement indexing and early-retirement subsidies. The post-2012 portion does not receive those features when the member leaves before the applicable early retirement birthday.
The difference also reaches the temporary OMERS bridge benefit. For affected post-2012 service, an NRA 65 member does not receive a bridge on that portion. An NRA 60 member receives a five-year bridge from age 60 to 65 on the affected portion.
These rules make the date you leave more important than it might initially appear. Two members with similar earnings and service can leave at different ages and retain different retirement features because one had already reached the applicable early retirement birthday.
The details are contained in the OMERS 2013 benefit changes.
Can Your Deferred OMERS Pension Increase Before Retirement?
Whether your pension receives inflation adjustments while deferred depends partly on the service involved and whether the 2013 benefit changes apply.
A deferred pension that is not affected by those changes can receive pre-retirement inflation adjustments. An affected post-2012 portion does not receive pre-retirement indexing while you wait to start the pension.
Service earned from January 1, 2023 onward is also subject to Shared Risk Indexing. The amount of inflation protection available for that service can be adjusted based on the financial health of the plan. The broader rules governing increases before and after retirement are covered in our explanation of OMERS pension increases and indexing.
What Happens If You Get Another OMERS Job?
Returning to work for an OMERS employer can allow separate periods of membership to be combined. Instead of permanently maintaining two independent membership records, qualifying service from the earlier period can become part of the combined record.
This can have a particularly important effect when your first departure occurred before your early retirement birthday. If post-2012 service from that earlier membership was subject to the 2013 benefit changes, combining the records and subsequently remaining employed until your early retirement date can remove those changes from the combined membership. The OMERS rules for combining membership periods explain when previous and current records can be joined. If earlier service cannot simply be combined because its value was previously transferred out of OMERS, restoring qualifying service may instead involve an OMERS buyback.
Do You Have to Take a Deferred Pension?
A deferred pension is not necessarily your only choice after leaving. Depending on your age and circumstances, you may also be offered the option to transfer the commuted value of your pension out of OMERS.
A commuted value represents the present value of the future pension being surrendered. Taking it therefore has a very different result from leaving the benefit deferred. The pension itself no longer remains in OMERS once the applicable commuted value has been transferred.
Eligibility for that option is also time-sensitive. It is generally available only when you leave before your early retirement date. The details of that alternative are covered separately in cashing out or withdrawing from an OMERS pension early.
For someone deciding between the two, we would pay close attention to what is actually being exchanged. A large commuted value can look attractive on paper, but keeping the pension preserves a defined lifetime benefit under OMERS. Those are fundamentally different forms of retirement value, so the amount displayed on the termination statement should not be considered in isolation.
Questions About Leaving OMERS Before Retirement
Can you leave your OMERS pension deferred while working somewhere else?
Working for an employer outside OMERS does not require you to begin collecting the pension. It can remain deferred until you become eligible and decide to start it.
Can you make regular contributions to a deferred OMERS pension?
A deferred OMERS pension is based on benefits already earned through your previous membership. It does not operate like an RRSP that you can continue funding with ordinary personal contributions after leaving the employer.
What happens if you die before starting your deferred pension?
Applicable OMERS survivor provisions continue to protect a pension left in the plan. The benefit payable and who receives it depend on your circumstances at death and the beneficiary and spouse rules that apply to your membership.
Can you change your mind after initially leaving your pension with OMERS?
Some termination elections are subject to specific eligibility requirements and deadlines. Leaving the pension temporarily untouched should therefore not be taken to mean every alternative will remain available indefinitely. Your Pension Options Form identifies the choices and deadlines that apply to your membership.
