Unlike other members who joined HOOPP when they first became employed in the healthcare sector, you’ve joined or are joining the Plan as a result of an organizational change (called a “divestment”) and you are now employed by a HOOPP employer. This means there are a few special rules relating to your pension that you should know about.

This section provides you with an overview of those special rules, along with a description of the main features of your new HOOPP pension, and the important role it can play in providing financial security in your retirement.

Special rules that apply to your HOOPP pension

A divestment occurs when an employer sells, assigns, transfers or disposes all or part of its business to another employer. The most common examples are when:

• two or more organizations amalgamate to form one organization
• one organization separates into two or more companies, or 
• a service offered by an employer is sold or transferred to another employer.

Because you are joining HOOPP as the result of a divestment, the usual pension transfer rules — which let you transfer pension service from your former pension plan to HOOPP — do not apply. According to Ontario pension laws, divested employees are deemed not to have terminated employment with their former employer for pension purposes. This means that you will remain a member of both your former pension plan and HOOPP, until such time as you terminate your employment with your new HOOPP employer.

There are some advantages to these divestment rules. Until you terminate your employment with your new HOOPP employer, your former pension plan and HOOPP must both recognize the period of membership you accrued in the other pension plan for eligibility purposes when determining the pension benefit you are entitled to receive.

For example, your HOOPP eligibility service will be based on your membership in HOOPP but will also include the period of membership in your former employer’s pension plan. Eligibility service plays an important part in HOOPP’s early retirement benefits. Also, your period of employment with your new HOOPP employer will be factored into the benefits you are eligible to receive from your former employer’s pension plan.

Two important rules

1. You won’t be able to receive termination or retirement benefits from your former employer’s pension plan until you terminate employment or retire from your new HOOPP employer.
   
   
2. If you move to another HOOPP employer after leaving your current HOOPP employer, you can continue to be a member of HOOPP, but the protected period ends. This means you may get termination benefits from your former employer’s pension plan, which could be transferred into HOOPP if your former pension plan agrees to transfer the funds. Please contact us and your former pension plan for further details if this occurs.
   

Example of how special protection rules work

Louise is an employee of ABC Food Services and a member of ABC’s registered pension plan. Louise’s employment was recently transferred to Centreville General Hospital through a divestment. Centreville offers HOOPP to all its employees.

At the date of transfer, Louise will be a member of both pension plans – her ABC plan (where she had 16 years of membership) and HOOPP – but she will only be able to contribute to HOOPP. She will earn all future pension benefits with HOOPP. However:

• HOOPP must recognize her 16 years of membership with the ABC plan when determining the amount of eligibility service she is entitled to.
• The ABC plan must recognize Louise’s period of employment with Centreville for determining the benefit she’s entitled to under the ABC plan.

If Louise keeps working at her HOOPP employer for another 14 years, and then retires, she’ll receive two pensions – one from HOOPP and one from the ABC plan. Her HOOPP pension will be based on 14 years of contributory service – and her ABC pension will be based on 16 years of service. However, she’ll have 30 years of eligibility service in HOOPP, based on 16 years with the ABC plan and 14 years with her HOOPP employer.

While eligibility service isn’t used in the formula that determines the amount of your HOOPP benefit, it is important if you want to retire early. For example, if you have 30 years of eligibility service, you can retire with an unreduced pension, as early as age 55. At age 55, the maximum difference between unreduced and reduced pension can be as much as 30%.