April 2022 legislation temporarily changes how Tier 6 contribution rates are calculated.
As a Tier 6 member, your contribution rate is based on your past earnings and can change from year to year. Usually, Tier 6 contribution rates are calculated using a member’s base pay, which includes regular earnings, holiday pay and longevity pay. Overtime pay (up to a certain limit) is also included in the calculation of the contribution rate.
The legislation removes overtime earned from April 1, 2020 through March 31, 2022 from the Tier 6 contribution rate calculation. For some Tier 6 members, this has resulted in lower contribution rates for up to two years. The lower rates affect earnings that are being paid from April 1, 2022 through March 31, 2024.
Although overtime is temporarily removed from the calculation of Tier 6 contribution rates, your contribution rate is still applied to all your pensionable earnings, including overtime.
Our video Understanding Your Tier 6 Contributions helps explain how your contribution rate is determined.
Who is Affected by the Rate Change?
The temporary exclusion of overtime affects Tier 6 members who:
- Earned overtime from April 1, 2020 through March 31, 2022; and
- Make mandatory contributions toward their retirement (most Tier 6 members do).
The rate decrease does not apply to:
- Members who are already paying the minimum rate of 3 percent;
- Members who did not earn overtime during the COVID pandemic; and
- New members whose rate is based on an estimated wage rather than actual earnings.
If you are a Tier 6 member who is affected by the legislation, we worked with employers to review your past earnings and to determine whether your rate should be lowered. Members who should have contributed at a lower rate beginning April 1, 2022 received a refund. The rate that will be applied to your earnings from April 1, 2023 to March 31, 2024 already takes the legislation into account.