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HOOPP

Buying Back Service

Buying Back Service

Buying Back Service

Members Plan Features Buying Back Service

Did you know that you can increase your overall pension at retirement when you buy back service? During your working life, there may be times when you need to be away from work, such as a pregnancy or parental leave, or for other personal reasons. Or perhaps you worked for a HOOPP employer but were not a contributing member of the Plan. As a result, there may be gaps in your contributory service. You can fill in those gaps through buying back service.

HOOPP allows you to maximize your pension by buying eligible past service. By doing this, you may gain additional contributory service and eligibility service in the Plan, thereby increasing your overall pension at retirement. To learn more about how your pension is calculated, visit How Your Pension Works.

What periods of service can you buy back?

There are two types of past service that you can buy back:

1

Service with a HOOPP employer

This includes: 

  • a period of time when you were employed by a HOOPP employer but not enrolled in the Plan 
  • a period when you were on a leave and did not make contributions 
  • a period of former HOOPP service for which you received a termination benefit 
  • a period of time you were off work due to a layoff or strike while employed by a HOOPP employer and did not make up contributions 
  • a period of employment with an employer prior to its participation in HOOPP
2

Prior service with another pension plan

If you were a member of a different registered Canadian pension plan:

  • you may be able to transfer in that service to build your HOOPP pension
  • you may be able to transfer in that service even if those funds have since been transferred into a locked-in retirement account (LIRA) or registered retired savings plan (RRSP)

If you're thinking about buying back service, contact Member Services for more information.

When is the best time to buy back service?

You can buy back service at any time before you retire or terminate your membership in the Plan. The cost of buying back service depends on a number of factors, such as your age, earnings and years in the Plan – so, in general, the sooner you buy back service, the better.

Here is an example of how buying back service today can increase your future pension. Each member's situation is unique, so the amounts represented here may not be typical.

Example: Jessica would like to buy back service

Photo of HOOPP member Jessica Age 40, Registered Nurse
Chatham, ON
Plans to retire at age 55

Jessica took a two-year leave for personal reasons and wants to buy back that period of service to help increase her pension in retirement. Read her example for more details about her situation and to see an estimate of how buying back service could increase her future pension.

Read more

How to pay for eligible past service

With HOOPP, preparing for retirement is simpler and more affordable than saving on your own. There are different ways you can pay for eligible past service, including cash or by transferring funds from a registered account, like your RRSP or LIRA, or another registered Canadian pension plan. Please note that the funds must come from an account that is under your name.

Our Member Services team is here to help guide you through your payment options and inform you of the tax implications related to buying back service.

How much does it cost?

The cost of buying back service depends on a variety of factors, such as your age, earnings, years of service, and the service that you are purchasing in HOOPP. If the service you are interested in buying back would help you reach a key milestone, such as 15 years of eligibility service, the cost will reflect the value of that service. Reaching such milestones means any early retirement adjustments that might be applied to your pension will be significantly reduced.

Remember: in general, the sooner you buy back service, the lower the cost will be. Plus, your purchase may also include valuable features such as cost of living adjustments, survivor benefits and more.

How to request a quote

Contact our Member Services team who can walk you through the options that are right for your personal situation.

Do I have to buy back all of my past service at the same time?

You can buy back all, or a portion, of your service. If you decide to buy back a portion of your service, HOOPP will apply your purchase to your most recent period of eligible service. You have the option to buy back any remaining service later; however, the cost will generally go up as your age, earnings and years of service increase.

If you decide to buy back past service, it will be your responsibility to send HOOPP all the required information. Your quote will outline everything that you need to submit.

Other considerations when buying back service

There are a few things to consider when buying back service, including possible tax implications, ensuring you have enough RRSP contribution room, and the source of your funds. While your quote will provide you with details, here is a summary of some of the considerations, including applicable tax rules:

Tax deductibility and your purchase

Tax deductibility and your purchase

If you use registered funds to pay for eligible past service, the purchase is not tax-deductible because you have already received a tax deduction for these funds.

If you use cash to purchase past service that occurred after 1989, the full amount may be tax deductible. HOOPP will issue a tax receipt for the year in which the cash payment is received.

If you use cash to purchase past service that occurred before 1990, different tax rules apply.

Interest paid on money borrowed to purchase past service is not tax-deductible.

Be mindful of past service pension adjustments (PSPA)

Be mindful of past service pension adjustments (PSPA)

Paying for past service with cash usually results in a past service pension adjustment (PSPA). This will reduce your available RRSP contribution room by the amount of the PSPA.

HOOPP is required to calculate and report PSPAs to the Canada Revenue Agency (CRA) for approval to ensure that the tax limits on contributions for retirement savings are not exceeded.

If you don’t have enough RRSP contribution room, you may have to withdraw funds from your RRSP to buy the eligible past service. You may want to consider using registered funds from an RRSP or a LIRA to pay for past service to reduce the PSPA or eliminate it entirely.

HOOPP cannot finalize your purchase until the PSPA has been certified by the CRA.

Understanding the source of funds

Understanding the source of funds

It’s important to understand the source of your funds when buying back service. Most eligible periods of past service can be purchased with cash or with registered funds (for example, from a registered pension plan, an RRSP or a LIRA). However, there are some restrictions that apply to periods of former vested service that occurred before 1992:

  • Only registered funds can be used to purchase a period of HOOPP service that occurred prior to 1992 for which you received a payment of the commuted value.
  • You can only purchase a period of pre-1992 service while you were a member of another pension plan with funds directly from that pension plan.

If there aren’t enough funds to transfer directly from your prior pension plan, or if you can’t transfer those funds to HOOPP, you may be able to make up the difference with cash or other registered funds. Please note that when buying back service, HOOPP cannot accept funds that come directly from a spouse, parent, friend, or another third party on your behalf.

Lastly, be sure to follow up!

It’s important to follow up with your financial institution or former pension plan to ensure that the funds have been sent to HOOPP. The funds and completed forms must be received on or before the quote expiry date indicated in your package. HOOPP does not follow up with your financial institution or former pension plan to confirm whether or not the funds have been sent.

This document provides a simplified overview of HOOPP's benefits based on the terms of the HOOPP Plan Text at the time of publication. From time to time, HOOPP may amend the HOOPP Plan Text. In cases where the information provided in this document differs from that contained in the HOOPP Plan Text, the HOOPP Plan Text will govern. More details, including the full HOOPP Plan Text and a complete description of the Plan and its benefits, can be found on hoopp.com.