4.6 Retroactive Pay (Retro)
Important
HOOPP contributions on retroactive pay settlements are based on the contribution rates that were in effect for each of the years to which a settlement applies, not on the contribution rates in effect for the year in which the settlement is paid. 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.
Definition of Retroactive Payments Retro Calculator How to Calculate Contributions
Exclusions from Retroactive Contributions Retro on Retro Situations Not all Retro Pay is Pensionable
While retroactive salary adjustments are usually the result of delayed contract settlements, they also can be caused by other adjustments, such as a pay equity award. A one-time payment that does not result in a change in the member's rate of pay is not generally considered to be a retroactive salary adjustment. Such a payment is not pensionable and therefore HOOPP contributions should not be deducted. If you are uncertain whether contributions are required, contact HOOPP. Remitting and Reporting Retro Retroactive contributions should be remitted to HOOPP as soon as they are deducted from the employee's pay. Member retro contribution data is reported along with the retro contribution payments via the HOOPP Insight remittance process. You will also need to provide this additional information for any member who receives a retro settlement in the last 12 months before termination, retirement, or death that has not already been reported to HOOPP. If retro is paid for years prior to 2004 when different contributions were in place, it will be necessary to report contributions in respect of any retroactive pay for these years separately from your regular monthly contributions. Retired Members Receiving Retro However, the pension benefit option originally selected by the member when they retired and commenced their pension will continue to apply. Retroactive contributions can only be accepted for retired members for a prior year when the member was contributing and accruing contributory service. Retro for Deceased Members or Members Who Have Terminated Employment HOOPP will not recalculate a memberʼs termination benefit to include retroactive adjustments that were not reported when the final termination information is submitted to HOOPP. The amount of contributions and retroactive pay reported on this notice is final and cannot be adjusted. Examples The following examples demonstrate how to deduct contributions from retro pay. Example 1: Annualized Earnings Above the YMPE On June 1, 2026, a member receives a $5,000 retroactive pay settlement in respect of the years 2023 to 2025, and an adjustment to the current year. Of the $5,000, $1,100 applies to 2023, $1,300 applies to 2024, and $1,600 applies to 2025. The remaining $1,000 applies to 2026, 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: |
Year covered by retro payment | Amount of payment that applies to this year | What the member contributes | What the member’s employer contributes |
|---|---|---|---|
2023 | $1,100.00 | 9.2% (high rate) of $1,100 or $101.20 | 126% of $101.20 or $127.51 |
2024 | $1,300.00 | 9.2% (high rate) of $1,300, or $119.60 | 126% of $119.60 or $150.70 |
2025 | $1,600.00 | 9.2% (high rate) of $1,600, or $147.20 | 126% of $147.20 or $185.47 |
Total | $4,000.00 | $368.00 | $463.68 |
In this case, the member’s annualized earnings in the current year (2026) 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 2026 for a total of $92. The employer’s contribution for the 2026 portion would be 126% of what the member contributes, or $115.92.
Example 2: Annualized Earnings Below YMPE
On August 1, 2026, a member receives a $3,000 retroactive pay settlement in respect of the years 2024, 2025, and 2026. Of the $3,000, $900 applies to 2024, $1,100 applies to 2025, and $1,000 applies to 2026. 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 2026. In all of the years covered by the settlement, the memberʼs annualized earnings prior to the retroactive pay settlement were below the YMPE. Because of this, contributions are made at the low rate, as follows:
Year covered by retro payment | Amount of payment that applies to this year | What the member contributes | What the member’s employer contributes |
|---|---|---|---|
2024 | $900.00 | 6.9% (low rate) of $900 or $62.10 | 126% of $62.10, or $78.25 |
2025 | $1,100.00 | 6.9% (low rate) of $1,100, or $75.90 | 126% of $75.90, or $95.63 |
Total | $2,000.00 | $138.00 | $173.88 |
In this example, the memberʼs annualized earnings in the current year (2026) were also below the YMPE both before and after the retroactive pay settlement. The member would contribute at the 2026 low rate of 6.9%, on the $1,000, for a total of $69. The employer's contribution for the 2026 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)
On November 1, 2026, a member receives a $3,000 retroactive pay settlement in respect of 2022 and a $2,000 salary adjustment for 2026.
The memberʼs annualized earnings in 2022 were $60,000.
The memberʼs annualized earnings in 2026 before the settlement were $74,000.
In this example, the memberʼs annualized earnings for 2022 were below the YMPE. For 2026, the annualized earnings were below the 2026 YMPE of $74,600before the settlement, but moved above the YMPE after it.
Because the memberʼs annualized earnings for 2022 were below the YMPE of $64,900, regardless whether the settlement pushed their annualized earnings above the YMPE in 2026; contributions are made at the low rate for 2022. Because the settlement moved the memberʼs annualized earnings from below to above the YMPE in 2026, contributions on the 2026 portion of the settlement must be made at both the low and high rates as this payment for current year is considered an adjustment to current year.
In this example, the member had 44 weeks reported and paid a total of $4,320.36 at the low rate as of November 1, 2026. The adjustment to the current yearʼs low contributions will be the difference between what the member had already paid at the low rate, and the maximum low contributions for the number of weeks in 2026 to which the settlement applies.
The maximum low contribution for 2026 is $98.99 per week ($74,600x 6.9% ÷ 52, rounded), which equates to $5,147.40 for a full-time member for the entire year ($74,600 x 6.9%). On November 1, 2026, the member had 44 weeks reported therefore the maximum low contributions for 44 weeks equates to $4,355.56 for a full-time member (44 weeks x $98.99, rounded).
This means that $35.20 is payable on the retro settlement amount at the low rate ($4,355.56 - $4,320.36), which corresponds to $510.14 of the $2,000 settlement for 2026 ($35.20 ÷ 6.9%).
The balance of the $2,000 salary adjustment for 2026, $1,489.86 requires contributions at the high rate of 9.2%, which equates to $137.07 in high contributions.
Year covered by retro payment | Amount of payment that applies to this year | What the member contributes | What the member’s employer contributes |
|---|---|---|---|
2022 | $3,000.00 | 6.9% (low rate) of $3,000 or $207.00 | 126% of $207.00 or $260.82 |
2026 | $510.14 (portion of settlement up to the YMPE) $1,489.86 (portion of settlement above the YMPE) | 6.9% (low rate) of $510.14 or $35.20, and 9.2% (high rate) of $1,489.86 or $137.07 | 126% of $35.20 or $44.35, and 126% of $137.07 or $172.71 |
Total | $5,000.00 | $379.27 | $477.88 |
Example 4: Annualized Earnings above YMPE (bonus for April 1 - March 31 fiscal year)
On May 1, 2026, a member receives a $4,000 annual bonus payment in respect of performance for employerʼs fiscal year ending March 31, 2026 that is pensionable earnings. As the bonus period crosses calendar years, for HOOPP purposes $3,000 of the bonus paid is attributable to service in 2025 (9/12 x $4,000) and $1,000 applies to 2026 (3/12 x $4,000). An adjustment to the memberʼs contributions for the current and prior year is required to allocate this bonus to the corresponding periods. In both years covered by the bonus payment, the memberʼs annualized earnings prior to the bonus payment were above the YMPE. Because of this, contributions are made at the high rate, as follows:
Year covered by bonus payment | Amount of payment that applies to this year | What the member contributes | What the member’s employer contributes |
|---|---|---|---|
2025 | $3,000.00 (portion of bonus payment attributed to the period between April 1, 2025 – December 31, 2025) | 9.2% (high rate) of $3,000, or $276 | 126% of $276, or $347.76 |
2026 | $1,000.00 (portion of bonus payment attributed to the period between January 1, 2026 – March 31, 2026) | 9.2% (high rate) of $1,000, or $92 | 126% of $92, or $115.92 |
In this example, the memberʼs annualized earnings in the current year (2026) were also above the YMPE both before and after the bonus payment. Where a member retires and subsequently receives a pensionable bonus for their final year of employment, HOOPP will adjust their pension to reflect any increase to their average annualized earnings, once you report the required contributions for the bonus.