ARCHIVED CD 2006-012
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June 28, 2006
SUBJECT: New Reporting Requirements - Leave With Income Averaging and Educational Leave
1.1 The purpose of this directive is to provide compensation advisors with information concerning new reporting requirements for Leave With Income (LIA) averaging and modified reporting requirements for educational leave in order to comply with the Public Service Superannuation Regulations (PSSR) and the Income Tax Act (ITA) requirements relating to the five-year maximum allowable pensionable leave without pay (LWOP) provision.
2.1 The ITA places certain restrictions on the total periods of LWOP that can be treated as pensionable service during an individual's career, under a registered pension plan (RPP). In order to comply with the ITA, Section 8.5 of the PSSR was adopted effective January 1, 1996 (refer to Superannuation Administration Manual [SAM] Special Bulletin 2000-006).
2.2 As indicated in the SAM Special Bulletin 2000-006, the maximum time permitted, for LWOP taken on or after January 1, 1996, is five years of cumulative full-time equivalent pensionable LWOP, excluding sick LWOP and "on loan" LWOP cases. In addition to this five-year maximum, employees are permitted up to an additional three years of full-time equivalent parenting leave. For cases of LIA and educational leave, the actual leave periods for LIA and educational leave must be included in the five-year pensionable LWOP limit.
2.3 Because of the unique reporting requirements associated with the education leave where an educational allowance is provided, both the Regional Pay System (RPS) and the Contributor System have been unable to identify periods of LWOP. As for LIA, because no LWOP reason is being reported in the RPS, the Contributor System has been unable to read them.
3.1. LEAVE WITH INCOME AVERAGING
Effective on June 27, 2006, systems modifications will be made to both the RPS and the Contributor System that will permit the recording and tracking of the actual LWOP taken during a period of LIA.
3.2 A new field has been created on the LIW screen to allow for input of the LWOP reason code. Therefore, effective June 27, 2006, completion of the LWOP reason code field on this screen will be mandatory for all new periods of LIA.
3.3 A LWOP reason code "10" has been created for use when reporting the LWOP period for employees taking LIA and, who have not yet reached the allowable five-year limit of pensionable LWOP. This code will not be posted to the Master Employee Record (MER), but will be posted to the salary/service history (SSH) and will be extracted for updating to the Contributor System.
3.4 The existing reason code "W" (LWOP -- Non-pensionable LWOP in excess of the 5 year/3 year limit), must be used to record any period of LWOP under the LIA provision that exceeds the five-year limit. This reason code will also be posted to the SSH in the RPS and will be extracted for updating the Contributor System.
3.5 The RPS has also been modified to accept an LIW A 306 (15A306) transaction when an employee has reached the five-year limit of pensionable LWOP during a period of LIA. Compensation advisors are responsible for reporting the change of LWOP reason to the RPS. As such, when a change in the LWOP reason is reported, a message is produced to alert the regional pay office of a change to the pension status of the period of LWOP reported via the LIW transaction.
3.6. EDUCATIONAL LEAVE
When an employee proceeds on educational leave, and there is an entitlement to an educational allowance, the actual period of LWOP is not reported to the RPS. As such, both the RPS and the Contributor System have no records of the actual LWOP. However, it is necessary to identify the period of the educational leave in the Contributor System for the purpose of tracking the five-year LWOP limit. The Contributor System will be modified to generate a LWOP record for educational leave for every educational allowance (code 077) record that exists on the Contributor System salary record. The LWOP record will be generated using the from and to dates of the educational allowance and the reason code "B" (Undergoing training or instruction including educational leave), will be imposed.
3.7 Compensation advisors are responsible for ceasing the pension contributions for those employees who have reached their maximum five-year limit prior to proceeding on educational leave or during a period of educational leave. A new pension type code "66" has been created for this purpose. Therefore, when an educational allowance (code 077) record exists in the RPS and the pension type code for the same period is equal to 66, the Contributor System will generate a LWOP record and impose the reason code "W".
4.1. LEAVE WITH INCOME AVERAGING
When requested to commence a new LIA arrangement, the compensation advisor must review the LWOP history of the employee to determine if the five-year maximum pensionable LWOP has been reached or if it will be reached during the leave period being requested.
4.2. REGIONAL PAY SYSTEM INPUT
4.2.1 Once the LIA calculations have been completed in accordance with Compensation Directive 1995-047, the compensation advisor must create a LIW (15C306) transaction and a LIA C (18C306) transaction in the RPS. For detailed reporting requirements in these situations, please refer to the Personnel-Pay Input Manual (PPIM) sections 4-4-15-5-1 and 4-4-18-7-1.
4.2.2. On-line Screen
As indicated in Section 3.2 of this directive, a new field has been added to the LIW screen to report the LWOP reason. If the period of LWOP is pensionable, then the new reason code "10" must be used. If the LWOP exceeds the five-year limit of pensionable LWOP, then the reason code "W" must be used.
The new field will be called "LWOP REASN" and will be positioned under the H/D/W indicator (identified in the screen below in red).
PDLIW08D-001(115) PUBLIC WORKS AND GOV. SERVICES CANADA 05/07/04 PAY LEAVE WITH INC AV. LOP ACCOUNT MAINTENANCE
NEXT < PAY CYC: 7C PP: 17 150606 / 280606 CUT OFF 140606 1111 / xx xxx xxx BG MILNE 90 SVC SEQ: / 000000
*** ENTER THE PERIOD OF LEAVE WITHOUT PAY ***
MODIFIER: C EFF FR : 26 06 06 1 EFF TO: 28 07 06 2 H/D/W IND: D NUM H/D/W: 25 .00
LWOP REASN: 10 NUMBER OF NON-EI-HOURS - FIRST PAY PERIOD: 21.50 LAST PAY PERIOD: 15.00
*** USE THE ENTITLEMENT AMEND SCREEN TO REDUCE ON-GOING ENTITLEMENTS ***
4.2.3. BATCH REPORTING
For those using a hardcopy to report the 15 C 306, the new reason code "10" is to be input immediately following the number of LWOP hours in the initial pay period and the number of LWOP hours in the final pay period in Field 71 of the PWGSC-TPSGC 2517 or 2549.
The new LWOP code for LIA should be entered as follows:
- F60 F61 F62 F63 F64 F67 F68 F71
- 15 C 306 26 06 06 1 28 07 06 2 D 25.00 0215001500 10
- 0215001500 W
- space 6-10 - number of non-insurable EI hours in final PP
- space 11-12 - reason code for LWOP
4.3. SYSTEM EDITS
4.3.1 Two new edits have been added to the RPS to ensure that the proper codes are being entered for the LIA. The message: M-01 Mandatory field missing will be produced along with message: X-00 If DED/ENT=306 the reason code for LWOP must be present and = to W or 10
Should the reason code entered be other than "W" or "10", the system will produce the message: PD 654 Only Reasons W or 10 accepted on 15 306
4.3.2 Since it is possible for an employee to reach the five-year limit of pensionable LWOP during the actual LIA period, the RPS has been modified to allow the compensation advisor to modify and change the LWOP reason to a "W" from a "10" by performing an LIW A (15A306) transaction.When this is required, the compensation advisor must also enter the number of days that apply to the period which is non-pensionable, i.e. reason code "W" period.
A new edit has been added to the RPS to ensure that the "effective from" and "effective to" dates of a LIW A (15C306) fall within an existing period of LIW. When the dates do not match, the following message will be produced: PB/PD 655 FROM/TO DATES NOT WITHIN ORIGINAL PERIOD
4.4. PUBLIC SERVICE PENSION PLAN (PSPP) DEDUCTION INDICATOR
At one time, the employee had the option of paying his pension contributions on the reduced salary during a period of LWOP. Because of a change in the LIA Policy, that option is no longer available. Therefore, when creating an LIA C (18C306) in the RPS, compensation advisors are required to input a code "1" to indicate that pension contributions will be deducted on the full salary.
However, in the case of an employee who has reached the five-year limit of pensionable LWOP, compensation advisors must be able to indicate that pension contributions should not be withheld from the portion of the salary not subject to PSPP. That is to say, when an employee has reached the five-year limit of pensionable LWOP, no pension contributions should be deducted for that period. However, for the period during which the employee is receiving salary (reduced salary), pension contributions are required for the reduced salary. For this reason, the code "2" has been re-introduced, and will be required when the reason for LWOP is "W" on the LIW (15C306). This will ensure that the pension contributions will be deducted on the reduced salary only.
4.4.1 The on-line pay LIA screen has been modified to display: ***Enter '1' if the employee is to pay Public Service Superannuation Act (PSSA) 1/2 on full salary or '2' if the employee has reached the five year pensionable LWOP maximum (LIW reason code "W") and is to pay PSSA 1/2 on reduced salary
There is a new inter element edit for both On-line and batch, which will compare the PSSA 1/2 Code INPUT ON THE LIA C/A (18C/A306) to the reason for LWOP code on the LIW C/A(15C/A306) to ensure that the appropriate code is associated with the LWOP type. In the event they do not match, the on-line and batch message will read: PD 657 Reason cannot be 10
4.4.2 The salary/service history of the RPS has also been modified to break an existing LIW line to reflect the amended reason code "W". The RPS will close the original record a half day prior to the effective date of the LIW A (15C306) and create a new line to reflect the "effective from" and "effective to" dates of the amended LWOP record. If the dates are identical, the new record will overwrite the previously reported record.
4.5. ONGOING AND PREVIOUS LIA RECORDS
For accounts with ongoing periods of LIA, compensation advisors will be responsible to identify if the employee has reached the five-year limit of pensionable LWOP and will have to amend the LWOP record (s) and change the reason to a "W" from a "10". There is also a requirement to review and amend the reason codes for previous periods of LIW, should the five-year limit have been reached. Further information will be provided concerning the requirement to review and correct historical records.
4.6. CONTRIBUTOR SYSTEM UPDATING
As a result of the changes to the LIA reporting in the RPS, the Contributor System will be updated accordingly and the LWOP information will be displayed on the LWOP screen.
4.7. Educational Leave
When an educational leave allowance is approved by the employer, a ENC 077 (18C077) transaction is reported to the RPS which updates element 101 (basic pay) on the MER. As such, there is no LWOP being reported in these cases.
4.8. Regional Pay System Input
4.8.1 Employees on educational leave have the option of paying their pension contributions, Supplementary Death Benefit (SDB) and Disablity Insurance (DI) premiums while on LWOP or deferring the payment until they return to work. For those who have not yet reached the five-year limit of pensionable LWOP, compensation advisors must report a Miscellaneous Staffing Action "MSA" (05A) and change the pension type code using code "62", where an employee has chosen to defer the payment of his pension contributions and SDB premiums until he returns to duty. Should the employee opt to continue to have deductions taken on his full salary, while in receipt of an Educational Allowance, an ENC 202 (18C 202) is required for the difference between the full salary and the allowance. Refer to PPIM 4-4-18-3-1, Remark 1 for full input requirements.
4.8.2 A new pension type code "66" has been created to identify employees who are taking educational leave, are in receipt of an education allowance, and who have reached the five-year limit of pensionable LWOP. Compensation advisors must report an MSA (05A) to change the pension type code in the RPS, effective the date the employee reaches the five-year limit. This new pension type code will be posted to the SSH screen of the RPS.
4.8.3 Upon return to duty, compensation advisors must revert the employee to basic or acting pay, by creating a Revert to Basic Pay "RBP" (18C) transaction, and creating an MSA (05A) transaction to change the pension type code to recommence pension contributions, if required. If during the education leave, the pension type code "62" was used, i.e. LWOP under the five-year limit, the MSA (05A) transaction will be effective the date the employee commenced his educational leave.
If pension type code "66" was used for the whole period of education leave, then the MSA (05A) transaction to change the pension type code will be effective the date of return to duty. Compensation advisors will receive a warning message identifying this requirement. When an RBP transaction is created to revert an employee's salary from the educational allowance (code 077) to his basic or acting pay (code 001/002), compensation advisors will receive the following warning message: PB/PD WG1 M039 = 66 EMPLOYEE NOT ON EDUCATIONAL LEAVE
However, if the employee reached the five-year limit of pensionable LWOP during the educational leave period and both pension type code "62" and "66" were used, then compensation advisors will have to create one closed period MSA (05A) transaction to change the pension type code for the period where the pension type code "62" was used, i.e. effective from and to dates matching the dates to which pension type code "62" applies. Another MSA (05A) transaction using the effective date of return to duty must be created to return the employee to pension type code "01". Therefore, pension type code "66" would apply to the period included between these dates and since this period does not count as pensionable service, no pension contributions are required for this period.
4.9. CONTRIBUTOR SYSTEM
Effective June 27, 2006, the Contributor System will be changed to recognize new incoming ENC 077 (18C077) records and generate an open LWOP record. Approximately two weeks later, an extract will be done for all ongoing educational leave records, with reason code "B" and all historical records identified as educational allowance (code 077). A LWOP record will be created using reason code "B", in all cases. The LWOP records will be displayed on the LWOP maintenance screen. The "effective from"date of the generated record will be identical to the "effective from" date on the educational allowance record. For ongoing cases, the LWOP record will be generated as an open period. The Contributor System will use the effective date of the MSA (Pay Action Code (PAC) 05A) to close the LWOP period when an MSA (PAC 05) transaction is created to change the employee's pension type code. When an MSA (PAC 05A) is reported with pension type code "66", the Contributor System will amend and close the period of the existing LWOP record by using the "effective from" date of the MSA transaction and will generate an additional LWOP record with reason code "W". The LWOP records will be displayed on the LWOP maintenance screen.
Since the average salary calculation is always based on the full true salary, and not on the amount of an educational allowance, the ENC 077 transaction (18C077) will not be extracted and posted to the Contributor System salary records.
5. Compensation advisors will receive a broadcast message confirming implementation of these changes.
The PPIM and the Pay Office Procedures Manual (POP) will be updated to incorporate all related changes contained in this compensation directive.
6.1 Any inquiries on the information contained in this document should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.
Original Signed by
Acting Director General
Accounting, Banking and Compensation
Reference(s): CJA 9001-1
- Date modified: