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1 |
PURPOSE
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1.1 |
The purpose of this directive is to provide clients with information
regarding the proper calculation of the Pension Adjustment (PA) for former
employees who meet all of the following criteria:
- who were contributors during their service
- who did not receive a Return of Contributions (ROC);
- for whom the Struck off Strength (SOS) effective date is between
January 1, 1990 and December 31, 1999, inclusively;
- who have received some Pay Equity (PE) payments that are defined
as pensionable earnings in the year 2000;
- for whom no pensionable service has been accrued in the year
2000.
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1.2 |
This directive should be read in conjunction
with the following:
- Compensation Directive 1991-007(04)
dated January 24, 1991, entitled "Tax Reform - Pension Adjustment".
- Compensation Directive 2000-004
dated February 1, 2000, entitled " Pay Equity Implementation -
CR, ST, DA-CON, HS, LS and EU Groups".
- Compensation Directive 2000-015
dated May 19, 2000, entitled "Additional Information on the Implementation
of the Pay Equity Agreement".
- Compensation Directive 2000-19
dated June 21, 2000, entitled "Implementation of Pay Equity for
the PE Group".
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1.3 |
In this text, use of the masculine is generic
and applies to both men and women.
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2 |
CANCELLATION
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2.1 |
Bill C-52, passed on June 27, 1990, introduced
tax reforms pertaining to registered pension plans and registered retirement
savings plans (RRSPs). This resulted in the introduction of the Pension
Adjustment (PA).
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3 |
POLICY
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3.1 |
As per the Canada Customs and Revenue Agency
(CCRA) regulation 308 (3), a PA must be calculated on all pensionable Pay
Equity payments issued in the year 2000 for former employees who were contributors
with an SOS effective date between January 1, 1990 and December 31, 1999
inclusive, and who had no pensionable service accrued in the year 2000. |
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3.2 |
The Regional Pay System (RPS) does not calculate
a PA for the year where the employee does not have any pensionable service
accrued and in which pensionable payments were issued. As a result, former
employees who were contributors with an SOS effective date prior to January
1, 2000 and who received a Pay Equity Adjustment payment in the year 2000
did not have a PA amount calculated and reflected on their T4. |
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3.3 |
The current PA process in the RPS for former
employees with an SOS effective date prior to 1990 reports a PA amount of
zero. This zero reflects the accurate amount of the PA. |
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4 |
PROCEDURES/INSTRUCTIONS
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4.1 |
The RPS has been amended to automatically calculate
the PA for employees who meet all the criteria mentioned in section 1.1.
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4.1.1 |
For these cases the system will identify the
total of all pensionable PE payments received in the year 2000, and apply
the following special calculation to determine the PA:
[ (2% X the total of pensionable PE payments received in the year 2000)
X 9 = PA for 2000 ] TO A MAXIMUM OF $14,900. |
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4.1.2 |
An amended T4 reflecting the PA amount for the
year 2000 will be produced automatically by the RPS. |
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4.1.3 |
The related listings (amended T4 and amended
PA listings) will be produced for the 2000 taxation year. |
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4.1.4 |
The PA amount will also be reflected in the
previous year earnings (year 2000) in element 733 of the Master Employee
Record (MER). |
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4.1.5 |
The tentative implementation date for this
process is November 6, 2001. |
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4.1.6 |
This process will have to be repeated for the
2001 taxation year. |
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5 |
INQUIRIES
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5.1 |
Any request for information regarding the foregoing
should be addressed to your Public Works and Government Services Canada
(PWGSC) Compensation Services Office. |
R. Jolicoeur
Director General
Compensation Sector
Government Operational Service
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