ARCHIVED SAM - Special Bulletin 2000-006
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November 17, 2000
SUBJECT: Pensionable Leave Without Pay (LWOP) Limits under the Public Service Superannuation Regulations
1.1. The purpose of this Bulletin is to provide additional information regarding changes to the Public Service Superannuation Regulations as they relate to the accumulation of pensionable LWOP.
1.2. These changes became effective January 1, 1996, and are briefly described in Chapter SAM 2-6-1.
1.3. In this text, use of the masculine is generic and applies to both men and women.
2.1. The Income Tax Act places certain restrictions on the career total periods of LWOP that can be treated as pensionable under a registered pension plan. In order to comply with the Income Tax Act, Section 8.5 of the Public Service Superannuation Regulations was adopted effective January 1, 1996.
2.2. The maximum permitted, for LWOP taken on or after January 1, 1996, is 5 years of cumulative full-time equivalent pensionable LWOP, excluding sick LWOP and "on loan" LWOP cases. In addition to this 5-year maximum, employees are permitted up to an additional 3 years of full-time equivalent parenting leave.
2.3. Once a contributor's total pensionable LWOP reaches the pensionable limits as described above, any additional periods of LWOP (exclusive of sick LWOP and on loan cases), will not be considered pensionable. A Pension Adjustment (PA) will not be calculated for the non-pensionable period, LWOP pension deficiencies will not be required, and that period of LWOP will not be included in a pension benefit calculation.
| Note that even single days of LWOP (excluding sick LWOP and "on loan" LWOP) are to be included in determining when an employee will reach the maximum pensionable limits.
2.4. It is important to note that the requirements set out for LWOP under collective agreements are a separate issue and are still used to determine the length and reason for LWOP. For example, an employee may be permitted up to 5 years of LWOP for care and nurturing of a pre-school age child under the terms of a collective agreement. The employee may still take the 5 years of LWOP; however, under the revised Public Service Superannuation Regulations, a portion of that leave may be non-pensionable due to prior periods of pensionable LWOP taken by the employee.
2.5. On Loan Cases
As mentioned above, LWOP where the contributor is on loan is not included in the maximum 5-year pensionable limit. "On loan" is defined as LWOP where there is an official agreement between the employers for the loan of the contributor from the Public Service to the outside employer. Such an agreement could be in the form of a mutual contract, memorandum of agreement or other similar formal document. This includes an employee on loan to serve as a full-time paid official of a bargaining agent or a credit union.
2.6. Parenting Leave
As mentioned in Subsection 2.2 of this Bulletin, employees are permitted a maximum of 3 years of full-time equivalent pensionable parenting leave. Parenting leave is any leave taken for purposes of caring for a child. This includes maternity leave, paternity leave, adoption leave and leave for the care and nurturing of pre-school age children.
For purposes of determining the 3-year cumulative limit, the parenting leave starts on or after the date of birth of a child of whom the contributor is the natural parent, or on or after the date on which the contributor adopts a child. Parenting leave ends 12 months after the date of birth or adoption. In other words, a contributor is permitted a maximum of 1 year of pensionable LWOP per child.
If the contributor does not take 1 full year of parenting leave for a specific child, the balance remaining may be used for an additional period of parenting of a different child (refer to Appendix A, Example 1).
If the contributor's parenting LWOP exceeds 12 months following the date of birth or adoption, only the leave that falls within the first 12 months is applied to the 3-year maximum permitted for parenting leave. The balance is to be included in the 5-year maximum (refer to Appendix A, Example 1).
Once the 3-year limit for parenting leave has been met, any additional leave taken for purposes of parenting may be counted under the 5-year maximum. In other words, a contributor could actually have 8 years of pensionable leave, i.e. 3 years for purposes of parenting and 5 years for other purposes, including parenting leave.
2.7. Part-time Service
As mentioned, the pensionable limit is 5 years of cumulative full-time equivalent LWOP, plus an additional 3 years of full-time equivalent parenting LWOP. For purposes of determining when a part-time employee will reach the maximum permitted limits, the part-time LWOP period must be converted to a full-time equivalent LWOP period. Refer to Subsection 3.3 of this Bulletin for instructions on how to perform this conversion and to Appendix A, Example 2.
2.8. Supplementary Death Benefit(SDB), Disability Insurance (DI) and Long Term Disability (LTD)
In cases where the contributor exceeds the maximum permitted pensionable LWOP limits, contributions for the SDB Plan and for the DI or LTD Insurance Plan are still required for the full period of LWOP. Refer to Subsection 3.8 of this Bulletin for additional information regarding the recovery of DI and LTD deficiencies.
2.9. LWOP as Elective Service
As described in Chapter 2.6.9 of the SAM, effective from September 9, 1993, contributors have the option not to count a period of LWOP (beyond the first 3 months of the leave period) for pension purposes.
At a later date, the employee may choose to count the service by means of the elective service process. It is important to note that in cases where the leave occurred on or after January 1, 1996, the elective period(s) must also be included in determining the maximum permitted LWOP limits.
Furthermore, as a result of applying the allowable limits, when a contributor makes an election for a prior period of LWOP which he originally opted not to count as pensionable, all or a portion of the period may not be elective. In the case of a full-time period of LWOP, the employee must elect for the portion of the service that is most recent in point of time (refer to Appendix A, Example 3). However, if the elective period is composed of part-time LWOP, the contributor is not required to elect for the most recent period .
Compensation Services Offices (CSOs) may be contacted by the Superannuation Directorate in cases where an employee elects to count a prior period of LWOP which he had originally opted not to count. Originally, if the employee opted not to count a period of LWOP after the end of the calendar year in which the leave occurred, the PA that had already been reported for the leave period was not amended. If he later elects to count the period, a Past Service Pension Adjustment (PSPA) must not be calculated. Prior to calculating the PSPA, the Directorate may contact the CSO to request confirmation of whether or not a PA was reported, in order to ensure that the employee's Registered Retirement Savings Plan (RRSP) room is not reduced twice for the same period of service.
It is also important to note that where an employee has exceeded the acceptable LWOP limits, the period of non-pensionable LWOP that exceeds the permissible limits is not elective.
2.10. Dual Employment
The term "dual employment" describes the situation where an employee is on LWOP from his substantive position and is employed in another position in the Public Service during the leave. The employee in this situation is not considered to be on LWOP; therefore, the LWOP period from the substantive position is not included when determining the employee's pensionable LWOP limits.
2.11. Leave with Income Averaging (LIA) and Pre-retirement Transition Leave (PRL)
For cases of LIA and PRL, the actual leave periods must be included in determining when the employee will reach the maximum permitted pensionable LWOP limits.
2.12. Self-funded Leave and Educational Leave
The actual leave periods for Self-funded Leave and Educational Leave must be included in the 5- year pensionable LWOP limit.
2.13. Rehabilitation Leave
In the case of Rehabilitation Leave, the hours not worked each pay period are due to the employee's sickness. As mentioned in Subsection 2.2 of this Bulletin, sick LWOP is not included in determining when an employee will reach the maximum 5-year pensionable LWOP limit; therefore, the hours not worked each pay period, while the employee is on Rehabilitation leave, are not to be included in the 5-year limit.
3.1. LWOP Tracking
Compensation Advisors should ensure that an employee who is proceeding on LWOP is aware of the pensionable LWOP restrictions.
It is the responsibility of the employing Department, Corporation or Agency to monitor an employee's LWOP in order to determine when he will reach the maximum permitted limits.
Each organization can determine the actual method to be used; however, it is suggested that it might be helpful to maintain a "Bring Forward" (BF) system for each employee on LWOP, as a reminder of when the employee is approaching the acceptable limit.
Please note that the earliest possible date that an employee could exceed the 5-year maximum pensionable LWOP limit is January 1, 2001. (Please note that an employee in this situation could still have the 3-year maximum parenting leave available.)
A new LWOP reason code, code "W" (Non-pensionable LWOP in Excess of the 5 Year/3 Year Limit), has been created to identify the period of non-pensionable leave that occurs as a result of a contributor having exceeded the maximum limit.
3.2. Calculating the Period of Pensionable LWOP Used and the Balance Remaining
In order to determine when a contributor will reach the maximum permitted LWOP limits, it will be necessary to calculate the period of pensionable LWOP used and the balance remaining, based on 365 calendar days in a year.
For example, an employee is on LWOP from October 1, 2000, to December 31, 2000, which represents 92 calendar days. The balance of pensionable LWOP remaining under the 5-year limit is 4 years, 273 days.
Please note that the extra day (February 29) that occurs in a leap year is not counted; leap years are to be considered as having 365 days.
The "Retaken on strength (RE-TOS) Arrears Deductions Summary" section of the RE-TOS Calculation System will be amended to show the number of calendar days in the LWOP period, in addition to the number of compensation days. Therefore, this System could be used as a tool to determine the number of calendar days that comprise a particular LWOP period.
3.3. Converting Part-time LWOP to Full-time Equivalent LWOP
As mentioned in Subsection 2.7 of this Bulletin, a period of part-time LWOP must be converted to a full-time equivalent LWOP period. In order to do this, the following calculation should be performed:
- Count the number of calendar days in the LWOP period in the same manner as for a full-time employee (e.g. 187 days).
- Divide the employee's Assigned Work Week by the Scheduled Work Week (e.g. 18.75 hours ÷ 37.50 hours = 0.50).
- Multiply the number of days counted in Step 1, by the conversion factor calculated in Step 2. The result is the number of full-time equivalent days of LWOP taken by the employee (e.g. 187 days x 0.50 = 93.50 days) [refer to Appendix A, Example 2].
It is important to note that this calculation is used only for purposes of determining when the employee will reach the 5-year/3-year maximum limits. Pension, SDB, DI, and/or LTD deficiencies are to be calculated in the normal manner.
3.4. PA Reporting
As mentioned in Subsection 2.3 of this Bulletin, a PA must not be reported for non-pensionable LWOP periods that occur as a result of a contributor having exceeded the maximum limits for pensionable LWOP.
For clients serviced by the Regional Pay System, a PA is reported automatically for all pensionable LWOP periods. In cases where a contributor exceeds the maximum limits for pensionable LWOP, it is important that the Compensation Advisor amends the ongoing LWOP reason to "W" in a timely manner, otherwise, it is possible that a PA will be reported incorrectly for a given year, and it will be necessary to take corrective action.
3.5. Clients with Access to the Pension Support System (PSS)
For clients with access to the PSS, a history of both pensionable and non-pensionable LWOP is maintained by the Compensation Advisor. The LWOP Maintenance screen on the PSS displays historical LWOP service records which may be used as an aid in determining when an employee will reach the maximum permitted pensionable LWOP limits.
Once the maximum pensionable LWOP limit has been reached, the Compensation Advisor is responsible for amending the ongoing LWOP reason code to "W" to reflect that the remainder of the leave is non-pensionable.
It is important to note that the PSS is to be used as an additional tool only in the LWOP tracking process. An employee's LWOP should still be confirmed using manual records. For example, the actual leave periods for cases of LIA and PRL are not updated to the PSS, so it is necessary to refer to manual records.
It is also important to remember that pensionable periods of sick LWOP (including periods of LWOP taken while an employee is on Rehabilitation Leave) and on loan LWOP cases are not to be included in determining when the employee will reach the maximum pensionable LWOP limits.
3.6. Clients without Access to the PSS
Clients who do not have access to the PSS must also ensure that a method is in place to accurately track an employee's pensionable LWOP occurring on or after January 1, 1996.
In all cases of transfers between departments, Corporations and/or agencies, the "transfer out employer" must ensure that the "transfer in employer" receives clear and accurate LWOP records.
In cases where an employee transfers between a client with access to the PSS and a client without access to the PSS, it is important that the "transfer out employer" provide the "transfer in employer" with the relevant LWOP information. Compensation Advisors may wish to use the sample letter attached in Appendix B of this Bulletin, or a similar letter containing the same required information, to provide the "transfer in employer" with the employee's pensionable LWOP records for leave periods that occurred on or after January 1, 1996.
The new employer can then ensure that either the PSS (for clients with access) or the appropriate manual records (for clients without access to the PSS) are updated with the previous LWOP records in order to assist in the future pensionable LWOP tracking.
3.8. RE-TOS Application
The PC application "RE-TOS Calculation System" is used to calculate pension, SDB, DI and/or LTD deficiencies as a result of a period of LWOP. The most current copy is available for download from the Compensation Sector Web site at /compensation under the menu item "Software".
The RE-TOS Calculation System will be updated by the end of 2000 with LWOP reason code "W" (Non-pensionable LWOP in excess of the 5 year/3 year limit), so that this new code may be input to the System to ensure that pension deficiencies will not be calculated for the non-pensionable periods of LWOP.
Please note that code "W" is used to identify the non-pensionable period of both single and double rate LWOP. As mentioned in Subsection 2.8 of this Bulletin, SDB, DI and/or LTD deficiencies must still be recovered for the non-pensionable LWOP period. For DI/LTD purposes, it will be necessary to determine whether the non-pensionable period occurred while the contributor was on LWOP for a single or double rate reason, and to input this information, when prompted, into the RE-TOS Calculation System. For clients serviced by the Regional Pay System, the Pay Office must contact the client department in order to determine whether the non-pensionable period occurred while the employee was on single or double rate LWOP. SDB deficiencies are always calculated at the single rate.
4.1. Any request for information regarding the foregoing should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.
Original Signed by
Government Operational Service
Reference: CJA 9203-42-8.5 (1),
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