We have had some questions about OMERS recently, in the context of staffing issues related to COVID-19, and thought it would be helpful to provide a summary of the various plan provisions that may be applicable.
DIFFERENT TYPES OF ABSENCES
If an employee is absent from the workplace, then the reason for the absence has implications for the employee’s OMERS pension. Specifically, OMERS treats leaves under the Employment Standards Act, 2000 (“ESA”), other employer-authorized but non-ESA leaves, and lay-offs differently.
1) ESA Leaves
An employee on an ESA leave, for example a declared emergency leave or the new infectious disease emergency leave, is not credited for service during the leave; however, the employee can purchase the time away from work and, in doing so, convert it to credited service.
If the employee purchases the leave time before the end of the year following the year in which the leave ends, then the employee is required to pay the employee’s cost of contributions and the employer must match. The cost of contributions is based on the employee’s pre-leave earnings. Unless an employee declines in writing to purchase the leave time, the employer must generally assume that the member will buy the leave and, therefore, include it in the employer’s pension adjustment calculation.
If, however, the employee does not purchase the leave time within this window but wants to do so at a future date, then the cost of the buy back is calculated differently and there would be no employer contribution.
Any period of time on the ESA leave that is not purchased by the employee would be considered eligible service for the purpose of determining when the employee qualifies for an unreduced pension.
2) Employer-Authorized Leave
Employers may permit employees to take a leave of absence where the employee does not meet the criteria for an ESA leave. An example of this would be an employer-approved personal leave of absence.
Under the terms of the OMERS plan, a member can purchase a period of authorized leave by paying twice the cost of contributions based on the member’s pre-leave earnings. The employer is not required to match the contributions.
Again, the employee would have until the end of the year following the year in which the authorized leave ended to make the purchase. If the employee does not make the purchase within that time period then the time can be bought back but the calculation is different and there would still be no employer contribution. In contrast to an ESA leave, any period of authorized leave that is not purchased would not be considered for the purpose of determining when the employee is eligible for an unreduced pension.
3) Lay-Off
For an employee on a temporary lay-off, the lay-off period is not purchasable and is not considered eligible service.
RETIREES WHO RETURN
If you have retirees returning to work to provide assistance, then regular rules for re-employment of an OMERS pensioner continue to apply.
A member cannot accrue pensionable service and receive an OMERS pension at the same time. As a result, an employee receiving a pension will not be permitted to re-enrol in OMERS. This is true even if the employee is otherwise required to re-enrol (for example, they are returning to continuous full-time employment).
Your employee should make their election as soon as possible. It takes effect as of the hire date.
Despite all of the above, employees are not permitted to enrol past November of the year in which they turn age 71.
EXTRA PAY
Any extra payments to employees during the COVID-19 crisis, for example overtime, are not pensionable regardless of the manner in which it may be paid (lump sum, spread over time). These payments are temporary in nature and, as a result, are not considered to be amounts received on a regular and recurring basis.
WILL OMERS GIVE US A BREAK?
No. OMERS is not allowing employers to defer contributions. In addition, the deadline for the 2019 annual reconciliation remains June 30, 2020.
