4.1 Employee Required Contributions |
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Employee required contributions to HOOPP are made by payroll deduction and apply to the current year of service. It is your responsibility as a HOOPP employer to calculate, deduct and remit employee required contributions. If your organization uses an external payroll services provider, it might be helpful to supply that organization with the information contained in this section of the manual. If you or your payroll provider have any questions, contact HOOPP.
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For more details regarding waiving contributions, please see section 3.2 Fulltime Full-time Employees and section 3.3 Part-time Employees . The following four factors determine the amount of a member’s required contributions:
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.
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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.
YEAR | YMPE |
|---|---|
2020 | $58,700 |
2019 | $57,400 |
2018 | $55,900 |
2017 | $55,300 |
2016 | $54,900 |
Factor 4: Employee Contribution Rates
HOOPP uses a two-tier contribution rate. Calculate member contributions using the following formula:
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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 Decuction Method in section 4.3 .Calculating Employee Contributions
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 8. Termination please refer to section 8.
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