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1994-001-e.html
SUPERANNUATION ADMINISTRATION MANUAL
SPECIAL BULLETIN: 1994-001
Appendix "A"
Appendix "B"
January 31, 1994
SUBJECT: Calculating Contributions Required under the Public Service Superannuation Act (PSSA)
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1 |
PURPOSE |
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1.1 |
The purpose of this Bulletin is to provide Public Service Corporations and Agencies not on the Regional Pay System with information regarding the proper method of calculating contributions required under the Public Service Superannuation Act (PSSA). |
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1.2 |
This Bulletin also contains information on how to correctly calculate the Pension Adjustment for employees subject to the PSSA. |
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2 |
BACKGROUND |
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2.1 |
The PSSA specifies the contribution rate assigned to employees who are subject to that Act. Contributions required are 7.5% of pensionable salary minus an amount equal to the amount that would have been required under the Canada Pension Plan or the Quebec Pension Plan (CPP/QPP) if the employee were required to contribute to the CPP/QPP. |
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2.2 |
The same contribution rate is required from all employees regardless of whether the employee is actually paying into the CPP/QPP. (Of course, employees with 35 years contribute at a rate of 1%.) In other words, the employee under age 18, the employee over age 65 and in receipt of CPP/QPP benefits and the employee who is on Leave Without Pay (LWOP) and not receiving salary, all pay the same PSSA contribution rate of 7.5% minus what would have been required under the CPP/QPP as if they were also required to contribute to the CPP/QPP. |
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2.3 |
Appendix A of this Bulletin provides some examples of how PSSA contributions should be calculated. |
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2.4 |
Revenue Canada provides direction on the annual Pension Adjustment (PA) calculation in the "Employers' Pension Adjustment Guide" which is available from your District Taxation Office. Appendix B of this Bulletin provides some specific examples of the PA calculation for members of the PSSA. |
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3 |
PROCEDURES |
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3.1 |
Although we refer to PSSA contributions as being integrated with CPP/QPP contributions, the integration is not on a dollar for dollar basis. That is, PSSA contributions are not reduced by the contributions paid into CPP/QPP. The PSSA contribution rate is actually a formula based on what would have been paid into CPP/QPP if the employee were paying CPP/QPP contributions on the pensionable salaries used for PSSA. |
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3.2 |
The requirements for deducting CPP/QPP contributions differ from PSSA requirements. For example, CPP/QPP contributions must be paid from the first salaries received during the year including overtime and non-pensionable monies (for PSSA purposes). On the other hand, PSSA contributions are deducted only from salaries that are pensionable for PSSA purposes. |
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3.3 |
The Regional Pay System (RPS) is designed to calculate PSSA contributions independently from CPP/QPP contributions so that the PSSA contributions are accurately calculated regardless of whether or when CPP/QPP contributions are paid. |
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3.4 |
Although individual pay systems may be designed differently from the Regional Pay System, the basic deduction principles are the same and can easily be adapted for other Pay Systems. |
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3.5 |
The examples at Appendix "A" use the CPP/QPP contribution and salary rates for 1993. (Of course, if you were calculating superannuation contributions for 1994, you would have to ensure that you are using the appropriate data for CPP/QPP for that year, i.e. $3,400 as the basic exemption, $34,400 as yearly maximum pensionable earnings, $31,000 as the CPP/QPP salary band and 2.6% as CPP/QPP contribution rate and therefore a superanuation reduced rate of 4.9%.) All calculations in the examples are based on an annual salary rate of $44,000 and assume 26 Pay Periods (PP) in the year. The 26 pay periods represent the number of pays a bi-weekly employee would receive in a year. The PP that you use should reflect the way your employees are being paid. |
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4 |
PENSION ADJUSTMENT CALCULATION |
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4.1 |
There have been some slight changes from previous years in the method of calculating the Pension Adjustment (PA) for members of the PSSA. The PA should be calculated in accordance with the examples at Appendix "B". |
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4.2 |
Although for some pension plans, the PA in the year of termination may be equal to the amount of the return of contributions, this is not true of the PSSA. It is important to note that the PSSA is, for Income Tax purposes, a multi-employer pension plan. The PA must be calculated the same way for all years, including the year of termination. |
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4.3 |
Where an employee has 35 years of service, the PA calculation will include service only up to the date on which the employee has completed 35 years of service. |
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4.4 |
As mentioned previously, there is a guide for employers on how to calculate a pension adjustment. As an employer, you are responsible for obtaining the information that will allow you to correctly calculate your employees' PA and keep you up to date on any changes regarding PA. To help you calculate the Pension Adjustment for 1993, you should note the following:
| i) |
the maximum pension adjustment for 1993 is $12,500 |
| ii) |
the maximum RRSP contributions for 1993 are $13,500 |
| iii) |
the excluded salaries for 1993 range from $75,000 to $86,111 |
| iv) |
the 1993 Yearly Maximum Pensionable Earnings for the CPP/QPP is $33,400 |
| v) |
the 1993 maximum Benefit Entitlement is $1,500. |
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5 |
INQUIRIES |
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5.1 |
Inquiries regarding the content of this Bulletin can be directed to Adèle Gervais, (819) 956-2058, or Michel David, (819) 956-2064, of the Advisory Services Division. |
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5.2 |
Requests for information on individual cases should be directed to the Superannuation Branch at (506) 533-5700 for English calls and (506) 533-5767 for French calls. |
Original Signed by
P. Charko
|
P. Charko
Director General
Compensation Sector
Government Operational Service Branch
APPENDIX "A"
| CALCULATION OF PSSA CONTRIBUTIONS |
| Pensionable Salary: |
$44,000/26 = |
$1692.31 |
per PP |
| CPP/QPP exemption: |
$3,300/26 = |
$126.92 |
per PP |
| CPP/QPP Salary Band: |
$30,100(annual) |
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| PSSA contributions are required at: |
| 7.5% of salary up to the CPP/QPP exemption |
| 5.0% of salary up to the CPP/QPP salary maximum |
| 7.5% of salary above the CPP/QPP maximum salary |
| Example 1: |
Employed for full year: |
| The same PSSA deduction is made each pay period until the CPP/QPP maximum salary is reached; all PSSA contributions deducted after the maximum salary is reached are based on a full 7.5% PSSA rate. Pay Period (PP) salary for this example: $1692.31 PP 1 to 19: |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 5.0% = |
$78.27 |
|
| CPP/QPP maximum salary is reached in PP 20 |
|
| $126.92 X 7.5% = |
$9.52 |
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| $357.59 X 5.0% = |
$17.88 |
|
| $1,207.80 X 7.5% = |
$90.50 |
|
| PP 21 to 26: |
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| $126.92 X 7.5% = |
$9.52 |
|
| $1,565.39 X 7.5% = |
$117.40 |
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| Total PSSA paid for the year |
| $ 9.52 x PP 1 to 26 = |
$247.52 |
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| $78.27 X PP 1 to 19 = |
$1,487.13 |
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| $17.88 + 90.53 PP 20 = |
$108.41 |
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| $117.40 X PP 21 to 26 = |
$704.40 |
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| Total = |
$2,547.46 |
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| Using the basic formula, this works out to : |
| $3,300 X 7.5% |
= |
$247.50 |
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| $30,100 X 5.0% |
= |
$1,505.00 |
|
| $44,000 - ($30,100 +$3,300) |
= |
$10,600 x 7.5% |
= $795.00 |
| total |
= |
$2547.00 * |
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| * The slight difference is as a result of bi-weekly pay. |
| Example 2: |
Taken on strength part-way through the year |
| NOTE: |
The PSSA rate of 7.5% based on the CPP/QPP exemption each pay period remains standard even though the employee may work only a partial year. (Employee Taken on Strength (TOS) in PP 15) |
| PP 15 (TOS date) to 26: |
| $126.92 X 7.5% = |
$9.52 |
|
| $1,565.39 X 5.0% = |
$78.27 |
|
| The same PSSA deduction continues each pay until the CPP/QPP maximum salary is reached. (In this case, the employee did not reach the CPP/QPP maximum salary for the year.) |
| Example 3: |
Employee terminates part-way through the year |
| Again, the same PSSA deduction is taken each pay and no adjustment is required because the employee worked only a partial year. If the employee had reached the CPP/QPP maximum salary, the deductions on that excess salary would be at a rate of 7.5%. |
| Pay Period 1 to 12 : (SOS in PP 13) |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 5.5% = |
$78.27 |
|
| Example 4: |
Employee with a LWOP recovery, single rate leave |
| When calculating deficiencies for LWOP, the integrated contribution rate is also used, even though the employee may not actually have paid into the CPP/QPP Plan. In this example the employee was on LWOP from pay period 7 through pay period 20 in the year and is counting the LWOP for pension purposes. |
| Pay Period 1 to 6 (on duty): |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 5.0% = |
$78.27 |
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| LWOP Pay Periods 7 to 20: Calculate the LWOP deficiency as if the employee had not been on leave. |
| Deficiency Calculation: |
| Pay period 7 to 19: |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 5.0% = |
$78.27 |
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| $87.79 X 13 pay periods = |
$1,141.27 |
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| Pay Period 20: |
| $126.92 X 7.5% = |
$9.52 |
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| $357.59 X 5.0% = |
$17.88 |
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| $1,207.80 X 7.5% = |
$90.50 |
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| Total = |
$117.90 |
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| Collect deficiency of $ 1,259.17 over the appropriate period (normally over a period equal to twice the period of the leave). |
| Pay Period 21 Re-taken on Strength (re-TOS) to Pay Period 26: |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 7.5% = |
$117.40 |
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| Total paid for the 1993 year PP 1 to 6: = |
$526.74 |
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| PP 21 to 26: = |
$ 761.52 |
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| Defiency PP 7 to 20: = |
$1,259.17 |
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| Total = |
$2,547.43 |
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| When the LWOP deficiency is a single-rate deficiency, the PSSA contributions recovered in a year should be the same for an employee (with the same pensionable salary) who had no LWOP. |
| Example 5: |
Employee with a LWOP recovery, double rate leave |
| The integrated contribution rate continues to be used even though the type of LWOP is a double rate leave and the employee may not actually have paid into the CPP/QPP plan. |
| Pay Period 1 to 6 (on duty): |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 5.0% = |
$78.27 |
|
| LWOP Pay Periods 7 to 20: Calculate the LWOP deficiency as if the employee had not been on leave, but using a double contribution rate. For this example only, we have assumed that 7 Pay Periods are equal to 3 months. |
| Deficiency Calculation: (First three months of LWOP are at single rate) |
| Pay Period 7 to 13: |
| $126.92 X 7.5% = |
$9.52 |
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| $1,565.39 X 5.0% = |
$78.27 |
|
| ($87.79 X 7 pay periods) = |
$614.53 |
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| Double rate leave: |
| Pay Period 14 to 19: |
| ($126.92 X 7.5%) X 2 = |
$19.04 |
|
| ($1,565.39 X 5.0%) X 2 = |
$156.54 |
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| ($175.58 X 6 pay periods) = |
$1,053.48 |
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| Pay Period 20: |
| ($126.92 X 7.5%) X 2 = |
$19.04 |
|
| ($357.59 X 5.0%) X 2 = |
$35.76 |
|
| ($1,207.80 X 7.5%) X 2 = |
$181.00 |
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| Total = ($235.80 x 1) = |
$235.80 |
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| Collect deficiency of $1,903.81 over the appropriate period (normally over a period equal to twice the period of the leave). |
| Pay Period 21 Re-taken on Strength (Re-TOS) to 26: |
| $126.92 X 7.5% = |
$9.52 |
|
| $1,565.39 X 7.5% = |
$117.40 |
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| Total paid for the 1993 year: |
| PP 1 to 6 = |
$526.74 |
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| PP 21 to 26 = |
$761.52 |
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| Deficiency = |
$1,903.81 |
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| Total = |
$3,192.07 |
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| NOTE: |
An automated Deficiency calculation Program has been developed for use in calculating LWOP deficiencies. This Program is available from the Software Exchange Program at (819)956-4731. |
APPENDIX B
| PENSION ADJUSTMENT CALCULATION FOR MEMBERS OF THE PSSA |
| Example 1: |
Annual pensionable salary: |
$45,000.00 |
| Step 1: |
Determine the annual benefit entitlement:
(1.3% x $33,400.00) + (2% x [$45,000.00 - $33,400.00])
= $434.20 + $232.00
= $666.20 (benefit entitlement) |
| Step 2: |
If the annual benefit entitlement is equal to or greater than $1,722.00, IMPOSE $1,722.00.
(In this case benefit entitlement does not exceed $1,722.00.) |
| Step 3: |
Pro-rate benefit entitlement by the number of pensionable pay periods.
| [A] |
Full year |
$666.00 x 26/26 = |
$666.00 |
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| [B] |
Partial year |
$666.00 x 13/26 = |
$333.00 |
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| Step 4: |
If the result is equal to or greater than $1,500.00, IMPOSE $1500.00.
(In this case, results are not greater than $1,500.00.) |
| Step 5: |
Multiply result of step 4 by a factor of 9
| [A] |
Full year |
9 x $666.00 = |
$5,994.00 |
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| [B] |
Partial year |
9 x $333.00 = |
$2,997.00 |
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| Step 6: |
Pro-rate $1,000 by number of pensionable pay periods
| [A] |
Full year |
$1,000.00 x 26/26 = |
$1,000.00 |
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| [B] |
Partial year |
$1,000.00 x 13/26 = |
$500.00 |
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| Step 7: |
Subtract result of step 6 from result of step 5; this result is the PA for 1993.
| [A] |
Full year |
$5,994.00 - $1,000.00 = |
$4,994.00 |
|
| [B] |
Partial year |
$2,997.00 - $ 500.00 = |
$2,497.00 |
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| Step 8: |
If result is greater than $12,500.00, IMPOSE $12,500.00.
(In this case, the result is not greater than $12,500.00.) |
| Example 2: |
Annual pensionable salary: $95,000.00. (Salaries between $75,000.00 and $86,111.00 are excluded from the PA calculation.) |
| Step 1: |
Determine the annual benefit entitlement:
(1.3% x $33,400.00) + (2% x [$95,000 - $86,111.00] + [$75,000.00 - $33,400.00])
= $434.00 + $1,009.00
= $1,443.00 (benefit entitlement) |
| Step 2: |
If the annual benefit entitlement is equal to or greater than $1,722.00, IMPOSE $1,722.00
(In this case, benefit entitlement does not exceed $1,722.00.) |
| Step 3: |
Pro-rate benefit entitlement by the number of pensionable pay periods.
| [A] |
Full year |
$1,443.00 x 26/26 = |
$1,443.00 |
|
| [B] |
Partial year |
$1,443.00 x 22/26 = |
$1,221.00 |
|
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| Step 4: |
If the result is equal to or greater than $1,500.00, IMPOSE $1500.00.
(In this case, results are not greater than $1,500.00.) |
| Step 5: |
Multiply result of step 4 by a factor of 9
| [A] |
Full year |
9 x $1,443.00 = |
$12,987.00 |
|
| [B] |
Partial year |
9 x $1,221.00 = |
$10,989.00 |
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| Step 6: |
Pro-rate $1,000.00 by number of pensionable pay periods
| [A] |
Full year |
$1,000.00 x 26/26 = |
$1,000.00 |
|
| [B] |
Partial year |
$1,000.00 x 22/26 = |
$846.00 |
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| Step 7: |
Subtract result of step 6 from result of step 5; this result is the PA for 1993.
| [A] |
Full year |
$12,987.00 - $1,000.00 = |
$11,987.00 |
|
| [B] |
Partial year |
$10,989.00 - $ 846.00 = |
$10,143.00 |
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| Step 8: |
If result is greater than $12,500.00, IMPOSE $12,500.00. |
| Example 3: |
Annual pensionable salary: $120,000.00. (Salaries between $75,000.00 and $86,111.00 are excluded from the PA calculation.) |
| Step 1: |
Determine the annual benefit entitlement:
(1.3% x $33,400.00) + (2% x [$120,000.00 - $86,111.00] + [$75,000.00 - $33,400.00])
= $434.00 + $1,509.00
= $1,943.00 (benefit entitlement) |
| Step 2: |
If the annual benefit entitlement is equal to or greater than $1,722.00, IMPOSE $1,722.00.
Benefit entitlement EXCEEDS $1,722.00. |
| Step 3: |
Pro-rate benefit entitlement by the number of pensionable pay periods.
| [A] |
Full year |
$1,722.00 x 26/26 = |
$1,722.00 |
|
| [B] |
Partial year |
$1,722.00 x 24/26 = |
$1,589.00 |
|
| [C] |
Partial year |
$1,722.00 x 22/26 = |
$1,457.00 |
|
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| Step 4: |
If the result is equal to or greater than $1,500.00, IMPOSE $1500.00.
Results are greater than $1,500.00 in [A] and [B]. |
| Step 5: |
Multiply result of step 4 by a factor of 9
| [A] |
Full year |
9 x $1,500.00 = |
$13,500.00 |
|
| [B] |
Partial year |
9 x $1,500.00 = |
$13,500.00 |
|
| [C] |
Partial year |
9 x $1,457.00 = |
$13,113.00 |
|
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| Step 6: |
Pro-rate $1,000.00 by number of pensionable pay periods
| [A] |
Full year |
$1,000.00 x 26/26 = |
$1,000.00 |
|
| [B] |
Partial year |
$1,000.00 x 24/26 = |
$923.00 |
|
| [C] |
Partial year |
$1,000.00 x 22/26 = |
$846.00 |
|
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| Step 7: |
Subtract result of step 6 from result of step 5; this result is the PA for 1993.
| [A] |
Full year |
$13,500.00 - $1,000.00 = |
$12,500.00 |
|
| [B] |
Partial year |
$13,500.00 - $ 923.00 = |
$12,577.00 |
|
|
(IMPOSE $12,500.00) |
| [C] |
Partial year |
$13,113.00 - $ 846.00 = |
$12,267.00 |
|
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| Step 8: |
If result is greater than $12,500.00 IMPOSE $12,500.00.
In example B: result is greater, IMPOSE $12,500.00. |
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