The coming health benefits shock for retirees: Mayers http://t.co/E5sjWHZJe9 via @torontostar
— Gerry Pedwell (@Fireme35) October 21, 2014
Question: What is the OMERS bridge benefit and how does it work?
Answer: OMERS and CPP are two completely different pension plans but they are integrated. You pay reduced contributions on earnings for which you also contribute to CPP (that is why there are two contribution rates - above and below the YMPE). OMERS assumes that you will receive CPP at age 65. So, if you retire before age 65, OMERS has a benefit that provides you a top-up or what is referred to as a bridge, similar to what you would have received if CPP were paying you. You are eligible for a reduced retirement pension from CPP at age 60. Taking a reduced CPP pension does not affect your OMERS pension or bridge benefit in any way. Once you reach age 65 you will lose the bridge and see a reduction to your OMERS pension. The reduction is 0.675 to the YMPE average for 5 years of your retirement amount.
If you take CPP early at age 60, it is recommended to invest the whole amount for 5 years. As you are receiving the OMERS bridge for 5 years, why not save the CPP for a rainy day and earn some interest? It will help you have a better adjustment at age 65. Also, a reminder that some people, depending on age, will not be getting old age security until after 65 - some as late as 67. It might be a good plan to then dip into the 5 year CPP savings to keep your income constant.
OMERS Plan Pension Formula
To Age 65:
2% x credited service (years) x "best five" earnings
After age 65:
Less OMERS Plan bridge benefit at age 65 0.675% x credited service (years) x lesser of
"best five" earnings or AYMPE*
Answer: OMERS and CPP are two completely different pension plans but they are integrated. You pay reduced contributions on earnings for which you also contribute to CPP (that is why there are two contribution rates - above and below the YMPE). OMERS assumes that you will receive CPP at age 65. So, if you retire before age 65, OMERS has a benefit that provides you a top-up or what is referred to as a bridge, similar to what you would have received if CPP were paying you. You are eligible for a reduced retirement pension from CPP at age 60. Taking a reduced CPP pension does not affect your OMERS pension or bridge benefit in any way. Once you reach age 65 you will lose the bridge and see a reduction to your OMERS pension. The reduction is 0.675 to the YMPE average for 5 years of your retirement amount.
If you take CPP early at age 60, it is recommended to invest the whole amount for 5 years. As you are receiving the OMERS bridge for 5 years, why not save the CPP for a rainy day and earn some interest? It will help you have a better adjustment at age 65. Also, a reminder that some people, depending on age, will not be getting old age security until after 65 - some as late as 67. It might be a good plan to then dip into the 5 year CPP savings to keep your income constant.
OMERS Plan Pension Formula
To Age 65:
2% x credited service (years) x "best five" earnings
After age 65:
Less OMERS Plan bridge benefit at age 65 0.675% x credited service (years) x lesser of
"best five" earnings or AYMPE*
- Five year average of the year's maximum pensionable earnings (YMPE)