Terminating PSPP membership

What's on this page:

    Overview

    When can members terminate

    This table summarizes when members can terminate based on the type of their PSPP membership or their shortened life expectancy.

    When the member has... Then the member...
    Mandatory membership must end employment in order to
    • terminate from the Plan, and
    • receive termination entitlement(s) from the Plan.
    Involuntary termination of employment An involuntary termination occurs when a member's employment is terminated without cause. It also occurs when a member voluntarily terminates their employment after receiving termination notice from their employer; it does not include:
    • willful misconduct, disobedience or willful neglect of duty by the former member that is not trivial and has not been condoned by the employer;
    • voluntary termination of employment, including participation in the Voluntary Exit Program, the Transition Exit Initiative or a similar program under which employees terminate their employment voluntarily, or take the place of another employee who has received notice of layoff, in return for severance benefits;
    • a divestment out of the PSPP; or
    • the member's death.
    Note: Employers contemplating the use of initiatives that offer employees incentives to resign or to take the place of an employee who has received a notice of lay-off are encouraged to contact OPB before implementation to confirm whether participation in such an initiative is considered an involuntary termination.

    See information on how to report an involuntary termination.
    Optional membership may opt out of PSPP membership
    • before terminating employment
    • at any time during the period of employment, and
    • upon request of the member in writing to OPB.
    Shortened life expectancy of less than 24 months may apply to
    • terminate membership in the PSPP, and
    • receive the Commuted Value of their pension.
    Note: This termination entitlement must be approved by OPB.

    Terminating mandatory membership

    This section describes how to terminate a PSPP membership when a member's employment ends before the member is eligible to retire. It includes the following topics:

    Termination process

    This table describes how PSPP membership is terminated when a member ends their employment.

    Stage Description
    1
    • The member voluntarily resigns employment and membership, or
    • The employer initiates termination of the employee.
    2 The employer submits a retirement/termination transaction through OPB's Employer Portal(opens in a new tab)

    Note: You will need to provide additional information if the member's employment was involuntarily terminated
    3 OPB
    • Notifies the member that they have 30 days from the termination date to pay off the balance of any outstanding buyback,
    • Works with the member to obtain missing vital documents
    • Determines the member's entitlement from the PSPP, and
    • Forwards the member's options with regard to the pension benefit directly to the member.

    Required forms and documents

    OPB will contact the member if we determine any of the following forms and documents are not on record when a member terminates.

    Important: The OPB cannot process a member's pension entitlement(s) without full documentation.

    When the member... Then the member must also provide...
    is married
    • Proof of spouse's birth date
    • Marriage certificate
    has a common-law relationship
    is divorced or separated
    • Separation Agreement
    • Divorce documents (e.g., Divorce Decree, Divorce Judgement)
    • Court Order.
    If the member has eligible children, proof of birth date for each eligible child must be provided.

    Common-law relationship requirements

    Definition of a common-law relationship

    The member and spouse must have been living together as of the termination date in either

    • a conjugal relationship continuously for three years, or
    • a relationship of some permanence as the parents of a child.

    Proof of common-law relationship

    The terminating member must submit a signed and completed  OPB3010 - Affidavit of Spousal Status (PDF).

    Terminating optional membership

    This section describes how to terminate an optional membership and includes the following topics:

    Who are optional members?

    Membership in the PSPP is optional for an employee who is:

    • employed under Section 32 of the Public Service of Ontario Act (e.g., they are a fixed-term employee),
    • employed under Section 47 of the Public Service of Ontario Act (e.g., Minister's employees),
    • employed by an agency, board, commission, foundation, organization or public body whose enabling statute or Order-in-Council permits optional membership,
    • appointed to an agency, board, commission, foundation, organization or public body by an Order-in-Council that permits optional membership,
    • a Deputy Minister. And
    • age 65 or above.

    Important: Please contact an Employer Relations Specialist at OPB if you have any questions about optional PSPP members at your organization.

    When optional memberships can be terminated

    Unlike mandatory membership, optional membership may be terminated at any time during the member's period of employment without terminating employment.

    OPB cannot provide a former member with their termination options until their employment ends. When this happens, please send OPB a secure message through the Employer Portal. Please remember to indicate the member’s last day of employment. Once OPB receives notification that employment has ended, we will mail out the former member’s termination options.

    Termination process

    This table describes the termination process for optional membership.

    Stage Description
    1 The optional member contacts the Employer to begin the termination process either
    • formally through a written request, or
    • informally through an email or phone call.
    2 The employer provides the optional member with the OPB1057 - Termination of Optional Membership (PDF).
    3 The optional member
    • completes, signs and dates Part 1, and
    • returns it to the employer.
    4 The employer
    • signs and dates the form after the Member has signed and dated it
    • converts the form into PDF format
    • logs into OPB's Employer Portal
    • initiates a termination transaction and selects termination of optional membership as the termination reason
    • attaches the form to the transaction, and
    • submits the transaction through the portal to OPB.
    5 OPB provides a written response to the optional member
    • acknowledging receipt of the termination request
    • identifying effective termination date for the employer to cease deduction of member contributions.
    • indicating the amount of pension they’ve accrued (deferred) beginning on their 65th birthday, and
    • confirming that their termination options package will be sent out when they subsequently terminate their employment.
    6 The employer
    • refunds to the optional member any contributions remitted after the effective date of the termination, and
    • adjusts the optional member's records.
    7 After the Employer's notification that the former member's employment has ended, OPB will mail the optional member's termination options package. 

    Note: The member's pension entitlement is subject to small pension rules.

    After membership has been terminated

    Once optional membership has been terminated, members stop earning credit in the PSPP, unless they subsequently re-join the Plan, in which case, the period of employment between the two periods of PSPP membership is considered prior non-contributory OPS service.

    Reporting involuntary terminations

    Involuntary Terminations and grow-in

    The Pension Benefits Act includes grow-in provisions, which allow individuals who are involuntarily terminated and who meet a 55-point test, to grow into their earliest unreduced retirement date (EURD). This only applies to members who are involuntarily terminated by their employer on or after July 1, 2012.

    The 55-point test

    In order to meet the 55-point test, a member must meet one of the following tests:

    • age plus pension credit equals at least 55 points; or
    • age plus continuous employment date/PSPP membership equals at least 55 points

    If the member satisfies the 55-point test, then the member will be entitled to grow into their EURD. Their pension benefit will be based on the credited service they had as of their termination date. In other words, while the member is able to grow into their EURD, they do not continue to accrue pension credit during this period.

    Note: If the member does not have an early unreduced retirement date, then there is no early retirement date for them to grow into, so grow-in wouldn't apply. However, the member can still choose a deferred pension in the PSPP, which they can collect at age 65.

    Important: OPB, as plan administrator, is responsible for determining eligibility for grow-in not the employer.

    Example 1: Vivienne's employment is involuntarily terminated on July 10th, 2024. Vivienne is 45 years-old and has 10 years of pension credit in the PSPP. Had Vivienne's employment continued, they would have been eligible to retire with an unreduced pension at age 60, when Vivienne reached their 60/20 date in the PSPP. Since Vivienne's age plus credit equals 55, Vivienne would be eligible for grow-in and therefore able to retire at age 60 without a reduction to their pension. Vivienne's pension will be based on the 10 years of pension credit they had in the Plan when their employment was involuntarily terminated.

    Example 2: John is a full-time member whose employment is involuntarily terminated on July 15, 2024. John is 47 years old with 9 years of continuous employment and 6 years of pension credit. Had John's employment continued, they would have been eligible to retire at age 61, when John reached their 60/20 date in the PSPP.

    While John's age plus credit doesn't satisfy the 55-point test, John's age plus continuous employment does satisfy the 55-point test (47 years-old plus 9 years of continuous employment = 56). Therefore, John is eligible for grow-in. This means John will be eligible to retire at age 61 without a reduction to their pension.

    John's pension will be based on the 6 years of pension credit they had in the Plan when their employment was involuntarily terminated.

    How to Report an involuntary Termination

    In order to determine whether an individual qualifies for grow-in, OPB needs to be notified by the employer that the member was involuntarily terminated.

    We require a termination transaction submitted through the Employer Portal plus a letter stating:

    • That the member was involuntarily terminated
    • Their continuous employment dates (this refers to their original date of hire for their current employment period and their termination date)
    • For agencies, the letter must be signed by your designated signatory (this should be the most senior HR official)
    • For ministries, the letter must be signed by the designated signatory for your ministry. If you don't know who that is for your ministry, please contact OPB's Employer Relations team through the Employer Portal for more information.

    An involuntary termination occurs when a member's employment is terminated without cause. It also occurs when a member voluntarily terminates their employment voluntarily after receiving termination notice from their employer; it does not include:

    • willful misconduct, disobedience or willful neglect of duty by the former member that is not trivial and has not been condoned by the employer;
    • voluntary termination of employment, including participation in the Voluntary Exit Program, the Transition Exit Initiative or a similar program under which employees terminate their employment voluntarily, or take the place of another employee who has received notice of layoff, in return for severance benefits;
    • a divestment out of the PSPP; or
    • the member's death

    Note: Employers contemplating the use of initiatives that offer employees incentives to resign or to take the place of an employee who has received a notice of lay-off are encouraged to contact OPB before implementation to confirm whether participation in such an initiative is considered an involuntary termination.

    For more information on involuntary terminations, please refer to the Employment Standards Act.

    Please note: If a member who is involuntarily terminated chooses to retire with an immediate pension, you still need to report it as an involuntary termination.

    Terminating a member with shortened life expectancy

    A member with a life expectancy of less than 24 months may apply to OPB to receive the commuted value of their pension benefit on a non-locked in basis. Please see below for more details.

    Eligibility

    When the life expectancy of a member is less than 24 months, then the member may apply directly to

    • terminate membership in the PSPP, and
    • receive the Commuted Value of their pension.

    If approved by OPB, the payment would not be subject to locking-in requirements.

    Termination process

    This table describes the process for terminating membership for a member with shortened life expectancy.

    Stage Description
    1 The member submits to OPB
    • a written request to commute their pension benefit due to shortened life expectancy
    • supporting medical evidence
    • written consent to release medical information to OPB and its medical consultant(s)
    2 The member forwards above documentation and forms directly to OPB as follows: 

    Client Care Centre
    Ontario Pension Board
    200 King Street West, Suite 2200
    Toronto, ON M5H 3X6
    3 OPB reviews the member information in order to determine if the member is eligible.

    Waiver of rights

    Members must be made aware that in terminating membership they give up all rights to

    • pension benefits based on prior membership and pension credit in the PSPP
    • any future accrual of PSPP pension credit, and
    • any future spousal or survivor benefits from the PSPP.

    Continuation of insured benefits coverage

    Members who receive approval to obtain the commuted value of their accrued benefits may continue insured benefits coverage (supplementary health and hospital benefits, dental benefits, and life insurance). Continuation of insured benefits coverage is subject to Employer approval.