Page Comparison

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Factor 1: Pensionable Earnings
These are the regular wages, salary, or other compensation a member earns in a given pay period, excluding non pensionable earnings. See section 4.2 Pensionable Earnings for a description and examples.

Factor 2: The Member’s Annualized Earnings
For the purposes of calculating contributions, a member’s annualized earnings are what they would earn in a calendar year by working the full-time equivalent (FTE) hours for their position, as determined by you. In other words, regardless of whether a member works full-time, part-time, or for only part of the year, their annualized earnings for contribution purposes will be based on what they would earn by working fulltime for the whole year. However, a part-time member or a member who worked for only part of the year will earn contributory service proportionate to the time they worked to reflect the fact that they did not contribute to HOOPP for a complete year.

Factor 3: Year’s Maximum Pensionable Earnings (YMPE)
The YMPE is set each year by the federal government based on the average wage in Canada.

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YEAR

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YMPE

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2020

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$58,700

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2019

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$57,400

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2018

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$55,900

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2017

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$55,300

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2016

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$54,900

Factor 4: Employee Contribution Rates
HOOPP uses a two-tier contribution rate. Calculate member contributions using the following formula:

• 6.9% of annualized earnings up to the YMPE

• 9.2% of annualized earnings above the YMPE

Members contribute at the low rate on that portion of their annualized earnings up to the current YMPE and at the high rate on that portion of their annualized earnings above the YMPE.

You should calculate the contributions of all HOOPP members using the universal payroll deduction method. Required contributions and contributory service should be calculated each pay period. If a member's annualized earnings are above the YMPE, contributions must be made at both the high and low rate each pay period, according to the Universal Payroll Deduction Method in section 4.3.

It would be incorrect to deduct contributions at the low rate during the first part of the year – until the member's accumulated earnings reach the YMPE – and then deduct at the high rate for the remainder of the year. Actual employment earnings may vary between pay periods during the year, while annualized earnings remain constant unless there is a salary increase or decrease during the year.

For part-time employees, or members who terminate part-way through the year, the difference between the actual earnings they receive and their annualized earnings can be significant. If contributions are not deducted correctly, it can result in the payment of an incorrect pension amount. All information reported to HOOPP for that final period of employment is binding once submitted and is used by HOOPP to calculate a member’s pension. For more information on how to report a termination please refer to section 8.

A member’s contributions may decrease from one year to the next. For example, This would occur for a member whose annualized earnings are above the YMPE and their annualized earnings remain the same from one year to the next. Their annual contribution amount would decrease because of the increase in the YMPE, more of their contributions will be calculated at the low 6.9% contribution rate than in the previous year.

Examples of Pensionable and Non-pensionable Earnings

*For more information on payments at the end of the employment relationship, see section 4.7 under “Contributions on Termination Payments”.

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4.3 Calculating Employee Contributions

Universal Payroll Deduction Method Employers must use the universal payroll deduction method to calculate required contributions and contributory service weeks for all HOOPP members.

As the name suggests, the universal method can be used for members who are full-time or part-time, absent for part of a pay period, on reduced pay, on sick leave, pregnancy or parental leave or participating in a pre-paid leave program. The method is also suitable for any length of payroll period, including bi-weekly, monthly, and semi-monthly.

The six-step universal payroll deduction method calculates contributions based on a member’s annualized earnings, and then prorates contributions to reflect the hours worked during the payroll period in question. When calculating contributory service, the figure should be rounded to two decimal places to avoid distorting a member’s annualized earnings and related pension.

Examples

The following examples demonstrate how employee required contributions are calculated using the universal payroll deduction method for regular pensionable earnings. As noted above, contributions for pensionable bonuses are treated the same as retroactive pay, discussed in Section 4.5.

Example 1: Full-time Member Paid Bi-weekly

This example is for a full-time employee who is paid bi-weekly however, the calculation method can be used for any HOOPP member, regardless of hours worked or salary received, and any payroll frequency.

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Calculate earnings per pay
Earnings per pay = hourly rate × hours worked in a pay period
The member works 37.5 hours a week and is paid every two weeks. Therefore, their earnings for the biweekly pay period are:
$32 × 75 = $2,400

Step 3: Calculate contributions at the low rate
Contributions at the low rate are calculated as follows:
Contributions at 6.9% = [earnings per pay × (YMPE* × 6.9%)] ÷ annualized earnings
* Use the lesser of the member's annualized earnings or the YMPE.
Therefore, the bi-weekly contributions at the low rate are:
[$2,400 × ($58,700* × .069)] ÷ $62,400 = $155.78
* The 2020 YMPE ($58,700) is used here because it is less than the member's annualized earnings ($62,400).

Step 4: Calculate contributions at the high rate
A member must contribute at the high employee contribution rate on the portion of their annualized earnings per pay that exceeds the YMPE. Contributions at the high rate are calculated as follows:
Contribution at 9.2% = [earnings per pay × (annualized earnings* - YMPE*) × 9.2%] ÷ annualized earnings
*If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE.
Therefore, the bi-weekly contributions at the high rate are:
[$2,400 × ($62,400 - $58,700) × .092] ÷ $62,400 = $13.09

Step 5: Calculate total HOOPP contributions
The formula is: $155.78 (the low) + $13.09 (the high) = $168.87

Step 6: Calculate contributory service
A member's earnings per pay and annualized earnings are used to calculate contributory service.
The figure is calculated by converting pay into weeks and rounding off the figure to two decimals.
Contributory service = [earnings per pay × 52 weeks in a year] ÷ annualized earnings = [$2,400 × 52 weeks] ÷ $62,400 = 2 weeks
In this example, the member worked full-time during the two-week pay period, therefore, the contributory service credit is two weeks.

Example 2: Part-time Member Paid Bi-weekly

The member in this example works part-time, is paid bi-weekly, and works a total of 15 hours each week. The member's current hourly rate of pay is $33. The normal full-time work week or full-time equivalent (FTE) for the member's job is 37.5 hours per week or 1,950 hours per year. HOOPP annualizes earnings on a 52-week basis. The example uses the 2020 contribution rates and the 2020 YMPE of $58,700.

Step 1: Calculate annualized earnings
Annualized earnings = hourly rate × full-time hours in a year for that job
The member’s annualized earnings are:
$33 × 1,950 = $64,350

Step 2: Calculate earnings per pay

Earnings per pay = hourly rate × hours worked in a pay period
The member works 15 hours a week and is paid every two weeks. Therefore, their earnings for the biweekly pay period are:
$33 × 30 = $990

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Note: There is a maximum amount of low contributions that can be made within the year. This can be calculated by: Maximum low contribution rate = (6.9% × YMPE) ÷ number of weeks in the year = (0.069 × $58,700) ÷ 52 = $4050.30 ÷ 52 = $77.89 Therefore in 2020, the maximum amount that a member pays at the low contribution rate is $4050.30 per year or $77.89 per week.

Step 4: Calculate contributions at the high rate
A member must contribute at the high employee contribution rate on the portion of their annualized earnings per pay that exceeds the YMPE.

Contributions at the high rate are calculated as follows: Contributions at 9.2% = [earnings per pay × (annualized earnings* - YMPE*) × 9.2%] ÷ annualized earnings

*If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE.

Therefore, the bi-weekly contributions at the high rate are:
[$990 × ($64,350 - $58,700) × .092] ÷ $64,350 = $8

Step 5: Calculate total HOOPP contributions
To calculate total HOOPP contributions for the pay period, add the contributions at the low and high rates.
Total contributions = low rate + high rate

Because the member makes contributions at both the low and high rates, the total HOOPP contributions for the bi-weekly pay period are:
$62.31(the low) + $8(the high) = $71.31

Step 6: Calculate contributory service
A member's earnings per pay and annualized earnings are used to calculate contributory service - the length of time, measured in weeks, that the member has contributed to HOOPP, adjusted for such things as part-time service.

The figure is calculated by converting pay into weeks and rounding off the figure to two decimals.

Contributory service = [earnings per pay × 52 weeks in a year] ÷ annualized earnings

If the member in our example had worked full-time during the two-week pay period, the contributory service credit would have been two weeks. Because the member works part-time, however, the contributory service credit is prorated as follows:

[$990 × 52] ÷ $64,350 = .80 weeks The final figure (.80) is the contributory service the member earned during the two week pay period.

Example 3: Full-time Member Receiving Sick Pay

The member in this example is on an employer-approved health leave, is receiving 80% of their regular bi-weekly salary of $2,400, and has decided not to top up contributions to their pre-leave level. The normal full-time work week or full-time equivalent (FTE) for this position is 37.5 hours, or 1,950 hours a year and the hourly rate of pay is $32. The example uses the 2020 contribution rates and the 2020 YMPE of $58,700.

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Example 4: Member Works Two Different Jobs Concurrently

A member may work two different jobs at an organization at the same time, often at two different rates of pay. To calculate the member's contributions, use blended annualized earnings.

In this example, a member works two jobs at one organization. In job A, the member’s base wage is $28.50 per hour. In job B, the member’s base wage is $35 per hour. In both jobs, the normal full-time work week or full-time equivalent (FTE) is 37.5 hours or 1950 hours per year. During the current two-week pay period, the member has worked 45 hours in job A and 10 hours in job B for a total of 55 hours. However, the member’s hours may change every pay period. The example uses the 2020 contribution rates and the 2020 YMPE of $58,700.

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4.4 Employer Required Contributions

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4.5 Retroactive Pay (Retro)

As well, the YMPE for the year to which the settlement applies should be used to calculate the contributions to be deducted on the retro amount. See the table, later in this section, that shows historical contribution rates and YMPEs.

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Examples

The following examples demonstrate how to deduct contributions from retro pay.

Example 1: Annualized Earnings Above the YMPE

On June 1, 2020, a member receives a $5,000 retroactive pay settlement in respect of the years 2016 to 2018, and an adjustment to the current year. Of the $5,000, $1,100 applies to 2016, $1,300 applies to 2017, and $1,600 applies to 2018. The remaining $1,000 applies to 2020, which means that an adjustment to the member’s current year contributions will have to be made. In each of the years covered by the settlement, the member’s annualized earnings prior to the retroactive pay settlement were above the YMPE. Because of this, contributions are made at the high rate in effect for each year, as follows:

In this case, the member’s annualized earnings in the current year (2020) were also above the YMPE prior to the retroactive pay settlement. The member would contribute at the high rate, 9.2%, on the $1,000 in respect of 2020 for a total of $92. The employer’s contribution for the 2020 portion would be 126% of what the member contributes, or $115.92.

Example 2: Annualized Earnings Below YMPE

On August 1, 2020, a member receives a $3,000 retroactive pay settlement in respect of the years 2017, 2018, and 2020. Of the $3,000, $900 applies to 2017, $1,100 applies to 2018, and $1,000 applies to 2020. An adjustment to the member’s current year contributions will have to be made due to the $1,000 portion of the retro that applies to 2020. In all of the years covered by the settlement, the member’s annualized earnings prior to the retroactive pay settlement were below the YMPE. Because of this, contributions are made at the low rate, as follows:

In this example, the member’s annualized earnings in the current year (2020) were also below the YMPE both before and after the retroactive pay settlement. The member would contribute at the 2020 low rate of 6.9%, on the $1,000, for a total of $69. The employer’s contribution for the 2020 portion would be 126% of what the member contributes, or $86.94.

Example 3: Earnings Below and Above YMPE (Retro for current and previous year)

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To calculate the amount of high contributions, it is necessary to first calculate how much of the settlement amount requires contributions at the low rate. In this example, the member had only contributed $2,400 at the low rate for 2020 prior to the settlement. This means the member is making an additional low contribution of $57.84. Divide this amount by .069 (the low contribution rate), and this equals $838.26 – the amount of earnings which is applicable to the additional low contributions. The balance of the $2,000 adjustment, $1,161.74 requires contributions at the high rate of 9.2%.

Example 4: Earnings Below and Above YMPE (Retro for previous year only)

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4.6 Contributions for Leaves

Members must make required contributions on any employer-approved leaves that are less than 31 days in duration.

Members can choose to make contributions if they are away from work on a statutory leave or, with your approval, on other employer-approved leaves that are 31 days or longer in duration.

If a member elects to not make contributions on an employer-approved or statutory leave, they may still be able purchase the service at a later date by completing a buyback. A buyback will increase the member’s contributory service and eligibility service in the Plan, increasing their overall pension at retirement. However, the cost of the buyback will increase as a member’s age, earnings, and years in the Plan increase. Members should contact Member Services for more information or to request a buyback quote. For more details, please see section 5 Leaves and Layoffs.

Health Leaves

For more details, please see section 7 Disability Benefits.

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4.7 Contributions in Other Situations

Weekend Workers
Weekend workers are those employees who work 30 hours per week but are paid for 37.5 hours. Contributions should be deducted from their full earnings as they are credited with 52 weeks of contributory service as if they were working a full 37.5 hours per week.

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Missed Contributions
From time to time, a member or employer may miss making required contributions. HOOPP can learn about missed contributions in one of three ways:

• Upon reporting the enrolment, HOOPP may detect a missed contribution and alert you to
  this through a warning message.

• Via the annual member data collection process; or

• Via correspondence from you or one of your employees advising of the situation

When required contributions are missed, it is mandatory that both your organization and the member make up those contributions. Where applicable, interest will be charged.
In order for HOOPP to calculate the amount required to make up the missed contributions you will need to provide:

• The member's rate(s) of pay

• Start date for each pay rate

• The full-time equivalent hours for the member's position

• The hours worked at each rate of pay

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There is, however, an important twist in how the member's annualized earnings are derived. Where part of the salary is paid by a HOOPP employer and part by a non-HOOPP employer, the annualized earnings are based on the sum of the two salaries.

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Temporary Periods of Reduced Earnings
Members can choose to "top up" their contributions during a temporary period of reduced earnings (also referred to as an Approved Work Schedule Reduction), subject to your approval, as long as they have been employed by you for at least 36 months prior to the start of the period. Examples of a temporary period of reduced earnings include participation in a temporary job-sharing program or a decision by a member to work fewer hours each week for a temporary period of time.

Let HOOPP know when a member is starting a temporary period of reduced earnings by submitting Leaves of Absence information and selecting Approved Work Schedule Reduction as the leave type. When it ends, submit additional Leaves of Absence information and select Approved Work Schedule Reduction as the leave type. This is so HOOPP can credit the member with the correct amount of service.

Members who want to "top up" contributions can either make these contributions periodically throughout the temporary period of reduced earnings/approved work schedule reduction, or remit them to HOOPP through you, the employer no later than twelve months (temporarily extended from six months) after the end of the temporary period of reduced earnings/approved work schedule reduction.

Members who choose to "top up" their contributions each payday can, at any time during the period, switch back to making contributions on their actual earnings. If they make such a switch, they will not be allowed to resume periodic contributions, and will have to provide the rest of their "topped up" contributions as a lump sum no later than twelve months (temporarily extended from six months) after the end of the temporary period of reduced earnings/approved work schedule reduction. However, once the payment has been collected from the member, the total lump sum must be paid within 30 days of the end of the month in which the deductions were made.

Contributions for members who want to contribute during a temporary period of reduced earnings are based on what they were earning before the period of reduced earnings/approved work schedule reduction began. These "deemed earnings" must also include any subsequent pay increases. The contributions of part-time employees should be based on their average earnings for the 10 weeks immediately preceding the period of reduced earnings/approved work schedule reduction. If the member does not "top up" contributions within twelve months (temporarily extended from six months) from the end of the period of reduced earnings, they lose the opportunity to contribute, and you are relieved of any responsibility to match the contributions. HOOPP's buyback rules do not apply in this situation, so the member is unable to purchase the service later.

Contributions paid on a periodic basis during a temporary period of reduced earnings (also referred to as an Approved Work Schedule Reduction) are reported to HOOPP via the annual member data collection process if:

• The member pays the topped-up contributions on an ongoing basis (i.e. every payday); or

• The temporary period of reduced earnings/approved work schedule reduction starts and ends in the same calendar year, and the member makes contributions by the end of that same calendar year

If the member's contributions are received as a lump sum after you have completed your annual member data collection for the year in which the temporary period of reduced earnings began, contributions will need to be submitted via a Lump Sum payment process in HOOPP Insight.

Interest will be charged on lump sum payments received more than 30 months after the beginning of the temporary period of reduced earnings.

The employee can try to make all contributions relating to a leave/temporary period of reduced earnings/approved work schedule reduction each payday, so that contributions are made during the same calendar year in which the temporary period of reduced earnings occurs. Making contributions in the year in which they will apply will ensure the member's HOOPP annual statement and T4 slip reflect the correct contributions for the year.

Should an employee elect to pay contributions that apply to a previous calendar year in the current calendar year, you must report the contributions on the member's T4 slip for the year in which the contributions are made. The employee's contributions should be reported in box 20 Registered Pension Plan Contributions.

Contributions on Termination Payments
The table below summarizes the way HOOPP treats pension contributions for various payments that may be made to members upon termination of employment. Whether or not HOOPP contributions are made on these amounts depends on the type of payment, and the method by which the payment is made.

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Type of Payment

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If paid as…

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Contributions required

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Payments in lieu of termination notice period not exceeding amount required by

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lump sum

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yes

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salary continuance

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yes

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Employment Standards Act or collective agreement

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Payments in lieu of termination notice period exceeding amount required by Employment Standards Act or collective agreement

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lump sum

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Contributions allowed on excess portion if employer and member agree to make them and if the employment relationship continues for the applicable period.

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salary continuance

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yes

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Severance pay

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lump sum

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no

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salary continuance

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yes

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Other: retiring allowances, lump sum payments in lieu of benefits, etc.

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lump sum

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no

According to ITA rules, members cannot continue to contribute to HOOPP after the date their employment is terminated. Contributions are permissible when a member receives severance pay as salary continuance because their employment continues beyond the date they stop working but contributions are not permissible when a member receives severance as a lump sum payment because the employment relationship ends. As a general rule, contributions should not continue after the date of termination that appears on an employee’s Record of Employment (ROE).

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If a member receives a lump sum payment relating to a termination notice period, the last day at work should be reported as the last day of the legal notice period required under the Employment Standards Act, a collective agreement, or an employment contract. For example, the last day at work for a member who is entitled to two weeks' notice is the last day of that two-week period.

However, if both you and the member agree, contributions can also be made on the portion of a lump sum payment in lieu of termination notice that exceeds the statutory notice period, where the intention of the parties is for the employment relationship to continue but the payment is made in a lump sum. For example, if a member is entitled to two weeks' notice, but receives a lump sum payment equal to four weeks' pay as a payment of salary (and not a retiring allowance), an agreement can be made to make contributions on the full amount (four weeks' pay), rather than only the statutory amount (two weeks' pay). In this situation, the member's last day at work would be the last day of the four-week period, consistent with this period having been treated as salary continuance.

Contributions During Layoff Recalls
Working an occasional shift while on a leave due to a temporary layoff does not interrupt the leave. Under these circumstances, contributions are not permitted. A return to work of a more permanent nature is considered a break in the leave, and therefore contributions should be deducted from earnings.

Contributions for Days Off in Lieu of Overtime
Members who bank their overtime pay and are paid from the banked pay when they take a “lieu” day should contribute on this pay. If contributions are not deducted, the member will lose contributory service for the “lieu” days.

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4.8 Remitting Contributions – Deadlines and Methods

Both member and employer contributions must be remitted monthly, except when members contributing for a leave or topping up contributions for a temporary period of reduced earnings/approved work schedule reduction choose to remit their contributions as a lump sum within twelve months (temporarily extended from six months) after the end of the leave period. The deadline for making contributions after these periods is set out in the sections of this manual which describe these options (for Leaves and Layoffs, see section 5, for Health Leaves, see section 7). In such a case, employer contributions should be made at the same time as the member contributions and must be submitted to HOOPP no later than 15 days after the end of the month in which the member has made its contribution.

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For example, if the employer participation effective date is on Saturday August 29, but your organization will not have any required contributions deducted through payroll until Monday, September 1, there will be no required member and employer contributions to submit for the month of August. The first monthly remittance to HOOPP for September is due no later than 15 days after the end of the month in which the member has made their contributions (no later than October 15). Please reach out to your Regional Manager or Employer Services Specialist to ensure that your employer account is updated accordingly.

Remitting payments – Procedures
At the end of each calendar month, all employee contributions and related employer contributions are due and must be remitted by electronic funds transfer (EFT) no later than the 15th of the month following the month the contributions were deducted. If the 15th of the month is a weekend or holiday, the contribution due date shall be the next business day after the 15th of the month.

Remitting on time is important because Ontario pension legislation requires that contributions deducted in one month be deposited in the pension fund within 30 days of the end of the month in which the deductions were made. To meet that deadline, HOOPP needs your contributions no later than the 15th of the month. Failure to do so will result in penalties, interest and/or late payment fees. This is in accordance with HOOPP’s Agreement and Declaration of Trust and the PBA. When you do not remit HOOPP pension contributions or remit pension contributions late, the benefits of all Plan members are adversely affected. HOOPP has a statutory obligation to notify FSRA when an employer does not remit contributions to HOOPP within 30 days of the end of the month for which the contributions were deducted or received.

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4.9 Reconciliation Process

When you remit contributions, they do not specify what portion applies to individual members. HOOPP gathers this information once a year via HOOPP's annual member data collection process.

The annual Member Data Collection process starts in December and is used to gather the following information:

• Contributions (split by the low and high contributions as discussed in section 4.1 Employee Required Contributions and section 4.3 Calculating Employee Contributions)

• Contributory service weeks

• The employment status of plan members for a given year

• Pension adjustments

• Details when a member contributes for a leave or temporary period of reduced earnings (also referred to as an Approved Work Schedule Reduction)

Based on the information collected, HOOPP updates member records. This information is used:

• To calculate a member's benefit entitlement

• To generate HOOPP annual statements

• By the Plan's actuaries to assess HOOPP's financial obligations

Once HOOPP has received and analyzed all the data, and issued annual statements, your HOOPP account will be reconciled and a HOOPP statement of account will be issued. This statement provides you with a summary of employer and member contributions, based on the data provided as well as
money that was remitted to HOOPP, and any adjustments made during the year. The statement will indicate if you have an outstanding balance or credit. You will receive your HOOPP statement of account each fall.

If there is an overpayment, HOOPP will credit the amount owed to you within 30 days after the account has been reconciled. If there has been an underpayment, you will receive an invoice. You will have 30 days to make the payment; after that, you will be invoiced for make whole charges.

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4.10 Income Tax Requirements

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• The total annual member contributions in the RPP contribution box (box 20), including those contributions made to HOOPP, up to the maximum contribution limit in the applicable year

• HOOPP’s RPP registration number 0346007

• The member’s Pension Adjustment (PA) that you calculated Employer contributions are not reported on a member’s T4.

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This means that you should report an amended PA(s) for any members whose eligible period of leave or reduced pay ended in 2019 where such contributions were made by June 1, 2020. For members with leaves ending in 2020, the regular deadline of April 30, 2021 continues to apply in determining whether a PA or PSPA is reported.

In addition, HOOPP has temporarily extended the timeline for members to make pension contributions following a leave of absence. The regular timeline of 6 months from the end of a leave has been extended to 12 months and applies to all leaves of absence.

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4.11 Contributions Checklist

Remember to:

•  Use the Universal Payroll deduction method to calculate contributions
•  Remit Required Contributions by the 15th of each month
•  Report leaves even if a member is not contributing
•  Ask HOOPP for help if you are unsure if earnings are pensionable

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