Leave without pay information package
Changes were made to the public service pension plan effective January 1, 2013. For more information on the changes to the pension plan, visit the Information concerning changes to the public sector pension plans page of the Treasury Board of Canada Secretariat website or contact the Government of Canada Pension Centre.
We appreciate your patience while we gradually update all of our videos, publications and websites to reflect these changes.
This package provides you with important information needed when considering taking a leave of absence from the federal public service and explains the pension implications of taking a period of Leave without pay (LWOP) and the processes involved.
Your employer may authorize pensionable LWOP for various reasons. To determine what types of LWOP may be available to you, you should review your collective agreement and/or contact your Human Resources office. You may also find a list of the various types of LWOP under Types of leave without pay and contribution rates at the end of this document. If you wish to proceed on LWOP, you should then discuss the approval process with your manager. In addition, we suggest that you notify your compensation advisor of your intention of leaving, in advance of proceeding on LWOP, to avoid any overpayment situations. To update your LWOP records, you should also contact your compensation advisor if you are on LWOP and are then approved for a new type of LWOP.
Information regarding the impact LWOP has on your pay, benefits and group insurances can be obtained from your compensation advisor.
Contact the Pension Centre for any information regarding the effect LWOP has on your pension and your Supplementary Death Benefit (SDB) plan.
Things to consider when taking a period of leave without pay
Explore these sections to learn more about the impact LWOP has on your pension and SDB:
- Pensionable leave without pay
- Choosing to count your leave without pay as pensionable service
- Choosing not to count your leave without pay as pensionable service
- Payment options for pensionable leave without pay contributions
- Tax implications surrounding a period of leave without pay
- Seasonal layoff
- On loan leave without pay
- Leave with income averaging
- Pre-retirement transition leave
- Dual employment—Employment while on leave without pay
- Making service buyback payments while on leave without pay
- Types of leave without pay and contribution rates
- Required documents
The administrative process
Once you have decided that you wish to proceed on LWOP, you must seek approval from your manager. Your compensation advisor must then be notified that you will be leaving. It is preferable to inform your compensation advisor in advance to avoid overpayment situations.
Once you have reviewed the information in this package and decide to take a leave of absence, you may consult the Pension Centre for any additional information regarding the impact LWOP has on your pension and Supplementary Death Benefit.
Pensionable leave without pay
The public service pension plan allows you to earn pension credits during periods of employer-approved LWOP, allowing you to maintain the full value of your pension. Certain types of LWOP, however, cannot be considered pensionable such as suspension, strike, seasonal layoff and unauthorized leave of absences.
Please note that there is a limit on the number of years you can count as pensionable LWOP service under the public service pension plan. For more information, refer to the Tax implications surrounding a period of leave without pay section in this document.
If you have not already reached the pensionable LWOP limit, the first three months of any employer-approved LWOP is pensionable, meaning that the period of service counts in the calculation of your public service pension. After the first three months, you have the option to count or not to count your LWOP period as pensionable.
Choosing to count your leave without pay as pensionable service
If you do not sign an option not to count your LWOP within the prescribed time, you are deemed to have chosen to count your period of LWOP beyond the first three months as pensionable service. You will therefore owe pension contributions for your entire period of LWOP.
Since you also remain covered under the SDB plan during your period of LWOP, SDB contributions are owed for the entire period.
Pension and SDB contributions owing for a period of LWOP are based on deemed salaries and pensionable allowances (salaries and allowances you would have received had you not been on LWOP). These include pay revisions (including retroactive revisions) and pay increments that may become due after the commencement of your LWOP.
Choosing not to count your leave without pay as pensionable service
As indicated above, the first three months of your LWOP period are always counted as pensionable service. If you choose not to count your period of LWOP in excess of the first three months as pensionable service, you have to complete the Election not to Count Leave Without Pay as Pensionable Service (PWGSC-TPSGC 2480) form. You have to forward the completed form to the Pension Centre no later than three months following your return to work (in the case of rehabilitation leave, no later than three months after returning to your regular scheduled hours of work). Once your election has been made, your LWOP in excess of the first three months will not be counted as pensionable service and accordingly, you will not be required to pay pension contributions for the period of LWOP other than for the first three months. However, since you remain covered under the Supplementary Death Benefit (SDB) plan during your period of LWOP, SDB contributions are owed for the entire period of LWOP.
It should be noted that an option not to count LWOP as pensionable service cannot be made after an employee has terminated employment. The option has to be made while the employee is still actively at work or on LWOP.
As well, the option not to count can only be made for the full period of LWOP in excess of the first three months. You cannot choose to count only a portion of the period of LWOP in excess of the first three months as pensionable service and the remaining balance as non-pensionable service.
Please inform your compensation advisor if you are actively employed in the public service while you are on LWOP. This is referred to as a dual employment situation (that is, you are working in a term position, of 12 or more hours a week, while on LWOP from your substantive position). If you are in this situation, at the end of every term position you will have the option not to count the LWOP in excess of the first three months as pensionable service by completing the Election not to count leave without pay as pensionable service (PWGSC-TPSGC 2480) form. A new form is required at the end of each term position. Refer to the Dual employment—Employment while on leave without pay section.
Remember, if you do not exercise your option within three months following your return to work, you will be deemed to have chosen to count the period in excess of the first three months as pensionable service and contributions will be required for your entire period of LWOP.
An election not to count a LWOP period is irrevocable. You cannot later count that period of service unless you sign a Service buyback form (PWGSC-TPSGC 3006) (This site is only accessible to federal government employees, and only to federal departments and agencies) to count the service as pensionable under the public service pension plan. Contributions, however, would be based on your salary at the date of signing the service buyback form and a medical examination would need to be undergone and passed. This option would be more costly since interest is charged on service buybacks. More information is available in the Service buyback package or from the Pension Centre.
Payment options for pensionable leave without pay contributions
Generally, you are not required to pay your LWOP pension contributions and SDB contributions prior to, or during your period of leave. However, payments will be required upon your return to work. At that time, you will receive a letter from the Pension Centre outlining the amount owing and the deadline by which contributions have to be paid. The following payment options are available to you:
Lump sum payment: (within 30 days of return to work)
- By personal cheque, postal or bank money order payable to the Receiver General for Canada. Send your payment, together with a Payment Transmittal Form (PWGSC-TPSGC 570) (This site is only accessible to federal government employees, and only to federal departments and agencies), to the address indicated on the transmittal form.
Note 1: When sending a lump sum payment you must provide details on the payment by stating if it is for SDB contributions, provincial sales tax on SDB contributions for Quebec and Ontario residents, pension contributions or a service buyback payment.
Note 2: The receipt issued from the Pension Centre will be your tax receipt. Include it with your tax return to claim the deduction of pension contributions to a registered pension plan. Please note that SDB contributions are not tax deductible.
- By direct transfer of funds from your RRSP to the public service pension plan; using the Canada Revenue Agency Direct Transfer under subsection 146.3(14.1) or paragraph 146(16)(a) or 146.3(2)(e) (T2033) form. Send your completed T2033, together with a 'Payment Transmittal Form' (PWGSC-TPSGC 570), to the address indicated on the transmittal form.
Note 1: The direct transfer of funds option is for pension deficiencies only as SDB deficiencies and pension contributions owing to the Retirement compensation arrangements (RCA) account cannot be paid by transferring RRSP's.
Salary or pension deductions:
- By deduction from your salary or pension over a period equal to twice the period of the pensionable LWOP. If you choose this payment option, you can, at any time during the recovery period, make a payment for all, or part of the balance of deficiencies owing.
Note 1: Once your deductions have started, if you make a lump sum payment for part or all of the deficiencies owing, you would be advised in writing of any changes to your payment plan.
If you wish, you may pay your LWOP pension and SDB contributions during your period of LWOP. Contact the Pension Centre for more information.
These options are not applicable for on loan leave without pay as pension and SDB deficiencies must be paid in advance. For on loan LWOP situations, an estimate of the contributions owing as well as the related payment options, will be provided by the Pension Centre.
Tax implications surrounding a period of leave without pay
Income tax limit
The Income Tax Act places certain limits on the maximum period of LWOP which can be counted as pensionable service under a Registered Pension Plan. The maximum LWOP permitted is five cumulative years of LWOP (excluding certain types of LWOP), plus up to three years of child care leave, for a total of eight years of LWOP. The child care leave is limited to a maximum of one year per child which must be taken within one year of the date of birth or adoption of each child. Exceptions to these limits include periods of LWOP due to illness and leave where the member is "on loan". For part-time employees, the period of part-time LWOP must be converted to a full-time equivalent LWOP period when calculating the maximum period of pensionable LWOP.
Once you have reached the Income Tax Act limit, you may still proceed on LWOP, however, all additional periods of LWOP are non-pensionable and no pension contributions will be required beyond the pensionable LWOP limit. As indicated earlier in this document, SDB contributions are always required for the full period of LWOP since you remain covered under the SDB plan. The Pension Centre will notify plan members in writing when they reach the Income Tax Act limit.
A pension adjustment is a plan member's total pension credits, that is, the value of the plan member's pension for a given year, and is used by the Canada Revenue Agency (CRA) to determine the amount that you can deposit tax free to a Registered Retirement Savings Plan (RRSP) each year. The pension adjustment reduces the maximum amount that an individual can deduct for (RRSP) contributions for the next year. The annual Notice of Assessment issued by CRA indicates your available RRSP room for the year.
A pension adjustment is calculated and reported to CRA for all pensionable LWOP periods. Depending on when you make your choice not to count your period of LWOP beyond the first three months as pensionable service, a pension adjustment may be reported for your non-pensionable LWOP periods. It is therefore important that, if you intend not to count your LWOP, you sign your option not to count your LWOP at the time you proceed on LWOP to avoid any pension adjustments being reported for that service. CRA does not allow the reversal or amendment of any pension adjustment reported in a LWOP situation.
A pension adjustment will not be reported to CRA for LWOP periods that occur after the plan member has exceeded the maximum tax limit for pensionable LWOP.
Please note that a period of seasonal layoff is considered a non-pensionable period of LWOP and as such does not count in the calculation of your pension. Therefore, no pension contributions are required for a period of seasonal layoff. However, since you remain covered under the SDB plan for the entire period of LWOP, including the period of seasonal layoff, SDB contributions are required for the full period of your leave and will be recovered in a lump sum upon return to duty.
On loan leave without pay
A period of LWOP is considered "on loan" only where there is an official agreement between the employers for the loan of the member from the public service to the outside employer. Generally, members who proceed on LWOP for on loan purposes will be required to pay pension and SDB contributions in advance. If, however, you are obligated to contribute to the outside employer's pension plan, coordination of contributions will be required between the two pension plans. An estimate of the deficiencies owing along with your payment options will be provided to you by the Pension Centre.
Leave with income averaging
Leave with income averaging allows eligible employees to reduce the number of weeks worked in a specific 12-month period by taking leave without pay for a minimum period of 5 weeks up to a maximum period of 3 months. The employee's pay is reduced and averaged out over the 12-month period to reflect the reduced time at work.
Since this type of LWOP cannot exceed three months, the full period of leave is pensionable. Pension and SDB contributions are deducted on an ongoing basis from your reduced salary.
Please note that this type of leave is not available in all organizations subject to the public service pension plan.
Pre-retirement transition leave
Pre-retirement transition leave is a special working arrangement whereby eligible employees who are within two years of retirement and who agree to resign/retire effective at the end of the leave arrangement, may have their workweek reduced by up to 40 percent. For full-time employees, this represents up to two out of five working days.
Please note that this type of leave is not available in all organizations subject to the public service pension plan.
To apply for this leave you must submit an application to your manager for approval along with proof of your earliest date of retirement with an unreduced pension as indicated on your Pension and Insurance Benefits Statement. If required, the Pension Centre can also be contacted. As you are nearing retirement when applying for pre-retirement transition leave, you should contact the Pension Centre for retirement pension information, if you have not already done so.
Dual employment—Employment while on leave without pay
Should you become employed in a term position in the federal public service during your period of LWOP, you will be considered to be in a dual employment situation. If this occurs, you should notify both your employers as this could affect your benefits. In a dual employment situation, you may be required to pay pension and SDB contributions for your term employment while on LWOP from your first or substantive position. This is so, even if you are hired for a term position where you would not normally be required to contribute (for example, term of less than three or six months or on a casual basis).
Deductions for payment of pension and SDB deficiencies for periods of LWOP (exclusive of periods of dual employment) cannot be recovered until your return to duty or if you are appointed to an indeterminate position. If you are appointed to a new indeterminate position, you must notify your employer who has approved your original LWOP.
The first three-month period of LWOP following each period of term employment must be counted as pensionable service. If you decide not to count each period of LWOP in excess of the first three months as pensionable service, you must complete a new Election not to count leave without pay as pensionable service (PWGSC-TPSGC 2480) form for each period. Once you have made your options, each period of LWOP in excess of the first three months will not be counted as pensionable service towards your pension.
If you do not exercise your option within the prescribed time, you will be deemed to have chosen to count all periods in excess of the first three months as pensionable service and contributions will be required for all periods of LWOP.
Making service buyback payments while on leave without pay
Unlike current pension contributions, payments for a service buyback must be made on an ongoing basis during a period of LWOP. If you fail to make the monthly service buyback payments, those payments will be in default and additional interest will be charged.
Your monthly payments should be made payable to the Receiver General for Canada. Please send your payment, together with a Payment Transmittal Form (PWGSC-TPSGC 570) - This site is only accessible to federal government employees, and only to federal departments and agencies., to the Pension Centre at the address indicated on the form.
Note 1: The receipt issued from the Pension Centre will be your tax receipt. Include it with your tax return to claim the deduction of pension contributions to a registered pension plan. Please note that SDB contributions are not tax deductible.
Note 2: When sending a lump sum payment you must provide details on the payment by stating if it is for SDB contributions, provincial sales tax on SDB contributions (Quebec and Ontario residents), pension contributions or a service buyback payment.
Types of leave without pay and contribution rates
The following chart illustrates the pension contribution rates applicable to various types of pensionable LWOP. Be aware that some organizations may not offer all types of LWOP.
Note that certain types of LWOP are not pensionable (not listed in the chart) and contributions will not be required. The pension contributions can either be calculated at a single or double rate. Where the rate is single, you will be required to pay your share of contributions only, that is, the contributions that you would have paid had you not been on LWOP. Where the rate is double, you will have to pay both your share and the employer's share of contributions.
Contributions for the first three months of LWOP are calculated at single rate. The rate of contributions for the period exceeding the first three months is based on the type of LWOP.
Please note that the rates of contributions for the first three months of LWOP as indicated in the chart below may not apply in certain situations where multiple continuous periods or types of LWOP are taken.
Table summaryThe following chart illustrates the pension contribution rates applicable to various types of pensionable leave without pay. Be aware that some organizations may not offer all types of leave without pay.
|Type of leave without pay||Rates of contributions|
|First three months||After first three months|
|Adoption leave (within 52 weeks of adoption)||Single||Single|
|Care of immediate family, other than for taking care of a child within 52 weeks of birth or adoption||Single||Double|
|Care of immediate family, child only within 52 weeks of birth or adoption||Single||Single|
|Federal Royal Commission, Board or Agency outside the Public Service||Single||Single|
|Full-time paid official of union||Single||Double|
|Full-time paid official of a credit union||Single||Double|
|Illness and disability||Single||Single|
|Leave for personal needs (not to exceed three months)||Single||N/A|
|Leave with income averaging||Single||N/A|
|LWOP for the Long-Term care of a parent||Single||Double|
|On loan to an International Organization (not to advantage of the department)||Single||Double|
|On loan to any Organization, Government, etc. to the advantage of the department (except unions or credit unions)||Single||Single|
|On loan to a Government of a country other than Canada, not at the request of the Government or to the advantage of the department||Single||Double|
|Other reasons for LWOP (not covered by a code)||Single||Double|
|Parental LWOP (within 52 weeks of birth or adoption)||Single||Single|
|Parental LWOP (beyond 52 weeks of birth or adoption)||Single||Double|
|Relocation of spouse||Single||Double|
|Serving in the Canadian Armed Forces (non-contributor to CFSA)||Single||Single|
|Undergoing training or instruction including educational leave||Single||Single|
|Unpaid surplus status (12 months)||Single||Double|
A copy of your child's Birth/Baptismal Certificate or Adoption Certificate should be provided to the Pension Centre for the following types of LWOP:
- Maternity leave
- Parental leave
- Adoption leave
Please contact the Pension Centre if you have any questions regarding the required documents.
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