- What is a pension plan?
- Why is it important to contribute?
- What kind of a pension plan is the Ontario Teachers’ Pension Plan (OTPP)?
- Who are the members of the Ontario Teachers’ Pension Plan (OTPP)?
- What is special about the Ontario Teachers’ Pension Plan (OTPP)?
- What happens if the Ontario Teachers’ Pension Plan (OTPP) has a surplus or a deficit?
- What is the Ontario Teachers’ Pension Plan Board (OTPP)?
- How does OTF appoint directors to the Ontario Teachers’ Pension Plan Board (OTPP)?
- Has the creation of the Ontario Teachers’ Pension Plan Board (OTPP) been beneficial?
- What is the Partners’ Committee?
- What does the Partners’ Committee do?
- What is the OTF Pension Committee?
- What does the OTF Pension Committee do?
- What is the Pension Negotiations Committee?
- What does the Pension Negotiations Committee do?
- How are my pension interests represented if I am not a member of OTF?
- What if I have other questions?
1. What is a pension plan?
A pension plan is a program by which you can save money while you are working so you will have funds to live on when you retire.
2. Why is it important to contribute?
Contributions to a pension plan have several advantages:
- the earlier you start contributing, the longer you have to build up adequate savings for retirement;
- contributions to a registered pension plan are tax deductible – you pay income tax when you receive your pension, presumably when your overall income is lower; and
- investment earnings on the money in a registered pension plan are also tax-sheltered.
As a member of the Ontario Teachers’ Pension Plan (OTPP), your contributions are matched by the Ontario Government on behalf of publicly funded school boards.
Keep in mind that
- you usually don’t get the money back until you retire;
- in a group pension, all contributions are pooled and invested together; and
- this pool of money, plus investment earnings, is called the pension fund.
3. What kind of a pension plan is the Ontario Teachers’ Pension Plan (OTPP)?
The OTPP is a defined benefit pension plan. This means that your pension is based on a formula: 2% X your years of service X your best five years’ average salary.
4. Who are the members of the Ontario Teachers’ Pension Plan (OTPP)?
Membership in the OTPP is mandatory for all teaching certificate holders working in publicly funded schools in Ontario, including teachers, vice-principals, principals, and supervisory officers working for school boards. Other members of the OTPP include teachers on secondments, teachers working on Federation staff, teachers working in other designated educational institutions (including some private schools), and teachers working for school boards or designated employers in a non-teaching role. There are also inactive members who are not active contributors; for example, a former teacher with 10 years of OTPP contributions who now runs a travel business.
5. What is special about the Ontario Teachers’ Pension Plan (OTPP)?
The OTPP is an equal partnership between the Ontario Teachers’ Federation (OTF) and the Government of Ontario. Before 1989, the Teachers’ Superannuation Fund was entirely under the control of the Ontario Government. In 1989, the OTPP was created and, in 1991, a partnership was formed between OTF and the Government.
The terms of the partnership provide for joint governance of the OTPP:
- each Partner appoints five people to serve on the Board of Directors of the Ontario Teachers’ Pension Plan Board (OTPPB);
- the Partners together appoint an eleventh person to be the chairperson of the OTPPB;
- each Partner appoints three people to serve on a Partners’ Committee;
- the Partners jointly determine benefit levels, contribution rates and the frequency of filing funding valuations for the OTPP;
- the Government represents the employers in the partnership; and
- OTF represents the members of the OTPP.
6. What happens if the Ontario Teachers’ Pension Plan (OTPP) has a surplus or a deficit?
Since the OTPP is a partnership between teachers and government, each Partner shares both the good and the bad. This means that, when the investments of the pension fund do well and the OTPP has an actuarial surplus, the Partners negotiate how this surplus will be utilized. If the investments do poorly or if growing liabilities create a deficiency, the Partners must share the responsibility for making up the shortfall.
7. What is the Ontario Teachers’ Pension Plan Board (OTPPB)?
The OTPPB is the administrative organization that manages the Ontario Teachers’ Pension Plan (OTPP) and its investments on a daily basis. The OTPPB determines the investment strategy for the pension fund. The OTPPB is headed by a Chief Executive Officer who reports to the Board of Directors of the OTPPB.
8. How does OTF appoint directors to the Ontario Teachers’ Pension Plan Board (OTPPB)?
The process for appointing directors to the OTPPB is defined in OTF’s bylaws. The bylaws define the qualifications required of the directors as well as the selection committee and process.
The bylaws require that one director must have general pension knowledge and specific expertise in teachers’ interests. We must also have one director with general pension experience and specific expertise in pension plan benefits and structure. Also, at least two directors must have general pension experience and specific expertise in pension finances.
These criteria provide the teacher partner with some flexibility to meet other skill sets which might be required on the Board from time to time; for example, expertise in global markets, macroeconomics, human resources, or information technology.
Appointments to the OTPPB are ratified by the OTF Board of Governors following a recommendation from the OTF Executive.
9. Has the creation of the Ontario Teachers’ Pension Plan Board (OTPPB) been beneficial?
The OTPPB has been very successful in managing the Ontario Teachers’ Pension Plan (OTPP) assets, growing them from about $19 billion in 1991 to nearly $130 billion today. The OTPPB has developed a wealth of expertise on both the administration and investment of the OTPP.
10. What is the Partners’ Committee?
The Partners’ Committee is the means by which the Partners – OTF and the Government – typically meet to fulfill their responsibilities to the Ontario Teachers’ Pension Plan (OTPP). Each Partner appoints three representatives to the Partners’ Committee.
The teachers’ representatives are officers of OTF – the President, the Past President and the First Vice-President. The teacher members of the committee change yearly as new members take office.
The Government draws its representatives to the Partners’ Committee usually from the Ministries of Finance and Education.
11. What does the Partners’ Committee do?
The role of the Partners’ Committee typically includes
- designing the plan structure,
- setting the benefits of the plan,
- developing new policy,
- deciding the contribution rate,
- making changes to the plan or the Partners’ Agreement, and
- deciding when valuations will be filed with the appropriate authority.
12. What is the OTF Pension Committee?
The OTF Pension Committee is comprised of staff officers. OTF and its four affiliates – AEFO, ETFO, OECTA and OSSTF – each name a representative to the committee. The Retired Teachers of Ontario (RTO) also has a representative on the OTF Pension Committee.
13. What does the OTF Pension Committee do?
The OTF Pension Committee studies pension issues referred to it by the OTF Executive. The committee conducts research and makes recommendations concerning pension policy to the OTF Executive and to the OTF members of the Partners’ Committee.
14. What is the Pension Negotiations Committee?
The Pension Negotiations Committee is different from the Pension Committee. This group is chosen by the OTF Executive to negotiate with the Government Partner.
15. What does the Pension Negotiations Committee do?
The OTF Pension Negotiations Committee meets with the Government Negotiations Committee to negotiate changes to the OTPP. The terms of these negotiations are defined by the Partners’ Agreement. The negotiations take place at least every three years.
16. How are my interests represented if I am not a member of OTF?
The OTF Pension Committee, the OTF Pension Negotiations Committee, OTF members of the Partners’ Committee and the OTF Executive consult non-OTF members of the Ontario Teachers’ Pension Plan (OTPP). This consultation is done on both a formal and an informal basis.
All communications regarding the pension plan are distributed as broadly as possible to all members of the plan.
17. What if I have other questions?
You can contact OTF, your affiliate pension officer or the Ontario Teachers’ Pension Plan Board by e-mail, telephone or regular mail.
OTF/FEO
Suite 100, 10 Alcorn Avenue
Toronto, ON, M4V 3A9
T: 416.966.3424 or 1.800.268.7061
Email: comments
www.otffeo.on.ca
Ontario Teachers’ Pension Plan
160 Front Street West, Suite 3200
Toronto, Ontario M5J 0G4
T: 416.226.2700 or 1.800.668.0105
Email: inquiry
www.otpp.com
Association des enseignantes et des enseignants franco-ontariens
290 Dupuis Road, 4th floor
Ottawa, ON K1L 1B5
T: 613.244.2336
Email: aefo
www.aefo.on.ca
Elementary Teachers’ Federation of Ontario
136 Isabella Street
Toronto, ON M4Y 0B5
T: 416.962.3836 or 1.888.838.3836
www.etfo.ca
Ontario English Catholic Teachers’ Association
Suite 400, 65 St Clair Avenue East
Toronto, ON M4T 2Y8
T: 416.925.2493 or 1.800.268.7230
www.catholicteachers.ca
Ontario Secondary School Teachers’ Federation
60 Mobile Drive
Toronto, ON M4A 2P3
T: 416.751.8300 or 1.800.267.7867
www.osstf.on.ca