Working members contribute 10.8% of their annual salary up to the Canada Pension Plan (CPP) limit, plus 12.4% of any salary above the CPP limit. The limit, which changes annually, is $50,100 in 2011.
To address the projected $17.2 billion funding shortfall, the Ontario Teachers' Federation and the Ontario government have agreed to a contribution rate increase. Beginning Jan. 1, 2012, members will contribute an additional 1.1% of their salary to the Teachers’ pension plan to help cover the 2011 funding shortfall. The increase is being phased in over three years, with members contributing 0.4% more in 2012 and 0.35% more in each of 2013 and 2014. All rate increases go into effect Jan. 1.
2. Is there a cap on contribution rates?
The OTF and the Ontario government have agreed their matching contribution rates should not exceed 15% of base earnings above the Canada Pension Plan (CPP) limit. The CPP limit, which changes every year, is $50,100 in 2012. If rates would have to climb higher than 15% to keep the pension plan healthy, other alternatives would be considered.
3. Do contribution rates affect my RRSP room?
No, contribution rates do not affect how much you are allowed to contribute to your RRSP. The government formula used to calculate your RRSP contribution room is based on the deemed value of the benefit you earn in the Teachers' pension plan. It is not based on how much you contribute to the plan.
4. I'm unhappy with the contribution rates. Who can I talk to?
Consider contacting the OTF or your affiliate pension representative. The OTF and Ontario government spent months exploring various funding solutions before reaching their decision to increase rates.
5. I'm young. Will I pay more than I can expect to receive?
Under Ontario's Pension Benefits Act, you cannot pay for more than half of the value of the pension earned for service after 1986. Any excess amount is refunded to you (or your estate) on termination of membership, death or retirement.
6. Can Teachers' invest additional contributions on my behalf?
The simple answer is no. Our mandate and certain laws limit us to managing the Teachers' pension fund and administering the plan on behalf of members. For example, in order for our plan to comply with current tax legislation in Canada and the United States, OTPP does not directly invest or manage personal investments of our members or their families. Other plans have different mandates.
We continuously evaluate opportunities to enhance our member service offer. However, there are no current proposals to allow members to make personal investments or additional voluntary contributions to the plan. These activities would require structural changes to our legislated mandate and to our organization.
