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HOOPP
Members Plan Features Buying Back Service Buying Back Service: Example

Buying back service: example

Meet Jessica

Buying back service - Jessica example

Jessica is a 40-year-old nurse from Chatham, Ontario. She currently earns $80,000 per year and plans to retire early, at age 55. She took a two-year leave for personal reasons and is now considering buying back that period to help increase her pension in retirement. With this purchase, she would have 22 years of contributory and eligibility service instead of 20 when she reaches age 55.

Jessica contacted Member Services to get an estimate of the cost of buying back service for this two-year period with a HOOPP employer. Here’s what she discovered.


Jessica wants to maximize her pension

In this example, we assume that Jessica’s average earnings are $80,000 when she retires at age 55 (January 1, 2039).

Jessica's pension Before buying back serviceAfter buying back serviceIncrease
Monthly lifetime pension$2,565
$2,870$305
Monthly bridge benefit (until age 65)$520$565$45
Total HOOPP benefits over 25 years$831,900
$928,800$96,900

Based on rates on her purchase date of January 1, 2024, Jessica would spend $18,950 to buy her eligible past service. For that one-time cost, Jessica receives nearly $96,900 in additional benefits over 25 years under the retirement scenario above – over five times what she paid.

On the next tab, we’ll take a closer look at the value that Jessica gains from buying back service.

The value Jessica gains from buying back service

1

More service, larger pension

By buying back service, Jessica increases her contributory and eligibility service from 20 to 22 years at age 55. This helps grow her pension in two ways. First, every additional year of contributory service means a higher pension in retirement. Second, retiring before age 60 or 30 years of service (whichever comes first) is considered an early retirement and results in an adjusted pension. By gaining two years of eligibility service, Jessica receives a better early retirement adjustment and, therefore, a larger overall pension.

Learn more about choosing a retirement age and how your age and years of eligibility service impact your pension.


1

More flexibility

By buying eligible past service, Jessica increases her monthly lifetime pension and bridge benefit amounts. These higher amounts may make retirement more affordable, adding flexibility for Jessica when choosing her retirement date and making plans for the next stage of her life.

Learn more about early retirement and the bridge benefit.


1

Maximize other potential pension benefits

The value of Jessica’s purchase could be even greater than shown in the estimate. The additional years of service from the purchase would maximize the value she would receive from any earnings increases, as well as cost of living adjustments (COLA) that HOOPP may provide in the future.

Learn more about cost of living adjustments (COLA).

  • Buying back service with a HOOPP employer

    Jessica wants to maximize her pension

    In this example, we assume that Jessica’s average earnings are $80,000 when she retires at age 55 (January 1, 2039).

    Jessica's pension Before buying back serviceAfter buying back serviceIncrease
    Monthly lifetime pension$2,565
    		$2,870$305
    Monthly bridge benefit (until age 65)$520$565$45
    Total HOOPP benefits over 25 years$831,900
    		$928,800$96,900

    Based on rates on her purchase date of January 1, 2024, Jessica would spend $18,950 to buy her eligible past service. For that one-time cost, Jessica receives nearly $96,900 in additional benefits over 25 years under the retirement scenario above – over five times what she paid.

    On the next tab, we’ll take a closer look at the value that Jessica gains from buying back service.

  • Benefits

    The value Jessica gains from buying back service

    1

    More service, larger pension

    By buying back service, Jessica increases her contributory and eligibility service from 20 to 22 years at age 55. This helps grow her pension in two ways. First, every additional year of contributory service means a higher pension in retirement. Second, retiring before age 60 or 30 years of service (whichever comes first) is considered an early retirement and results in an adjusted pension. By gaining two years of eligibility service, Jessica receives a better early retirement adjustment and, therefore, a larger overall pension.

    Learn more about choosing a retirement age and how your age and years of eligibility service impact your pension.


    1

    More flexibility

    By buying eligible past service, Jessica increases her monthly lifetime pension and bridge benefit amounts. These higher amounts may make retirement more affordable, adding flexibility for Jessica when choosing her retirement date and making plans for the next stage of her life.

    Learn more about early retirement and the bridge benefit.


    1

    Maximize other potential pension benefits

    The value of Jessica’s purchase could be even greater than shown in the estimate. The additional years of service from the purchase would maximize the value she would receive from any earnings increases, as well as cost of living adjustments (COLA) that HOOPP may provide in the future.

    Learn more about cost of living adjustments (COLA).

*Disclaimer: For simplicity, the figures used in the table above do not factor in any cost of living increases that may be applied. Jessica’s pensions are calculated assuming the YMPE increases at 3% per year and her annualized earnings remain at $80,000 until January 1, 2039. Jessica is eligible for HOOPP's benefit improvements effective January 1, 2018, April 1, 2021 and January 1, 2023 and this is reflected in the illustration above of her annual lifetime pension and bridge benefit. Jessica’s pension is subject to an early retirement adjustment at age 55.

This example and calculation are for illustrative purposes. Your annual pension will differ from this example due to your personal circumstances. Your actual benefit entitlements, based on verified data, will be paid in accordance with the HOOPP Plan Text and applicable legislation in effect at the time you retire. For this reason, you should not rely upon the example for decision-making purposes. This example assumes that the terms of the HOOPP Plan Text will remain the same. However, HOOPP reserves the right to modify these terms at any time.

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.