Special Advice to Crown Corporations and Others 2016-002

Subject: Pension legislation 2013—Updates to the Data Capture Tool—Instructions

Date: December 19, 2016

1. Purpose

1.1. The purpose of this special advice is to provide instructions to Crown corporations and territorial governments using the Data Capture Tool (DCT) for reporting pension information required due to changes in Pension Legislation that came into force in 2013. As a result, new codes have been entered to identify pension plan members.

1.2. This special advice should be read in conjunction with the following documents/links:

Archived Special Advice to Crown Corporations and Others 2010-003 entitled "Government of Canada Pension Modernization Project (GCPMP) - Release 2.0 - New Data Capture Tool" [Update in progress]
Information Notices – Pensions (Budget 2012 - Changes to the Public Sector Pension Plans)

2. Background

2.1. The contribution rates for active plan members have been gradually increasing since 2006. In an attempt to achieve a more balanced cost-sharing ratio between plan members and the Government, the Federal Budget of March 29, 2012 announced that employee contribution rates for all active plan members would continue to increase over time, starting January 1, 2013. Royal assent was given to Bill C-45 on December 14, 2012, and these changes became effective on January 1, 2013.

The legislative amendments to the Public Service Superannuation Act (PSSA) allow plan member contribution rates to gradually increase over time to attain an employee to employer cost-sharing ratio of 50:50.

In addition, employees who become new plan members on or after January 1, 2013 are subject to different PSSA rules. Both employee and employer contribution rates differ for the two distinct groups of plan members. Therefore, it is necessary to distinguish employees who become new members on or after January 1, 2013 and are subject to the post-2012 PSSA rules from those employees who remain under the pre-2013 plan rules.

In this document, the term "pre-2013 plan member" signifies a plan member who is subject to the pension plan rules in effect prior to 2013 and the term "post-2012 plan member" signifies a plan member who is subject to the current (post-2012) plan rules.

3. Policy

3.1. Business processes must identify employee and employer contributions for existing pre-2013 plan members and new members who join the plan on or after January 1, 2013. The DCT continues to be used for submitting employee data and information to the Penfax system using current procedures.

3.2. Pension contribution rates, thresholds, indexation and calculations are published every year and can be found in the Superannuation Administration Manual - Special bulletin.

4. New data requirements

4.1. New pension type and fund type codes have been introduced to identify members who joined the public service pension plan on or after January 1, 2013. Incorrect coding may result in the member receiving incorrect pension benefits and will create over or under payments requiring correction and reconciliation on both the plan member and employer share.

To assist employers with corrective action of pension and fund type codes, a report was provided prior to the implementation of the new pension plan rules identifying all post-2012 plan members along with their date of becoming a contributor. To compare data with pre-implementation data, a second report of new pension plan rules was also provided in late fall 2016 identifying all pre-2013 plan members that may have been erroneously identified as post-2012 plan members.

Important: new data requirements are applicable for all members retroactive to the coming into force date of January 1, 2013.

Refer to section 5, 6, and 7 for detailed step by step instructions.

5. Process—Pension type adjustments

The following new pension type codes have been added to the DCT. New data requirements are applicable for all members retroactive to the coming into force date of January 1, 2013.

**Pension type codes:**
Pre-2013 plan members pension type	Post-2012 plan members pension type equivalent	Definition
01	31	Under 35 years of service (assigned work week (AWW) equal to or more than 12 hours)
02	32	Under 35 years of service (dual remuneration)
03	33	35 years of service (contributing 1%)
04	34	35 years of service (contributing 1% dual remuneration)
13	36	Dual Employment

The following examples will give you the steps required to change a pension type code:

Example 1 – Indeterminate employee

Employee was taken on strength (TOS) on July 3, 2014 as a full time indeterminate employee. At the time, new pension type codes were not added to the DCT, the pension type was submitted as 01 – < 35 Years of Service (AWW > = 12) and needs to be amended to group 2 (GR2).

A status change is required with an effective from date of July 3, 2014 with pension type of 31 – GR2 < 35 Years of Service (AWW > = 12).

Note: that only fields that are changing need to be updated, so in this situation only the pension type field needs to be filled.

Example 2 - Term employee reaching six months

Employee was TOS February 2, 2013 as a term employee less than six months followed by term extensions. Since six months of qualifying employment has been reached, the pension type will need to be updated as of August 2, 2013.

A status change is required with an effective from date of August 2, 2013 with pension type 31 - GR2 < 35 Years of Service (AWW > = 12). No changes required from February 2, 2013 to August 1, 2013, since a pension type for qualifying service has no distinction for pre-2013 and post-2012.

Note 1: only fields that are changing need to be updated, so in this situation only the pension type field needs to be filled.

Note 2: the same process can be used when an employee's pension type needs to be changed from a post-2012/group 2 code to a pre-2013/group 1 (01, 02, 03, 04, 13) pension type code.

6. Process - Contribution fund type code adjustments

Pension contributions are to be adjusted using the contributions (STA) screen or batch file upload.

The following new pension fund type codes have been added to the DCT. New data requirements are applicable for all members retroactive to the coming into force date of January 1, 2013.

Pension fund type codes:
Fund type code	Field description for fund type code
1	Fund 1 (prior to April 1, 2000)^{Footnote *}
2	Fund 2 (April 1, 2000 to present) and Group 1 (GR1) (up to December 31, 2012)
3	Retirement Compensation Arrangement (RCA) (April 1, 2000 to present) and GR1 (up to December 31, 2012)
4	Supplementary Death Benefit (SDB)
5	Fund 2 (April 1, 2000 to present) and Group 2 (GR2) (after January 1, 2013)
6	RCA (April 1, 2000 to present) and GR2 (after January 1, 2013)

6.1. Contribution data

The coding of the contribution data must reflect the corresponding pre-2013 or post-2012 pension group.

Example 1 - Correcting previously submitted contribution data

Since submitted contribution data cannot be deleted, incorrect contribution data needs to be corrected with a negative contribution for the same contribution type, amount, from and to dates previously submitted.

A period of contribution that has been reported with incorrect data for a post-2012 employee, submitted as follows: January 1 to 14, 2015 submitted as fund type code 2 in the amount of $227.89 with payment date of January 14, 2015.

To correct this contribution via manual entry in the DCT, under the contribution tab enter the mandatory information:

Enter contribution type ("C" for current)
Enter fund type code ("2" for group 1 and fund 2)
Enter the effective from date and effective from date AM/PM indicator (2015/01/01 01)
Enter the effective to date and effective to date AM/PM indicator (2015/01/14 02)
Enter the contribution amount as a negative value (-227.89)
Enter the payment date (2015/01/14)

Note: same process can also be done as a contribution file upload.

Once the negative entries are received, the entries will appear in the pension system as seen below:

At this point, new contribution data needs to be submitted with the updated contribution type, from and to dates along with the new contribution amount following these steps:

Enter contribution type ("C" for current)
Enter fund type code ("5" for group 2 and fund 2)
Enter the effective from date and effective from date AM/PM indicator (2015/01/01 01)
Enter the effective to date and effective to date AM/PM indicator (2015/01/14 02)
Enter the contribution amount (227.89)
Enter the payment date (2015/01/14)

The entry will appear in the pension system as seen below:

When all the entries have been completed, each contribution period will have three entires in the pension system, the original entry, a negative entry "correcting" the data on the original entry, and the new data submitted with the new contribution code.

Example 2 - Supplementary Death Benefit contributions

There is no distinction needed for SDB for pre-2013 and post-2012 members, the same rate applies to both types of employees.

6.2. Contribution calculation

The contribution amounts are calculated based on information provided in the Superannuation Administration Manual - Special bulletin that are published each January.

Starting in January 2013, these SAM – Special bulletins had employee contribution rates for members of the plan prior to January 1, 2013 and a different rate for plan members on or after January 1, 2013.

Example: In 2013, plan members who were participating in the plan prior to 2013 had a contribution rate of 6.85% on pensionable earnings up to the yearly maximum pensionable earnings (YMPE), and 6.27% for plan members who had joined the plan on or after January 1, 2013.

If contributions have been submitted with the correct corresponding rate since January 1, 2013, no further action is required in regards to the contributions. If contributions have been submitted using the incorrect contribution rate, (for example all contributions for a post-2012 employee were calculated using the 6.85% rate, the rate for employees who were in the plan prior to 2013), then corrections are required. Please see section 7 on how to process these refunds/underpayments.

6.3. Service buyback and leave without pay

Changes to pension and fund type codes for post-2012 members will ensure that proper contribution deduction codes are used moving forward and that the proper rates are used during costing of service buyback (SBB) and leave without pay (LWOP) deficiencies. This will also ensure that the correct benefit options and calculations are produced.

Existing SBB and LWOP repayment schedules that are active on members' account will need to be re-entered using the correct post-2012 plan member codes for reporting and for employer share billing purposes.

Example: A post-2012 member's service buyback was mistakenly coded as follows: contribution type (ES – Election single) and fund type code 2 (Group 1 fund 2). The proper coding for the buyback should be: contribution type (ES – Election single) and fund type code 5 (Group 2 fund 2).

Adjustments between pre-2013 or post-2012 plan member contributions will need to be reported on the PWGSC-TPSGC 2292 - Monthly Remittance of Superannuation Contributions (Public Service Corporation) form and remitted by separate year only, to indicate the amounts that have been adjusted from post-2012 to pre-2013 or vice versa. In the case where the employee would have paid the higher pre-2013 plan member contributions in error, a refund allocated to the employee would be completed by the Crown or territorial government if it's current year and by accounting for all years prior. Refer to 7.3. Processes—Service buyback and leave without pay for procedures on refunding pension contributions.

7. Processes—Refund and overpayment

In the case where the employee would have paid the higher pre-2013 plan member contributions in error, a refund allocated to the employee would be completed by the Crown or territorial government if it's current year and by accounting for all years prior.

7.1. Current calendar year adjustments relating to refunds or recoveries (current contributions)

Employer processes refunds and recoveries
DCT action is required to adjust the contribution amount:
- minus the full amount previously reported using the same effective from and to dates as well as the same fund/contribution type codes
- upload correct contribution amounts for the period of service affected using the proper fund and contribution type codes
- amend the pension type code to reflect the proper group
- refer to the DCT user guide as well as the Tips document for additional DCT entry instructions
PWGSC-TPSGC 2292 form includes adjustment:
- add employee (EE) and employer (ER) adjustments to the next applicable PWGSC-TPSGC 2292 form if the month of the remittance is in the same calendar year; otherwise, a separate PWGSC-TPSGC 2292 form will need to be completed

Example: Error occurred in April, employer is made aware in June, and adjustments are made on the June PWGSC-TPSGC 2292 form (current calendar year rates to be used for both employee and employer).

Note: If an error occurred for an active payment schedule (or SBB), the schedule will be amended and the employer notified; see section 7.3 for additional instructions.

7.2. Prior calendar year adjustments relating to refunds or recoveries (current contributions)

Refunds
- Government of Canada Pension Centre (Pension Centre) Accounting Department processes refunds
- Employer procedure:
  - send email to PWGSC.SHEcrownreconciliation-SHErapprochementcomptes.TPSGC@pwgsc-tpsgc.gc.ca with the subject line "contributor Accounting Refund Request"
  - include breakdown of employee/employer share for each type of contributions per calendar year; PWGSC-TPSGC 2292 form is not required
  - do NOT adjust the contribution amount in the DCT (action completed by the Accounting Department)

Example: Error occurred in December and employer is made aware in February of the following calendar year. Send email to PWGSC.SHEcrownreconciliation-SHErapprochementcomptes.TPSGC@pwgsc-tpsgc.gc.ca as per above instructions.

Recoveries
- Employer processes recoveries:
  - follow current calendar year adjustment process