| |
COMPENSATION DIRECTIVE: 2005-002
January 5, 2005
| SUBJECT: |
Changes to the Pension Support System (PSS) to Calculate a Projected Average Maximum Pensionable Earnings (AMPE) for the Purpose of Calculating the Canada Pension Plan (CPP)/ Quebec Pension Plan (QPP) Reduction |
| |
1 |
PURPOSE |
| |
1.1 |
The purpose of this directive is to advise client departments and pay offices of changes made to the PSS to provide a projected AMPE that will be used in the CPP/QPP reduction calculation when performing a pension estimate with a projected future termination date. These changes will come into effect on January 7, 2005. |
| |
1.2 |
These enhancements to the PSS will provide a more accurate amount of the CPP/QPP reduction. |
| |
1.3 |
In this text, use of the masculine is generic and applies to both men and women.
|
| |
2 |
BACKGROUND |
| |
2.1 |
Currently, when a pension estimate is performed with a termination date in the future, the PSS uses the current year AMPE in the CPP/QPP reduction calculation.
|
| |
3 |
PROCEDURES/INSTRUCTIONS |
| |
3.1 |
Pension Support System (PSS) |
| |
3.2 |
The CPP/QPP reduction amount is displayed on the Pension Calculation Screen (SNCAL) and is calculated using the lesser of the AMPE or the average salary. |
| |
|
The PSS will be modified to forecast the AMPE where a pension estimate will have a termination date that is in the future. The five-year AMPE will be projected by using the current yearly maximum pensionable earnings (YMPE) for the future years. |
| |
|
This AMPE calculation is currently being used on the Web application. |
| |
3.3 |
Here is an example of the values that will be used for this year:
| Projected termination |
YMPE |
AMPE |
| 1999 |
$37,400.00 |
$36,080.00 |
| 2000 |
$37,600.00 |
$36,620.00 |
| 2001 |
$38,300.00 |
$37,200.00 |
| 2002 |
$39,100.00 |
$37,860.00 |
| 2003 |
$39,900.00 |
$38,460.00 |
| 2004 |
$40,500.00 |
$39,080.00 |
| 2005 |
$41,100.00 |
$39,780.00 |
| 2006 |
|
$40,340.00 |
| 2007 |
|
$40,740.00 |
| 2008 |
|
$40,980.00 |
|
| |
3.4 |
Example of the AMPE projection |
| |
|
For pension estimates with a projected future termination date, we should assume that the current YMPE will remain constant when establishing the five-year AMPE. For example, if the expected termination date is 2006, we would calculate the AMPE as follows: |
| |
|
YMPE
2006 $41,100
2005 $41,100
2004 $40,500
2003 $39,900
2002 $39,100
$201,700 ÷ 5 = $40,340 AMPE for 2006
|
| |
4 |
INQUIRIES |
| |
4.1 |
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
R. Jolicoeur |
R. Jolicoeur
Director General
Compensation Sector
Finance, Accounting, Banking and Compensation
Reference(s): CJA 9203-11(2)(a)
|
[Print Version]