ARCHIVED SACCO 1995-011
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October 19, 1995
SUBJECT : Pension Reform Clarifications
1.1. The purpose of this Directive is to clarify some of the issues that have arisen as a result of the application of the pension reform provisions now in effect.
2.1. Some interpretations have been clarified or changed since the original Training Material was presented. This Bulletin will clarify the application of the new provisions relating to Leave Without Pay (LWOP); Part-time, Seasonal Employees, Pension Division etc.
3.1. Any request for information regarding the foregoing should be addressed to your Public Works and Government Services Canada(PWGSC) Client Services Center as per Compensation Directive 1994-039 dated October 6, 1994.
Original Signed by
Government Operational Service Branch
Reference: CJA 9206-24
LEAVE WITHOUT PAY
1. WHAT ARE THE RULES FOR FORWARDING AN ELECTION NOT TO COUNT LEAVE WITHOUT PAY (LWOP) TO THE PAY OFFICE OR TO THE SUPERANNUATION DIRECTORATE?
For employees on the Regional Pay System (RPS)
The employee may make the LWOP election at any time before the LWOP starts up to three months after return to duty.
If the election is not forwarded to the Pay Office within this time limit, the Pay Office should return the election to the employing Department, along with any evidence of the forwarding date (envelopes, covering memo etc.). The employing Department should then send the election to the Superannuation Directorate to determine whether the election is valid.
For employees not on the RPS
The election must be forwarded to the Superannuation Directorate by the expiry date for making the election. (E.G. return to duty June 15; election must be forwarded to the Pay Office by Sept 15th). (NOTE: CHECK WITH SUPERN'TO SEE IF THIS IS THE CRITERIA THEY HAVE BEEN APPLYING)
2. CAN AN ELECTION NOT TO COUNT LWOP BE REVOKED?
Where an employee has received erroneous advice regarding the option not to count the LWOP and wishes to revoke that option, the circumstances of the case must be documented and forwarded to Superannuation. Superannuation should be contacted for direction as soon as the Personnel Office becomes aware that there may be a problem.
If the revocation is approved, the recovery of the deficiencies owing for the LWOP must be made in the usual manner (i.e. over a period equal to twice the period of the leave, or equal to the period for on-loan cases).
3. CAN AN ELECTION NOT TO COUNT LWOP BE MADE AFTER THE NORMAL EXPIRY DATE FOR MAKING THE ELECTION?
Normally, an employee cannot elect not to count the LWOP if the election period has been expired. However, if the employee received erroneous advice about the election, or the employee did not receive any information about the option, the case should be referred to the Superannuation Directorate. Superannuation will determine whether the employee might be able to make an election not to count the LWOP even where the election period has expired.
4. HOW IS THE PENSION ADJUSTMENT (PA) AFFECTED BY THE OPTIONAL LWOP PROVISIONS?
Where the employee does not elect in advance of the LWOP, or within the first three months of the LWOP, a PA will be reported for the full period of leave. If the employee the returns to duty and elects not to count the LWOP by December 31st of the year of return to duty, no PA will be reported in respect of the LWOP which occurred in the year of return only. The PA reported for years prior to the return to duty cannot be canceled.
Where the employee elects during the leave, a PA will not be reported for the period of non-pensionable leave for the year in which the election was made, or for any non-pensionable time following the election. Any PAs reported for periods prior to the year of election must remain in force.
5. CAN AN EMPLOYEE WHO HAS 35 YEARS PENSIONABLE SERVICE PRIOR TO A PERIOD OF LWOP, ELECT NOT TO COUNT THE LWOP AS PENSIONABLE SERVICE?
Yes; however , the employee should be cautioned that if he makes such an election, the "deemed salary" during the period of LWOP will not be used to calculate the pension benefit.
6. WHEN DO INDIVIDUALS WHO WERE LESS THAN 12 HOURS PER WEEK AT 04.07.1994 BECOME PUBLIC SERVICE SUPERANNUATION ACT (PSSA) CONTRIBUTORS?
An employee who was required to work less than 12 hours per week on 4.07.1994 is a "grandfathered employee" for purposes of contributing to the PSSA. The employee would become a compulsory contributor only when the required work week increased to 30 or more; the employee can opt in if the hours of work increase to 12 or more. The option would have to be made by the later of 03.07.1996 and 6 months after being notified of the eligibility to opt-in.
7. IS LWOP WHICH OCCURRED DURING A PERIOD OF PART-TIME EMPLOYMENT COUNTABLE AS ELECTIVE SERVICE?
A period of LWOP which occurred during a period of Part-time service is elective only if the individual was a PSSA contributor on July 4, 1994. Any elections made by employees who fall into this category have been processed including the countable LWOP; there is no further action required to ensure the service has been included.
If the individual was not a contributor on July 4, 1994, the part-time LWOP is not elective.
LWOP which occurred during a period of full-time noncontributory service is not elective in either case outlined above.
8. FOR PART-TIME EMPLOYEES ARE STATUTORY HOLIDAYS TREATED AS LWOP AS FOR ELECTIVE SERVICE PURPOSES?
If the Statutory Holiday falls on the employee's regular work day, and salary is recovered (or not paid) for that day, the day should be treated as day of LWOP for elective purposes.
8. HOW ARE PENSION BENEFITS CALCULATED FOR "GRANDFATHERED" 30 HOUR EMPLOYEES?
The attached document indicates how the benefit should be calculated when a period of "grandfathered" 30 hour service falls in the 6 year average salary period. (All other examples should be ignored, the Superannuation Administration Manual (SAM) will be updated shortly to include these final examples.)
9. HOW ARE THE PART-TIME PROVISIONS TO BE APPLIED TO SEASONAL EMPLOYEES?
Applying the part-time criteria to Seasonal employees whose off-Season is three months or less has proven to be a complex and confusing issue. As a result, the issue of Seasonal employment will be re-examined. In the interim, all Seasonal employees should continue to be treated as is the past, regardless of the length of the Seasonal break. That is, Seasonal employees will continue to accrue PSSA benefits during the on-Season based on their regular on-Season salary.
10. IF A PLAN MEMBER REQUESTS PENSION DIVISION INFORMATION, IS THE MEMBER REQUIRED TO WAIT 30 DAYS BEFORE RECEIVING THE INFORMATION?
No. The 30 day waiting period applies to the plan member's spouse only. In addition, if the spouse waives the 30 day period, the information can be provided without applying the time limit.
11. IF A LAWYER IS REQUESTING PENSION BENEFITS DIVISION ACT (PBDA) INFORMATION ON BEHALF OF THE MEMBER OR THE SPOUSE, IS A RELEASE REQUIRED?
When providing information to anyone other then the member or spouse, it is important to ensure that the individual is indeed acting on his or her behalf. In most cases, a letter of authority will be provided. However, if the lawyer encloses the documents required by the Regulations, i.e., court order/spousal agreement, statutory declaration, and states that he/she is acting on behalf of the member or the spouse, it would be in order to provide the appropriate information to the lawyer.
12. UNDER WHAT CIRCUMSTANCES SHOULD A MEMBER BE ADVISED THAT A REQUEST FOR PENSION DIVISION INFORMATION HAS BEEN MADE?
Personnel are not to seek out a member to advise that request for PBDA information has been received. However, when a member asks if a request has been made, and the 30 day period has expired (or been waived), the member can be advised that a request was made. The member does not have to search through their personal file to locate the "note to file".
13. SHOULD PERIODS OF LWOP BE EXCLUDED FROM THE PBDA CALCULATION?
At the moment, periods of LWOP are not excluded from the PBDA calculation. However, in order to provide more accurate PBDA calculations, the procedures re the exclusion of LWOP will be amended shortly so that only periods of LWOP for which deficiencies have been recovered will be included in the calculation. Until the procedures are amended, the LWOP should continue to be excluded from the estimate.
14. WHAT IS THE PSSA CONTRIBUTION RATE FOR EMPLOYEES WHO ARE LESS THAN AGE 18, OR OVER AGE 65 AND IN RECEIPT OF CANADA PENSION PLAN, QUÉBEC PENSION PLAN (CPP/QPP) BENEFITS?
The PSSA contributions rate is the same for all employees; that is 7.5 % of pensionable salary minus the amount that would have been required under the CPP/QPP as if the employee were also paying into the CPP/QPP. In other words, all employees pay PSSA at he same "integrated" rate whether or not they are also paying into the CPP/QPP.
15. IS THE SERVICE ALSO INCLUDE WHEN APPLYING THE CPP/QPP REDUCTION?
Yes. ALL pensionable service, up to 35 years, will be included in the CPP/QPP reduction, because the employee paid an integrated contribution rate on all of the pensionable service.
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