How the transfer amounts are determined

Pension transfer amounts will be determined on an actuarial basis. The following will provide you with additional information on how the transfer amounts are determined:

Federal transfer amount (transfers into the public service pension plan or out of the public service to a defined benefit plan)

"A defined benefit plan is a pension plan that prescribes a specific level of benefit for each year of the plan member's pensionable service."

A federal transfer amount is the actuarial value calculated by the Government of Canada and is the amount required under the Public Service Superannuation Act (PSSA) to fund the service being transferred. The calculation of the "actuarial value" (value based on a set of actuarial assumptions) is very complex and lengthy and includes a great number of factors and tables. For this reason the calculation is performed by a computer program that is continually verified by the Office of the Superintendent of Financial Institutions (OFSI) to ensure its accuracy.

A simplified explanation of the process follows to provide a general understanding of how the federal transfer amount is determined.

The federal transfer amount is based on the deferred annuity that would be payable under the PSSA at age 60 and takes into account the following factors:

There are two categories of assumptions, which are applied in the following manner:

Federal transfer amount (transfers out of the public service to a defined contribution plan)

"A defined contribution plan is a pension plan that provides a member with a pension based on the value of the annuity purchased by the funds available in that member's investment account (contributions plus any accrued investment income) at retirement."

The federal transfer amount is equal to the transfer value as defined in the PSSA up to the prescribed limits set under the Income Tax Act.

A transfer value is a lump sum amount representing the present value of a contributor's future pension entitlement. The transfer value is calculated at the contributor's valuation date. The transfer value amount is determined using an actuarial calculation based on the deferred annuity that would be payable at age 60. It takes into account the factors defined above with the exception of economic assumptions. This factor differs from that used in the calculation of the federal transfer amount being transferred to a defined benefit plan. The definition of economic assumptions with respect to a transfer value payment is as follows:

Employer transfer amount

Is usually the amount equal to the value of the plan member's account(s) at the payment date. For additional information on how your employer calculates the employer transfer amount you will need to contact them directly.

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