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1 |
PURPOSE |
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1.1 |
The purpose of this bulletin is to provide Correctional Service Canada (CSC) Personnel Offices with detailed information on the new early retirement benefits provision. |
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1.2 |
The bulletin is also being provided to other holders of this manual who should be aware of the provision on a general basis, should CSC employees later join their staff. |
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2 |
BACKGROUND |
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2.1 |
The Public Service Superannuation Regulations providing special pension arrangements for CSC employees became effective 18 March 1994. |
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2.2 |
The special provision allows for a lower age at retirement and a reduction in the number of years required to qualify for a pension. An additional contribution will be required from employees subject to this special provision. |
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3 |
CURRENT SERVICE ELIGIBLE CONTRIBUTORS |
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3.1 |
General Rule: Every person employed with CSC in operational service and required to contribute to the Superannuation Account on or after 18 March 1994 will be subject to the new CSC provision, with the exception of the following employees who would not benefit from coverage under the Special Plan:
| i) |
contributors who on 18 March 1994 had already met the criteria for an immediate annuity under the PSSA (i.e. age 60 with 5 years of pensionable service or age 55 with 30 years of pensionable service); |
| ii) |
any person who is employed in operational service for the first time on or after reaching age 35; |
| iii) |
persons whose age, on becoming employed in operational service, minus the total of any prior operational service (to their credit or not), is equal to or greater than 35; |
| iv) |
individuals who become employed in operational service between the ages of 30 and 35 and who have at least 5 years of non-operational pensionable service to their credit under the PSSA. |
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DEFINITION OF OPERATIONAL SERVICE |
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3.2 |
Operational service is defined as service by a person employed by CSC whose principal place of work is other than:
| i) |
the national headquarters or a regional headquarters of CSC; |
| ii) |
the offices of the Commissioner, CSC; or |
| iii) |
a regional Correctional Staff College or any other institution that provides similar training to CSC employees. |
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3.3 |
Periods of operational service also include:
| a) |
periods of absence from CSC of less than six months where the employee remains employed in the Public Service and returns to CSC operational service as referred to in paragraph 3.2 above immediately following such an absence; |
| b) |
periods of absence from operational service of up to two years, with or without pay, where the employee remains employed with CSC; |
| c) |
periods of service away from operational service where a contributor with at least ten years of operational service has made a valid election to continue paying the extra contributions. |
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CURRENT CONTRIBUTIONS |
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3.4 |
Effective 18 March 1994, CSC employees engaged in operational service and required to contribute to the PSSA must contribute an additional 1.25% of salary to the Superannuation Account with the exception of the employees listed in paragraph 3.1. |
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3.5 |
The total PSSA contribution rate for these employees is 8.75% (7.5% + 1.25%) minus the amount required under the CPP or QPP. |
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3.6 |
The total contribution rate for individuals who have accumulated 35 years of pensionable service remains at 1.0%, i.e. the additional 1.25% is not required after 35 years. |
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3.7 |
CSC will be responsible for identifying those contributors who will become subject to the new provision. A bulk change to the pension code from 01 to 18 will be made in the Regional Pay System. This will result in the deduction of the additional 1.25% from the salary of all eligible employees. |
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3.9 |
A decision has not yet been reached as to whether or not additional contributions owing will be recovered for the period between the CIF date and the date on which additional contributions commenced. The appropriate offices will be advised once a decision has been reached. |
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CURRENT OPERATIONAL SERVICE PRIOR TO 18 MARCH 1994 |
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3.9 |
Any contributor who is subject to the new provision and who, prior to 18 March 1994, has pensionable service which is defined as operational service will have this service credited as "operational service" at no additional cost. |
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3.10 |
Operational service must be certified on the DSS-MAS 2471, Certification of Operational Service Correctional Service of Canada. Completion of this form does not negate a future requirement for the completion of a DSS-MAS 2000 at retirement. |
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3.11 |
The DSS-MAS 2471 should be completed, for example, when a review of the employee's file is made for information purposes, when an election for prior operational service is made, when an employee transfers out of Operational service or leaves CSC, etc., so that the information will be available for benefit processing. |
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3.12 |
A copy of the DSS-MAS 2471 must be sent to Superannuation Directorate in order to have the Contributor System updated for the periods of "operational service". |
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PERIODS OF LEAVE WITHOUT PAY |
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3.13 |
A contributor required to pay contributions for periods of leave without pay will also be required to pay an additional 1.25% (for single rate leave) or 2.50% of salary (for double rate leave) in respect of a period of operational service that may be counted as such. |
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MOVEMENT TO NON-OPERATIONAL SERVICE |
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3.14 |
A member of the plan who has been employed in operational service for a period of at least ten years, upon ceasing to be employed in operational service but while still employed in CSC, may elect to continue paying the additional 1.25% contribution in order to count the service as operational. |
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3.15 |
Periods of absence from CSC described in paragraph 3.3(a) and any portion in excess of six months of absence from operational service described in paragraph 3.3(b) shall not count in the calculation of the ten years of operational service required to make a valid election to continue paying the additional contributions. |
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3.16 |
Such an election must be made within 90 days of ceasing to be employed in operational service, or within 90 days of the date of issue of the new instrument of appointment, whichever is later. The election must be made by completing a DSS-MAS 2469, Election to Continue to Pay Extra Contributions for All Additional Years of Non-Operational Service, and forwarding one copy to Superannuation Directorate within the aforementioned 90-day period. A copy of the DSS-MAS 2469 must also be sent to Personnel so that the additional contributions may be taken from the employee's salary. The election ceases to be effective if the employee later transfers to any department other than CSC. |
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4 |
ELECTIVE SERVICE |
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4.1 |
A contributor who is subject to the CSC special plan may elect to count prior employment in CSC as "operational service" provided it is defined as "operational service", subject to the terms and conditions explained below:
| i) |
Elections for service before 18 March 1994 |
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Prior elective service which is defined as "operational service" and which took place prior to 18 March 1994, will count as "operational service" automatically. The regular elective service costing applies to this service. The additional contribution of 1.25% is not required. |
| ii) |
Election for service occurring on or after 18 March 1994 |
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If an election is made for service occurring on or after 18 March 1994, the contributor will be credited with non-operational service even where the service would otherwise be defined as "operational service". A second election will be required in order to count the period as "operational service." |
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4.2 |
The election to purchase the service and count it as "operational" can be made at the same time using the same election form.
However, it is possible to elect for the service first under the regular elective provisions and also to make a subsequent election to count the service as "operational". The contributor must be engaged in operational service at the time of the election to count the elective service as operational. The DSS-MAS 2006 must clearly indicate the service is to be credited as "operational", otherwise the employee will be credited with non-operational service only. |
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4.3 |
Costing The cost of electing for operational service which occurred on or after 18 March 1994 will, in addition to the regular election cost, include the additional contribution of 1.25% (or 2.50% for double rate LWOP that is elective) of the appropriate salary rate. |
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4.4 |
If the contributor makes the election within one year of becoming employed in operational service, the additional cost will be based on the salary rate authorized on becoming so employed. Otherwise the cost will be based on the salary authorized on the date of the election. |
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4.5 |
Forwarding of Form In all cases (both normal and late elections), an election to count the service as "operational" must be forwarded within one month of signature. |
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4.6 |
Medical Examinations If the contributor makes an election to count the service as "operational" within one year of becoming employed in operational service, the medical requirements for normal elections apply. |
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4.7 |
If the election is made more than one year after the contributor becomes employed in operational service, a medical must be undergone and passed within the 30 days preceding or the 90 days following the date of election. Otherwise, the election is invalid. |
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5 |
BENEFITS TO CONTRIBUTORS |
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5.1 |
The new CSC provision establishes lower age and service criteria for PSSA pension benefits for employees who were employed in operational service on or after 18 March 1994. |
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LESS THAN FIVE YEARS OF PENSIONABLE SERVICE |
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5.2 |
An employee who terminates his employment in the Public Service with less than five years of pensionable service is entitled normally only to a return of contributions plus interest. The return would include the additional (1.25%) contributions paid while in operational service. |
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FIVE OR MORE YEARS OF PENSIONABLE SERVICE |
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5.3 |
All contributors who have five or more years of pensionable service at termination of employment in the Public Service are entitled to a benefit under section 13(1) of the PSSA. |
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5.4 |
The following paragraphs illustrate the benefits which individuals covered under the special CSC provision may choose in lieu of any benefits to which they would otherwise be entitled under section 13(1) of the PSSA. |
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5.5 |
A contributor subject to the CSC special plan who is at least 50 years of age and who has at least 25 years of operational pensionable service at the time he ceases employment in operational service is entitled at his option to an immediate annuity in respect of operational service, payable from the date he ceases to be employed in the Public Service. |
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5.6 |
A contributor who meets the requirements outlined in paragraph 5.5 and who does not opt for a benefit payable under section 13(1) of the PSSA within one year of ceasing to be employed in the Public Service will be deemed to have chosen an immediate annuity under the CSC special provision payable from termination of employment. |
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5.7 |
A contributor subject to the CSC special plan who is at least 45 years of age and who has at least 20 years of operational pensionable service at the time he ceases employment in operational service is entitled, upon ceasing to be employed in the Public Service and any time prior to receiving a benefit under section 13(1) of the PSSA, to opt for an annual allowance in respect of his operational service. The value of the annual allowance is the value of the deferred annuity based on the operational service reduced by the greater of (i) 5% for each year, to the nearest 1/10 of a year, that the contributor is less than 50 years of age at the time of making the option or (ii) 5% for each year, to the nearest 1/10 of a year, that the contributor's operational service is less than 25 years. |
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5.8 |
A basic annuity payable under the CSC special provision is calculated the same way as a basic PSSA annuity, that is 2% X years of pensionable operational service X average salary for the best six consecutive years of pensionable service. The average salary is calculated when the employee terminates employment in the Public Service and can include salaries earned during periods of regular service. |
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INDEXATION |
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5.9 |
A benefit paid under the CSC special provision will be indexed as follows: - the indexation will become effective the month during which the total of a person's age (in full years) and years of service on which the benefit is based (in full years) total 85. - it will be payable at the earliest in the month in which the recipient reaches age 55 (with 30 years of operational service), and at the latest when that person reaches age 60. - when the entitlement criteria are met in the year of termination from the Public Service, the benefit will become indexed on 1 January of the following year. When the entitlement criteria are met in a year prior to termination from the Public Service, and termination from operational service has also occurred in a year prior to termination from the Public Service, indexation will occur immediately upon the benefit becoming payable. |
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5.10 |
A CSC benefit will be indexed using the termination date from operational service. |
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EXAMPLE 1: |
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Date of Birth: 15-09-42 |
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Operational Service: 01-12-67 to 31-03-94 |
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Public Service: 01-04-94 to 31-03-97 |
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Retires from Public Service on 01-04-97 and opts for an immediate annuity under the CSC special provision based on 26 years of operational service. The CSC benefit would be indexed on 01-09-2001, when the total of the employee's age and years of service equals 85, and it would use April 1994 as the date of termination to calculate the indexation. |
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EXAMPLE 2 |
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SOS Operational Service: 01-06-94 |
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SOS Public Service: 01-06-94 |
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Total Operational Pensionable Service: 24 years |
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Date of Birth: 30-05-38 |
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(56 years old at SOS) |
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The criteria for the 85 formula will not be met until the member is 61 years old. Therefore, the CSC benefit will be indexed effective 01-05-98, the month the employee reaches age 60. The SOS date of 01-06-94 would be used to calculate the indexation. |
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EXAMPLE 3: |
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SOS Operational Service: 01-06-94 |
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SOS Public Service :01-06-96 |
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Total Operational Pensionable Service: 28 years |
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Date of Birth: 30-05-39 |
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The criteria for the 85 formula will be met on 01-05-96 (the month the member becomes 57 years of age with 28 years of pensionable operational service). The CSC benefit (if the member chooses that option) would be indexed effective from the SOS date 01-06-96, because the member had terminated operational service prior to 1996. The indexation would be based on the 1994 SOS date. The regular PSSA benefit based on two years of Public Service would be indexed effective 01-01-97 using the SOS date of June 1996. |
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5.11 |
A disability pension is an entitlement under section 13(1) of the PSSA. Therefore, the indexing of such a benefit does not follow the 85 formula; it is indexed the later of the date it becomes payable or the 1st of January following the date of retirement. The indexing of a disability benefit under the PSSA, will be calculated based on the year of retirement from the Public Service. |
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5.12 |
A contributor who has both operational and regular public service to his credit may choose to receive two separate benefits, one calculated under the CSC provision and the other calculated under the regular PSSA provisions. He may also choose to receive one benefit under the regular PSSA provisions based on the combined operational and non-operational service. On providing information to these contributors on their various options, the compensation specialist should ensure that the employee is aware of the impact of choosing CSC versus regular benefits, not only in terms of basic pension, but also as it relates to supplementary benefits (indexation) and eligibility to continue SDB coverage at the regular rate. |
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5.13 |
A contributor who has a choice of benefits under the regular PSSA provisions must indicate his choice by completing a DSS-MAS 2011. A contributor who is entitled to choose a benefit under the CSC special plan will be required to complete the new DSS-MAS 2011-2 indicating his choice of benefits under the special plan. In cases where the contributor chooses to receive two separate benefits (one under the CSC special plan and the other under the regular plan) both a DSS-MAS 2011 and a DSS-MAS 2011-2 must be completed. |
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5.14 |
A contributor with operational service to his credit who transfers to another employer also subject to the PSSA may be entitled to choose benefits under the special provision upon terminating his employment with the Public Service. Such an individual should consult his Correctional Service Canada personnel office to obtain information on his choice of benefits under the special provision. If this is not possible, he should contact Superannuation Directorate to obtain this information. |
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5.15 |
Survivor benefits paid in respect of an employee who was subject to the CSC special plan will be paid under the regular PSSA provisions. Those benefits will be indexed immediately in the case of benefits that become payable subsequent to the year of retirement or on January 1st following the entitlement date for all other cases. |
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6 |
RESPONSIBILITY |
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6.1 |
Personnel offices of CSC will be responsible for: - determining whether an employee should be subject to the special provision and ensuring that the required additional contributions are deducted accordingly. - certifying prior operational service by completing the DSS-MAS 2471 when required. - providing employees with information regarding their benefit entitlement and any other information regarding the special provisions, as requested. |
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7 |
REQUEST FOR INFORMATION |
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7.1 |
Any request for information regarding the content of this bulletin may be addressed to Adèle Gervais (819) 956-2058 or Michel David (819) 956-2064, of the Advisory Services Division. |
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7.2 |
Any inquiry regarding a specific case may be addressed to Superannuation Directorate of Public Works and Government Services Canada. |
