Pension Strategies for Occasional Teachers
Occasional teachers should be aware of a number of rules under the Ontario Teachers’ Pension Plan (OTPP) that affect them differently from how other teachers are affected.
Occasional and part-time teaching
The single most important factor in the calculation of your pension is your average salary. If a teacher mixes casual occasional teaching with part-time teaching, the credited service is added together and so is the salary earned. Mixing part- time and occasional teaching is a good thing for teachers early in their careers. However, teachers near retirement must be extremely careful: mixing part-time and occasional teaching can lower their average salary. An OT on a long-term assignment who is near retirement should also be cautious, because mixing a high long-term rate of pay with a lower casual rate will also result in a lower average salary.
Working after retirement
When you are receiving your pension there’s a limit on the number of days you can work in any job in education.
- You can be employed in education for no more than 95 days (FTE) per school year for a maximum of three years (only years before September 2001 and/or after August 2006 count).
- After three years, you can work for 20 days (FTE) per school year.
Your pension will stop at the end of the month in which you exceed the limit, and your employer will begin deducting contributions. These limits don’t apply if you are 69 years of age or over (yes, some members are).
Immediate versus deferred pensions
The rules that apply to your pension are those that were in effect on the day that you made your last contribution. Some teachers confuse the effective date of retirement they state in their resignation letter to their board with the date on which they last contributed. It is the last contribution date that the plan uses to determine entitlements. An immediate pension begins in the month after the one in which you made your last contribution. A deferred pension begins in any month after that.
Occasional teachers, like all other teachers, are entitled to begin receiving their pensions in any month of the year, provided they meet the minimum qualiﬁcations: age 50, 85 factor, or 35 years of credited service. The penalty for retiring before you have achieved the 85 factor is 2.5 percent per point for immediate pensions and 5 percent per point for deferred pensions.
To ensure the lower penalty, OTs who do not have their 85 factor and who are not 65 years old should make a pension contribution in the month before the one in which they begin their pensions.
Sally, an OT, last contributes to the plan in June. Over the summer holidays she turns 50, but she has not achieved her 85 factor. She could begin her pension in September, but it would be a deferred not an immediate pension because two months have elapsed. Her pension would be reduced by 5 per cent for each point she is below the 85 factor.
Sally should teach in September and go on pension in October. That way she is receiving an immediate pension and her early retirement penalty would be only 2.5 percent per point.
If Sally were 50 on June 30, she should begin her pension July 1.