CD 2013-001

Subject: New Pension Legislation 2013 - Additional Pay Input for new members of the public service pension plan

January 16, 2013 Updated April 30, 2013

1. Purpose

1.1. The purpose of this directive is to provide compensation advisors with information regarding additional pay input required when an employee becomes a contributor to the public service pension plan on or after January 1, 2013.

2. Background

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

This is to inform you that employees that become new plan members on or after January 1, 2013 will be subject to different PSSA rules and contribution rates than current plan members. Therefore, there is a need to distinguish employees who become new plan members on or after January 1, 2013.

3. Policy

3.1. The pension benefits for new employees who become public service pension plan members on or after January 1, 2013 will be changing. Therefore, pension contribution rates will differ between new and existing plan members.

Note: There is no change to the pension benefits of current plan members. There is also no change for certain Correctional Service employees.

3.2. Correctional Service of Canada employees that become new plan members on or after January 1, 2013 and employed in actual operational service will contribute the same rates as those plan members who joined pre-2013. In addition, new plan members who become employed in deemed operational service continue to contribute the additional premium of 0.62%. Therefore, plan members in operational service at Correctional Service of Canada are not affected by these changes to the pension contribution rates.

3.3. The compensation advisor will be required to complete an "Entitlement Commence" (ENC - PAC 18C) transaction when an employee becomes eligible to contribute to the public service pension plan on or after January 1, 2013. This transaction will not produce any payment but will flag the account to ensure that the proper contribution rates are collected. The consequence of failing to include this transaction is that the new plan member will not be paying the correct pension contributions.

Updated 3.4. The requirement to use an "Entitlement Commence" (ENC – PAC 18C) transaction is only temporary. Once the Regional Pay System (RPS) and the new pension system, Penfax, are updated, new pension type codes will replace the ENC – PAC 18C transaction and a further Compension Directive will be issued. In the meantime, the ENC – PAC 18C will flag the account in the RPS as a new contributor on or after January 1, 2013.

3.5. Leave Without Pay Deficiencies

Until further notice, no new leave without pay (LWOP) deficiencies will be commenced for plan members who become contributors on or after January 1, 2013. These plan members will be advised of this by the Pension Centre when they return from LWOP.

Plan members should be referred to the Your Public Service Pension and Benefits Web portal for information on the pension impacts of taking a leave of absence and to update their address on line. They can also contact the Pension Centre.

3.6. Service Buyback

Until further notice, no service buyback (election) deductions will be commenced by compensation advisors for plan members who become contributors on or after January 1, 2013. These plan members will be counselled of this by the Pension Centre when they request information or elect for prior service.

Plan members should be referred to the Your Public Service Pension and Benefits Web portal for information on Service Buyback. They can also contact the Pension Centre.

4. Procedures and Instructions

4.1. A new entitlement code has been created in the RPS to identify employees who become new plan members on or after January 1, 2013.

  • 1G5 2013 PENS PLAN RATE

4.2. Compensation advisors continue to apply the public service pension plan rules of eligibility to commence contributions and to input the appropriate employee and pension type codes into the RPS. At the same time, employees who become eligible to contribute to the pension plan on or after January 1, 2013, an "Entitlement Commence" (ENC - PAC 18C) transaction 1G5 must be completed. This will be in conjunction with the current requirement to input the Taken on Strength (TOS - PAC 01) transaction and the Miscellaneous Staffing Action (MSA - PAC 05) transaction.

Updated Compensation advisors determine pension eligibility and update the RPS at various times during a plan member's career, such as at initial hiring, completion of the six-month qualifying period, where there is a change in employment conditions and/or status (e.g. a change in an assigned work week to 12 or more hours, or a change in employment status that would affect an employee's eligibility to the public service pension plan).

Updated Note: The new legislation does not impact existing plan members who have ceased or cease to contribute prior to 2013 yet have remained employed without interruption since then, and start contributing again on or after January 1, 2013.

4.3. Entitlement Commence

Initiate an ENC - PAC 18C 1G5 transaction

Compensation advisors are responsible to determine eligibility to the public service pension plan. Once the plan member is required to contribute, the compensation advisors must report the appropriate pension type code.

Updated When an employee has been identified as a post-2012 plan member, the compensation advisor will input an ENC – PAC18C 1G5 to flag the account under the new pension legislation, with the appropriate effective From date. This date must be the same effective from date as the TOS – PAC 01 or MSA – PAC with a pension type code as a contributor to the pension plan. The input must be concurrent in the same update with the TOS – PAC 01 or MSA – PAC 05 input to ensure any supplementary payments have the correct pension contribution recovered.

Open Period

Example 1

An indeterminate employee is hired on January 14, 2013. Since this employee is required to contribute to the pension plan after January 1, 2013, the new contribution rates apply. An ENC - PAC 18C 1G5 must be done.

TOS - PAC 01 effective from: 14 01 13 1 with the pension type code 01

  • ENC - PAC 18C code 1G5 (open period) effective from 14-01-13 1

All other fields must be blank.

Example 2

An employee is hired on December 17th, 2012 as a term employee less than 6 months. On February 20th, 2013 the employee accepts an indeterminate position.

Even though this employee is hired in 2012, an ENC- PAC 18C 1G5 is still required since the employee becomes eligible to contribute to the public service pension plan on or after January 1, 2013.

TOS - PAC 01 effective from: 17 12 12 1 with the pension type code 53

MSA - PAC 05 effective from: 20 02 13 1 to change the pension type code to 01

  • ENC - PAC 18C code 1G5 (open period) effective from 20-02-13 1

All other fields must be blank.

Note: If the effective from date of the open period of the ENC - PAC 18C is not equal to the current pay period start date, a notification will be sent to the Pay Office for action (N21).

Closed Period

Updated If the effective from date of the ENC – PAC18C transaction should have been earlier than the original ENC – PAC18C, a new ENC – PAC 18C transaction with a closed period can be done with both an effective From and effective To date to report the period in the past on an account that falls under the new legislation. You cannot report an ENA – PAC18A with code 1G5, if the real effective from date is before the original date of the ENC – PAC18C.

Note: A notification will be sent to the Pay Office for action (N21).

Updated Missed Update

Updated Example 1

An indeterminate employee is hired on January 14, 2013. Since this employee is required to contribute to the pension plan after January 1, 2013, the new contribution rates apply. However, the ENC – PAC 18C 1G5 was not input with the TOS – PAC 01.

  • PP02 = recovered PSSA2 regular pension contributions
  • PP03 = recovered PSSA2 regular pension contributions
  • PP04 = recovered PSSA2 regular pension contributions
  • PP05 = the compensation advisor discovers the error

Updated The compensation advisor must input a MSA – PAC 05 transaction to change the pension type code F39 to a non-contributor code 53 with the same effective date as originally reported on the TOS – PAC 01; this will avoid the PSSA2 regular pension contributions to be recovered from the next pay period.

Updated The Pay Office will then reimburse to the employee the PSSA2 regular pension contributions taken from PP02 to PP04 via REF 760 transaction, thus correcting the employer's share.

Updated Once the employee has received the reimbursement, the compensation advisor will input a MSA – PAC 05 transaction to change the pension type code F39 to a contributor code 01 effective the same date as originally reported on the TOS – PAC 01 AND on the same update will input transaction ENC – PAC 18C 1G5.

Updated A notification will be sent to the Pay Office for action to recover the arrears at the rate of one current deduction and one arrears deduction for the PSSA post 2012 pension contributions.

Updated Example 2

An indeterminate employee is hired on January 14, 2013. Since this employee is required to contribute to the pension plan after January 1, 2013, the new contribution rates apply. However, in this example, the ENC – PAC18C 1G5 was input in a later update than the TOS – PAC 01 transaction.

  • PP02 = recovered PSSA2 regular pension contributions
  • PP03 = recovered PSSA2 regular pension contributions
  • PP04 = recovered PSSA2 regular pension contributions
  • PP05 = the compensation advisor discovers the error and inputs transaction ENC – PAC 18C 1G5 with the same effective date as the date the member became a contributor

Updated A notification will be sent to the Pay Office who will advise the compensation advisor to:

  • Input a ENS – PAC 18S 1G5 transaction with the same effective date as originally submitted on the ENC – PAC18C 1G5
  • Input a MSA – PAC 05 transaction to change the pension type code F39 to a non-contributor code 53 effective the same date as originally reported on the TOS – PAC 01

Updated The Pay Office will then reimburse to the employee the PSSA2 regular pension contributions taken at the incorrect rate from PP02 to PP04 via REF 760 transaction.

Updated After the reimbursement is received by the employee, the compensation advisor will input a MSA – PAC 05 transaction to change the pension type F39 to contributor code 01 AND input the ENC – PAC18C 1G5 transaction in the same update, with the true effective date that the employee became a plan member. This will trigger a notification to the Pay Office to collect the PSSA contribution arrears post 2012, thus correcting the employer's share.

Updated If the ENC – PAC18C 1G5 and MSA – PAC 05 transactions are done only in a subsequent PP, i.e. PP07, this would mean that PP05 was taken with the correct PSSA post 2012 employee and employer rate. Therefore, Pay Office will not include PP05 in the calculation of arrears owed.

4.4. Entitlement Stop

An Entitlement Stop (ENS) (ENS - PAC 18S) should only be used in one of the following situations:

To Change the Effective from Date

To change the effective from date when the real from date is after the original date of the ENC - PAC 18C.

Example:
  • Updated ENC – PAC 18C code 1G5 effective from 01 05 13 1 on account XYZ; the compensation advisor subsequently discovers the error
  • ENS – PAC 18S code 1G5 effective from 01 05 13 1 must be entered
  • ENC – PAC 18C code 1G5 effective from 01 06 13 1 must be entered to reflect the true effective from date. The new ENC – PAC 18C must be reported only on the next update
    within the same pay period (after ENS-PAC 18S has been processed).

Updated The Pay Office will then reimburse to the employee the PSSA2 regular pension contributions taken for May, 2013 via REF 760 transaction.

To Remove ENC - PAC 18C 1G5 Entered in Error

To remove ENC - PAC 18C 1G5 entered in error on an account that should not be identified as a plan member who became a contributor on or after January 1, 2013.

Example:
  • ENC - PAC 18C code 1G5 effective from 01 05 13 1 is currently on account XYZ
  • ENS - PAC 18S code 1G5 effective from 01 05 13 1 must be entered

If the effective from date of the ENS - PAC 18S is not equal to the ENC - PAC 18C effective from date, the input will reject.

Updated Note: If the effective from date of the ENS – PAC 18S is not equal to the current pay period start date, a notification will be sent to the Pay Office for action (N21). The Pay Office will then reimburse to the employee the PSSA2 regular pension contributions taken to date via REF 760 transaction.

Updated Important Note: If the 1G5 was started on an account for an employee that was a contributor to the pension plan before January 1, 2013, the compensation advisor must first contact the pay office to allow them to calculate the required adjustments to the pension contributions while the 1G5 is still on the master file. Once the pay office has confirmed that the calculation of the adjustment is done, the compensation advisor will enter the ENS - PAC 18S 1G5 to remove the 1G5 that was done in error.

Unless the account was incorrectly identified, an ENC -PAC 18C 1G5 should not be stopped once an employee is identified as being a contributor on or after January 1, 2013. The entitlement code 1G5 is only to flag the appropriate pension contribution rate. If the employee moves from a contributor to a non-contributor pension type code, then no pension deductions are taken and the 1G5 must remain on the account should the employee ever again become a contributor.

5. Personnel-Pay Input Manual (PPIM)

5.1. The PPIM will be updated to incorporate the changes included in this compensation directive.

6. Inquiries

6.1. Any request for information regarding the content of this document should be addressed to your Public Works and Government Services Canada (PWGSC) compensation services office.

Updated 6.2. With the centralization of Employer Support Services, compensation managers can now contact the Public Service Pension Centre – Contact Us - Employer Support Services, on employer-related questions regarding the rules in determining when a person is eligible to contribute under the public service pension plan.

Original Signed by
Carrie E. Roussin

Carrie E. Roussin
Director General
Compensation Sector
Accounting, Banking and Compensation

Reference(s): Entitlement Code 1G5, 9213-15