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1
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PURPOSE
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1.1
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The purpose of this bulletin is to provide information
regarding amendments to the Public Service Superannuation
Regulations (PSSR) pertaining to the change in age limit
for contributing to the Public Service Pension Fund (PSPF)
(from 71 to 69).
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1.2
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The use of the masculine in this text is generic and applies
to both men and women.
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2
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POLICY
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2.1
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The Income Tax Act (ITA) and ITA Regulations
place limitations on benefits that can be provided on a
tax-sheltered basis under a registered pension plan. On
September 25, 2002, the PSSR were amended in order to meet
the requirements of the ITA. These amendments are
effective January 1, 2003, and will discontinue the accrual
of pensionable service by contributors beyond age 69 rather
than age 71.
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2.1.1
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A contributor will cease to contribute to the PSPF, effective
January 1 of the year following the year in which he reaches
age 69.
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2.1.2
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A contributor who reaches age 69 while on leave without
pay (LWOP) will also cease contributions effective January
1 of the following year. In this case, the contributor can
only count as pensionable service the period of LWOP up
to the day prior to ceasing to contribute. This also applies
in situations where the contributor would cease contributing
during the first three months of LWOP.
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2.1.3
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In accordance with the new regulations, contributors who
reach age 69, 70 or 71 during the year 2003 will cease contributions
as of January 1, 2004.
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2.2
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Current contributions
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Current contributions must cease on the applicable effective
date as indicated in 2.1.2. An affected contributor (i.e.,
age 69 or over) who has completed 35 years of pensionable
service and is paying contributions at 1% (for indexing),
will also cease contributing under the Supplementary Benefits
provisions of the Public Service Superannuation Act (PSSA).
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2.3
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Past Service elections
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A contributor affected by these provisions is not eligible
to make a past service election once he ceases to contribute
to the PSPF. If an affected contributor wishes to elect
for eligible prior service, then the option must be exercised
before ceasing to contribute. Therefore, it is extremely
important that affected contributors are advised
of this provision immediately. All required ongoing
deductions for elective service will be made from the contributor's
salary even though current contributions are not being recovered.
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2.4
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Salary and service for benefit purposes
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Salary and service which occurs after the employee ceases
to be a contributor under these provisions will not be included
in the average salary for the best five years as well as
any pension benefit calculations.
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2.5
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Commencement of pension benefits
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An affected employee with at least two years of pensionable
service before ceasing to contribute (because of this provision)
would become entitled to an immediate annuity. However,
the annuity will not commence until the employee actually
terminates employment from the Public Service.
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When an employee has less than two years of pensionable
service and is only entitled to a return of pension contributions,
the return and its applicable interest is not payable until
the employee actually terminates employment.
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2.6
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Pension indexing
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Pension indexing for employees affected by the age 69 provisions
will be calculated from the date they ceased to contribute
rather that the date of termination.
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2.7
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Re-employed pensioners
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When a pensioner under the Public Service Superannuation
Act (PSSA) who is age 69 and over, becomes re-employed
for more than 6 months in the Public Service (and would
have to become a contributor if this provision did not apply),
his pension benefit will be suspended until he again ceases
to be employed. The annuity will recommence at the same
rate once the employee ceased again to be employed. The
indexation will be calculated as indicated in 2.6.
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2.8
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Supplementary Death Benefit (SDB) coverage
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SDB coverage will continue for employees who are affected
by the new PSSR. The 10% reduction in coverage will continue
to apply until the coverage has been reduced to the minimum
$10,000 or 1/3 of the annual salary, rounded to the next
$1,000, whichever is greater. Please note that this does
not apply to employees working for an Agency not subject
to SDB.
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3
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PROCEDURES
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3.1
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Cessation of contributions
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3.1.1
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Effective January 1, 2003, contributions for employees
who are of age 71 must be ceased.
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3.1.2
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Effective January 1, 2004, contributions for employees
who are of age 69, 70 or 71 must be ceased.
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3.1.3
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Effective January 1, 2005, and thereafter, contributions
for employees who are of age 69 must be ceased.
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3.2
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Identification of employees affected by the amended
regulations
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3.2.1
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Crown Corporations and Agencies are responsible for identifying
and notifying the employees who are affected by this change
and ensuring that their contributions to the PSPF cease
on the appropriate date.
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3.2.2
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It is important that affected employees are advised immediately
by their compensation advisor of these changes.
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4
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INQUIRIES
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4.1
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Any request for information regarding this matter should
be addressed to your Public Works and Government Services
Canada (PWGSC) Compensation Services Office.
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[Print Version]