Glossary
This page provides simplified explanations of the key pension terms found on hoopp.com. Exact definitions for most of the terms are provided in the Healthcare of Ontario Pension Plan Text, the official Plan document. Should the explanations provided here differ from those contained in the Plan Text, due to either wording differences or interpretation, the Plan Text will govern.
Annualized earnings (AE)
These are earnings a member is credited with in a calendar year that count toward his or her HOOPP pension. If a member works less than one full year his or her annualized earnings will be based on what the member would earn if he or she worked full time for the whole year.
Average annualized earnings
This is the highest average of a member's annualized earnings during any consecutive period(s) of five years of eligibility service before his or her HOOPP benefit is calculated. Benefits are calculated when a member retires, terminates, or dies.
Average YMPE
This is the average of the year's maximum pensionable earnings (YMPE) for the three years before a member's benefit is calculated. Benefits are calculated when a member retires, terminates, or dies.
Basic lifetime pension
This is the monthly lifetime pension a member will receive from HOOPP at retirement based on HOOPP's pension formulas.
Beneficiary
- Primary beneficiary: Under provincial pension legislation, a member's qualifying spouse is automatically the member's primary beneficiary. If the member has no spouse, or spousal benefits have been waived, the member can name any person, persons, organization, or his or her estate as primary beneficiary
- Secondary beneficiary: If the member's qualifying spouse predeceases the member, the member's secondary non-spouse beneficiary - a person, persons, organization, or his or her estate - will receive any death benefit payable after both the member and spouse have died.
Bridge benefit
The early retirement bridge benefit is a monthly payment that supplements a member's basic lifetime HOOPP pension until age 65 when government pensions normally begin. A member will receive the bridge if he or she retires from HOOPP while aged 55 to 64.
Buyback (also known as past service purchase)
HOOPP allows you to "buy back" eligible periods of time in the past, so that the service you purchase can count towards your HOOPP pension. Two types of past service are eligible for purchase:
- HOOPP service: A period of time you were employed by a HOOPP employer but not enrolled in the Plan, a period when you were on a leave and not making contributions, or a period of former HOOPP service for which you received a benefit.
- Other service: Service with other pension plans may be eligible for buyback. Examples include service with an employer that has now joined HOOPP, or pension benefits you transferred out of a plan. Contact HOOPP to see if your service with another plan is eligible for buyback.
Commuted value
The commuted value of a member's pension is the estimated amount of money HOOPP needs now to pay the member's pension in retirement, based on the member's service and earnings to date. The commuted value fluctuates with changes in factors such as the member's age and interest rates.
Consumer price index
Statistics Canada produces the consumer price index (CPI), as a monthly measure of the rate of inflation. The CPI is based on the cost of a "basket" of approximately 600 goods and services, and is regularly adjusted to reflect seasonal changes and changes in consumer habits. HOOPP's annual cost of living adjustment (COLA) is based upon the December to December increase in the previous year's CPI.
Contributory service
This is the length of time, measured in years and part years that the member has contributed to HOOPP. It includes any past service the member buys, service transferred into HOOPP, or service received while disabled.
Defined Benefit Plan
In a defined benefit plan members' benefits are determined by a formula usually based on years of service times earnings, rather than by the investment returns made on their pension contributions.
Eligibility service
This is the total of all periods when the member accrued contributory service, but also includes periods when the member switched from full-time to part-time and elected not to contribute, and any periods required by pension law in the event of a divestment or merger.
Free accrual
This is service for which neither the member nor the employer made contributions. It can be credited to the member during a health leave or total disability leave if the member submits medical evidence showing he or she meets HOOPP's definition of partially disabled, totally disabled, or totally and permanently disabled.
Leaves
A leave is a period of time when a member is absent from work. In most cases a leave must be approved by a member's employer.
Life income fund (LIF)
This is a tax-deferred retirement savings vehicle - similar to a registered retirement income fund - for locked-in RRSP funds or transfers directly from registered pension plans (such as HOOPP.)
Locked-in retirement account (LIRA)
Formerly called a locked-in RRSP, this is a tax-deferred retirement savings arrangement for locked-in funds transferred out of a pension plan upon terminating from the Plan.
Locked-in retirement income fund (LRIF)
This is a tax-deferred retirement savings arrangement for locked-in funds transferred out of a pension plan upon terminating from the Plan. It has different withdrawal rules than a LIRA.
Partially disabled
Being partially disabled means the member has a medically-certifiable physical or mental impairment that HOOPP has determined currently prevents the member from doing his or her own job.
Past service pension adjustment
A past service pension adjustment (PSPA) is the deemed value of pension benefits purchased in one year for service in a previous year or years.
Pension adjustment
A pension adjustment (PA) is the deemed value of the benefits a member earns every year in a registered pension plan such as HOOPP.
Qualifying spouse
A member's qualifying spouse is someone who, at the time a determination is needed:
- is legally married to the member, but is not separated from the member; or
- has been living with the member continuously in a conjugal relationship for at least a year; or
- is the mother or father (natural or adoptive) of the member's child, and lives with the member in a relationship of some permanence
Refundable contributions
Under provincial pension legislation, a member can not pay for more than half of the value of his or her pension. At the time the member retires, terminates membership in HOOPP, or dies (before retirement), HOOPP will calculate the commuted value of the member's pension and compare that amount with the required contributions the member has made to the Plan, plus interest on those contributions. If the member's contributions and interest are more than half of the value of his or her pension, the extra amount will be refunded to the member. These returned contributions are known as refundable contributions. (Payment of refundable contributions does not reduce the member's commuted value.)
Totally disabled
Being totally disabled means the member has a medically-certifiable physical or mental impairment that HOOPP has determined currently prevents the member from doing any job.
Totally and permanently disabled
Being totally and permanently disabled means the member has a medically-certifiable physical or mental impairment that HOOPP has determined will prevent the member, for the rest of his or her life, from doing any job.
Total disability leave
A member who is unable to work at any occupation due to a disability can be placed on a total disability leave. The leave begins four years from the member's last day at work, and can continue until the member returns to work, recovers, reaches age 65, builds 35 years of contributory service, dies, retires, or terminates membership in HOOPP. During an total disability leave, a member receives free accrual -- contributory service for which neither the member nor the employer make contributions.
Vested
A vested member is entitled to a future pension benefit. This occurs at the earliest of:
- two years of membership in the Plan
- two years of eligibility service
- reaching age 65
Year's maximum pensionable earnings (YMPE)
The year's maximum pensionable earnings (YMPE) is set each year by the federal government, based on the average wage in Canada. In 2010 the YMPE is $47,200.