At HOOPP, our mission is to provide you with a secure retirement in the form of a monthly pension for life. Retiring with a HOOPP pension not only gives you the peace of mind that comes with a stable and predictable retirement income, but also ensures you don’t have to worry about any investment decisions or risks.
To ensure the Plan remains healthy and sustainable, some changes are being introduced to the calculation of commuted values (CVs). These changes will not affect members who are currently receiving a pension or members who will retire with a monthly pension from HOOPP, including those who choose to keep their benefit in the Plan after leaving their HOOPP employer.
What is commuted value or CV?
Commuted value is the estimated lump-sum amount of money that would be needed to pay a member’s defined benefit pension in the future. The CV calculation is based on Plan terms along with several factors and assumptions such as age, interest and inflation rates and life expectancy.
What is changing?
HOOPP is updating the assumptions used in CV calculations. Effective April 1, 2021, we are removing an assumption that future inflation protection will be granted on benefits where it is not guaranteed.
Every year, the HOOPP Board of Trustees determines whether a cost-of-living adjustment (COLA) increase will be granted on benefits where it is not already guaranteed. Currently, the calculation for CVs assumes that the Board will grant COLA every year in the future. This means that members who leave their employer and decide to take their CV are being prematurely granted COLA on future benefits. By removing this assumption in the CV calculation, HOOPP is ensuring that benefits are fair to all members and only reflect COLA based on what the Board of Trustees has granted to date.
The Canadian Institute of Actuaries has also changed the standards used in CV calculations, including assumptions around interest rates and the age at which the member’s pension would start. These changes were effective December 1, 2020 and apply to all defined benefit pension plans in Canada.
Who is impacted?
These changes will impact individuals that have their CV calculated to take their benefit out of the Plan instead of receiving a monthly pension, and those having their pension value determined for the purposes of a separation or divorce.
Your HOOPP pension remains the same
Rest assured, if you are currently contributing to the Plan or have kept your pension with HOOPP after leaving your employer, these changes will not impact your pension – it remains safe and secure.
In fact, these changes ensure fairness to our members who continue to participate in the Plan and retire with a monthly pension from HOOPP. The changes also ensure the Plan is sustainable in the long run and well positioned to pay monthly lifetime pensions to all our members.
HOOPP members enjoy peace of mind when it comes to their retirement security. By keeping their pension with HOOPP, members receive a predictable monthly income and gain the confidence to retire as early as age 55. Read more about the advantages of staying a HOOPP member or watch our YouTube video for more information.
If you have any questions, please contact our Member Services team at 416-646-6445 or toll-free at 1-877-43HOOPP (46677), Monday to Friday, 8 a.m. to 5 p.m., Eastern Time.