ARCHIVED CD 2006-023

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September 28, 2006 (Revised October 4, 2006)

SUBJECT: New Entitlement -- Institutional - Retirement Lump Sum


1.1 The purpose of this directive is to provide information on the new Institutional - Retirement Lump Sum described in the letter of agreement between the Treasury Board of Canada and the Union of Canadian Correctional Officers - CSN, signed on June 26, 2006.


| 2.1 The letter of agreement states that, effective June 1, 2006, employees in Correctional Services (CX) whose substantive position is that of a CX-01 or CX-02, under the Bargaining Unit Designator (BUD) code 60100, shall receive a lump sum on retirement after 25 years of operational service. Excluded employees whose substantive position is that of a CX-03 or CX-04, under the BUD code 65100, are also eligible for this entitlement.

2.2 The letter of agreement also states that part-time employees shall receive the Retirement Lump Sum prorated to their hours of work.


3.1 The Institutional - Retirement Lump Sum is a lump sum amount payable upon retirement, to employees after 25 years of operational service, whose substantive position is part of the CX group, in accordance with the criteria set out in the following chart.

Date of Retirement Amount of Lump Sum Payment
From June 1, 2006 to May 31, 2007 $8,000
From June 1, 2007 to May 31, 2008 $6,000
From June 1, 2008 to May 31, 2009 $4,000
From June 1, 2009 to May 31, 2010 $2,000
After May 31, 2010 $0

3.2 Part-time employees shall receive the Retirement Lump Sum, as shown in Section 3.1, prorated to their hours of work, in the following manner:

Amount of Lump Sum Payment
weekly part-time
hours of work at the
date of retirement


3.3 As the Retirement Lump Sum is considered a retiring allowance, the eligible and non-eligible amounts of this payment must be reported separately. Two new entitlement codes, 1C2 and 1C1 have been created for reporting purposes.


4.1 For detailed information on how to determine the eligible and non-eligible portions of this payment, how to transfer the payment to a registered retirement savings plan (RRSP), the required documentation and reporting procedures, compensation advisors should refer to the Compensation Directive (CD) 2006-002 . Please note that non-eligible amounts transferred to an RRSP or used to make lump sum payments towards pension deficiencies or past service are still considered as non-eligible monies and must be reported as such (refer to Compensation Directive (CD) 2006-002 for additional information). To transfer amounts directly to an RRSP, compensation advisors should continue to use deduction code 582 "Transfer to RRSP" (refer to Compensation Directive (CD) 2006-002 for reporting procedures).

4.2 Code 1C2 -- Institutional - Retirement Lump Sum - Eligible

4.2.1 Effective September 19, 2006, entitlement code 1C2 "Institutional - Retirement Lump Sum - Eligible" will be available in the Regional Pay System (RPS). This entitlement code is to be used to report the portion of the payment that is eligible for transfer to an RRSP in accordance with the Income Tax Act , under Section 60(J.1).

4.3 Code 1C1 -- Institutional - Retirement Lump Sum - Non-eligible

4.3.1 Effective September 19, 2006, entitlement code 1C1 "Institutional - Retirement Lump Sum - Non-eligible" will be available in the RPS. This entitlement code is to be used to report the portion of the payment that is non-eligible for transfer to an RRSP. It should be noted that the payment can be transferred to an RRSP if the employee has sufficient personal RRSP room and provides the proper documentation. Please refer to CD 2006-002, Section 4.3 under "Non-eligible amounts" for more details.

| 4.4 The compensation advisor is responsible for reporting these payments for all eligible employees in the CX group using the Termination Entitlements (TEC) screen with entitlement codes 1C1 and 1C2 and a rate base "0".

4.5 Entitlement codes 1C1 and 1C2 are subject to both federal and provincial income tax on lump sum amounts. The most current lump sum tax rates can be found in CD 2006-002, Section 4.10.

4.6 The Personnel-Pay Input Manual (PPIM) will be updated to incorporate the relative information contained in this directive.


5.1 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
B. Fortin

Brigitte Fortin
Acting Director General
Compensation Sector
Accounting, Banking and Compensation

Reference(s): ENT 1C1, 1C2