OMERS is here to support you at every step of your pension journey. That’s why we have more ways for members to build a better financial future with a modernized approach to leave purchases. Over the course of your career, there may be times when you need to take a leave from work — maybe it’s to welcome a new baby, care for a family member or deal with a personal emergency. This time away can affect your pension.
When you are on a leave, your contributions to OMERS through your employer’s payroll stop. However, many leaves are purchasable under the OMERS Plan. If you decide to purchase a leave, it will help your pension grow.
Purchasing a leave can maximize your income in retirement and may also allow you to retire earlier with an unreduced pension. We are improving the leave purchase experience for members by introducing:
You will be able to purchase all or a portion of your leave and have the opportunity to take advantage of that option while still on a leave.
You will have up to two full calendar years after completing a leave to make a decision about purchasing it and how to pay.
You can use your banking and savings accounts to pay by lump sum, a payment plan or use a combination of methods.
Take advantage of the new online process through myOMERS to stay informed, save time and automate payments.
For a high-level overview of how leave purchases work, including the benefits of purchasing a leave, download a copy of our short digital guide for members. Once your leave is reported to OMERS by your employer, OMERS will provide you with your options and calculate the cost for you.
Communication: Your employer will provide you with your options and calculate the cost for you.
Expiry date: You will have until December 31 of the year following the year in which your leave ended or 30 days after the day your employment ends with your OMERS employer (if earlier).
Timing: When you return from a leave, you may be able to purchase the period to add to your credited service.
Payment options: You can pay with a lump sum to your employer who will forward it to OMERS, although certain leaves can be paid for directly by transferring funds from your RRSP account, locked-in retirement account (LIRA) or OMERS Additional Voluntary Contributions (AVC) account.
Communication: Take advantage of a streamlined online experience in your myOMERS account to stay informed, save time and automate payments.
Expiry date: You will have two full calendar years after completing a leave to pay for your leave purchase, or 30 days after the day your employment ends with your OMERS employer (if earlier), although timing matters. See Tax impact of purchasing a leave for more information.
Timing: You can purchase all or a portion of your leave. You also have the option to start your purchase while you are still on a leave.
Payment options: You will be able to pay OMERS directly by lump sum, automatic deductions from your bank account or transfers from other savings vehicles such as your RRSP account, locked-in retirement account (LIRA) or OMERS Additional Voluntary Contributions (AVC) account.
The cost to purchase a leave is not changing under the new process and will continue to be based on your deemed contributory earnings. Typically, your deemed contributory earnings match the contributory earnings you were receiving immediately before your leave.
For some types of leaves, your cost is a single contribution, which means the cost to purchase is shared with your employer. This applies to statutory leaves protected by the Employment Standards Act, 2000 (ESA), including leave types such as parental, long-term illness, emergency, family medical, organ donor leaves and more. If you choose not to purchase a statutory leave, it will still count as eligible service and be used to calculate your early retirement options, if applicable.
The Plan also offers you the option to purchase a disability or sick leave when you aren’t receiving OMERS disability benefits at a single contribution rate, where the cost is shared with your employer. If you choose not to purchase this type of disability or sick leave, that period will not count as eligible service.
For other types of leaves, your cost is a double contribution, which means you are responsible for your share and your employer’s share. This includes various authorized leaves of absence and strikes or lockouts as defined under the Labour Relations Act, 1995.
If you choose not to purchase these types of leaves, that leave will not count as eligible service or be used to calculate your early retirement date.
The decision to purchase some or all of your leave is up to you. To understand whether it makes sense for your situation, we encourage you to compare the cost of purchasing a leave to the potential impact on your pension. You should also factor in whether purchasing a leave will allow you to retire earlier with an unreduced pension.
Every member’s circumstances are unique. It may be worthwhile to talk to a financial planner for more personalized guidance. In general, you can consider the following questions:
Different tax rules apply depending on when you purchase a leave. The type of funds you use to purchase your leave can also have tax implications.
If you elect to purchase a leave during your leave before April 30 of the year after your leave ends
Your purchase will result in a Pension Adjustment (PA) being issued by OMERS via a T4A form, if necessary. PAs reduce your available RRSP room by the amount reported. Additionally, your OMERS record will reflect the credited service that you purchase as well as your deemed contributory earnings for the leave. These contributory earnings may be included in the calculation of your “best five” earnings.
If you elect to purchase a leave after April 30 of the year after your leave ends
Your purchase will result in a Past Service Pension Adjustment (PSPA). OMERS will apply to the Canada Revenue Agency (CRA) to certify the PSPA to ensure you have sufficient RRSP room. If your PSPA is approved, we will complete the purchase.
Your OMERS record will only reflect the credited service that you purchase, not your deemed contributory earnings. However, deemed contributory earnings will still be used to determine the cost of your leave purchase. This could impact your “best five” earnings if your purchased leave falls during the period where you have your highest 60 months of contributory earnings.
The type of funds you use to make your leave purchase also has an impact on tax reporting. You have the option to pay with one type of funds or pay with a combination of two or more sources.
Transfers from a retirement savings account such as an RRSP account, LIRA or OMERS AVC account are already tax sheltered. You cannot claim them again as a tax deduction for the leave purchase and the purchase will not reduce your available RRSP room. As a result, these transfers can be used to reduce a PA and may not require approval for a PSPA.
Cash contributions are new contributions for which you will receive a tax receipt to claim a deduction. Depending on when you elect to purchase a leave, either a PA or PSPA will be issued or applied for to reduce your RRSP room.
You may be eligible for OMERS disability benefits.
Learn how purchasing past service from a previous or current employer can help increase your pension.
Explore ways to increase your retirement savings by investing in the OMERS Fund.
Learn more about the OMERS Plan through frequently asked questions.