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1 |
PURPOSE |
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1.1 |
The purpose of this special advice is to remind
Crown corporations and territorial governments of the importance of communicating
pension related information when employees move from a department where
the Treasury Board of Canada Secretariat (TBS) is the employer to an organization
where TBS is NOT the employer or vice-versa, or between organizations where
TBS is NOT the employer of either one. |
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1.2 |
A complete list of the departments where TBS
is the employer (Public Services Staff Relations Act, Schedule I,
Part I) and the organizations where TBS is NOT the employer (Public
Service Staff Relations Act, Schedule I, Part II, Crown corporations
or other Government of Canada Entities) can be found in the Population
Affiliation Report at the following Web site: |
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http://publiservice.hrma-agrh.gc.ca/hr-rh/hrtr-or/hr_tools/Intro_e.asp ![Publiservice](/web/20061210202213im_/http://www.pwgsc.gc.ca/compensation/images/publiservice.gif) |
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1.3 |
This special advice should be read in conjunction
with Compensation Directive 2002-017 dated June 27, 2002, entitled "Change
of Employer -- Procedures" and Compensation Directive 2005-009 dated May
30, 2005, entitled "Pension Data Correction Project". |
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2 |
BACKGROUND |
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2.1 |
The Pension Data Correction Project (PDCP)
started production this spring. The team at the Superannuation, Pension
Transition and Client Services Sector (SPTCSS) in Shediac is reviewing
and correcting pension accounts using a pension data integrity application. |
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2.2 |
Since the introduction of the PDCP, the SPTCSS
has become increasingly aware that, in many cases, pension contributions
are not accurately deducted at source when employees move from one employer
to another because the new employer is not aware of the low rate contributions
already deducted for the calendar year. As a result, insufficient employee
pension contributions are being deducted. |
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3 |
POLICY |
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3.1 |
A permanent change in employment between employers
as defined above in Section 1.1 results in the previous pay account being
struck off strength (SOS) and a new one created using the taken on strength
(TOS) transaction. The data from the old pay account is not automatically
transferred to the new pay account. |
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3.2 |
If the employer is subject to the Public
Service Superannuation Act (PSSA), and the employee is a contributor
to the Public Service Pension Plan (PSPP), he remains a contributor
as long as he continues to meet the eligibility requirements. |
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3.3 |
The members' contributions to the PSPP are
based on the following formula: |
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- A low rate of contributions (currently 4%) on the salary up to the
maximum covered by the Canada Pension Plan/Quebec Pension Plan (CPP/QPP);
and
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- A high rate of contributions (currently 7.5%) on the salary above
the maximum covered by the CPP/QPP.
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4 |
PROCEDURES |
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4.1 |
The compensation advisor from the previous
employer must communicate with the compensation advisor of the new
employer to provide him with the amount of low and high rate pension contributions
deducted from the employee during the current calendar year. In turn, the
new employer's compensation advisor must communicate this
amount to his pay service provider (for example: the pay office) so that
it can be determined when the employee will reach (or has reached) the
annual Public Service Pension Fund (PSPF) low threshold rate. |
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Note: For employers being serviced by the Regional
Pay System (RPS), element 798 (PSSA Low) of the Master Employee Record
(MER) should be credited with the amount of PSPF low contributions.
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5 |
RESPONSIBILITY |
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5.1 |
To prevent pension contributions from being
incorrectly deducted, the compensation advisor must request the low rate
contributions from the previous employer and advise the pay service provider
(for example: the pay office) so that they can be updated in the pay system.
Without this update, deductions at source are inadequate and cause a deficiency
in pension contributions which also causes incorrect matching of the employers'
share of contributions. |
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5.2 |
Using the pension data integrity application,
this type of discrepancy will be identified for occurrences since the introduction
of the PSPF on April 1, 2000. For each specific period the PDCP team determines
that insufficient pension contributions have been received, a request will
be made to the current employer to determine the value of the pension contribution
deficiencies and to take the necessary corrective action. |
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5.3 |
To avoid similar situations in the future,
compensation advisors and pay service providers are asked to adhere to
the process described above.
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6 |
INQUIRIES |
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6.1 |
Any inquiries on the information contained
in this document should be addressed to your PWGSC Compensation Services
Office. |