About HOOPP's Defined Benefit Plan
How the HOOPP Defined Benefit (DB) Pension Plan Works
The pension benefit you receive from HOOPP upon retirement is defined in advance. Years before you retire you can quickly and easily estimate your retirement income based on the defined benefit formula which is calculated using the best five consecutive years of earnings and number of years of contributory service in the Plan.
How does it work?
With HOOPP, you can estimate in advance what the pension you will receive from HOOPP will be. HOOPP pensions are based on a formula that takes into account your earnings history and service in the Plan. For each year of contributory service, your basic lifetime pension will be:
- 1.5 per cent of your average annualized earnings up to the average year's maximum pensionable earnings (YMPE) plus
- 2.0 per cent of your average annualized earnings above the average YMPE
You receive your pension – plus any inflation protection paid by HOOPP – for as long as you live.
Quick Facts about Retirement Savings
Having a DB plan gives you the possibility of retiring when you want to, rather than having to wait until you can afford to.
Some quick facts about DB and retirement savings in general: The average HOOPP pension that started in 2010 was over $18,400 per year - three times greater than the average CPP pension started in 2010. If that average HOOPP pension was received for 20 years, it would total over $368,000.
- The average Canadian is able to put only $2,030 into his or her RRSP each year – and had an average of $60,000 saved at retirement. That’s only enough for an annual pension of $3,000 a year.
- A DB pension typically replaces 50 to 70% of pre-retirement income, while a defined contribution (DC) plan replaces less than 40%.
- In Australia, where DB plans were replaced by DC plans decades ago, 50% of seniors live below the poverty line and 35% run out of money in their DC plans by age 75.
- You can’t outlive a DB pension.
