4.1 Employee Required Contributions

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.

A member must continue to make required contributions until they:

• Terminate employment

• Retire

• Die

• Reach November 30 in the year in which they turn age 71 (at that point, the Income Tax Act (ITA) prohibits a member of a registered pension plan from contributing)

• Become an inactive member (an inactive member is one who has changed from full-time to part-time employment and has chosen to stop contributing to HOOPP) or

• Elect to stop making HOOPP contributions at their employer where they are employed part-time because they contribute to HOOPP at an employer where they are employed full-time.

For more details regarding waiving contributions, please see section 3.2 Full-Time Employees and section 3.3 Part-time Employees and Concurrent Members. 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.

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.

For information about annualized earnings for contribution purposes for members who are incorporated physicians, please see section 4.4 Calculating Employee Contributions – Incorporated Physicians.

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.

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 according to the Universal Payroll Deduction Method in section 4.3 Calculating Employee Contributions and section 4.4 Calculating Employee Contributions - Incorporated Physicians. 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.

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, incorporated physicians, or members who terminate part-way through the year, the difference between the actual employment 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 Termination.

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.