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1996-001-e.html
SUPERANNUATION ADMINISTRATION MANUAL
SPECIAL BULLETIN: 1996-001
Attachment
March 22, 1996
SUBJECT: Tax Compliance and Employees who are over age 71
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1 |
PURPOSE |
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1.1 |
The purpose of this Bulletin is to provide further details regarding employees over age 71 who will cease contributing to the Public Service Superannuation Account on April 1, 1996 |
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2 |
POLICY |
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2.1 |
As explained in Compensation Flash 1996-1 dated January 6, 1996, employees who were age 71 or older on December 31, 1995, will cease contributing to the PSSA on April 1, 1996. Employees who reach age 71 on or after January 1, 1996 will cease contributory status on January 1 of the year following the year in which they reach age 71.Current contributions |
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2.2 |
Current contributions must cease on the appropriate effective date. Where an affected employee (i.e. those over age 71) has completed 35 years of pensionable service and is currently paying contributions at 1% (for indexing) those contributions will also cease. Past Service elections |
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2.3 |
Employees affected by this provision are not eligible to make a past service election once they cease to contribute to the PSSA. If an employee so affected wishes to elect for eligible prior service, the election must be completed before ceasing to contribute after age 71. It is therefore extremely important that employees who are affected are advised in advance of the impacts of this provision. All required deductions for elective service will be made from the employee's salary even though current contributions are not being recovered. Salary and service for benefit purposes |
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2.4 |
Salary and service occurring after the employee ceases to contribute will not be included in any pension benefit calculations. This applies to all affected (age 71) employees, including those employees who have 35 years of pensionable service before they cease to contribute because of this new provision. Commencement of pension benefits |
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2.5 |
An affected employee with at least 5 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. Pension indexing on the annuity will be payable from the date the employee ceased to be required to contribute to the PSSA. Where an employee has less than 5 years of pensionable service, and is entitled to a return of pension contributions only, the return, plus applicable interest, is not payable until the employee actually terminates employment. Re-employed pensioners |
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2.6 |
Where a PSSA pensioner becomes re-employed in the Public Service, and would have become a contributor if this provision did not apply, the PSSA benefit must be suspended until the annuitant has again ceased to be employed. The annuity will recommence at the same rate, (with applicable indexing) once the employee again terminates employment. Supplementary Death Benefit coverage |
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2.7 |
For those employees who are subject to the Supplementary Death Benefit Plan, coverage will continue to be 1/3 of the employee's salary, or $5,000 whichever is greater. When the employee retires, if he is entitled to an immediate annuity, SDB coverage will reduce to $5,000. |
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3 |
PROCEDURES |
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3.1 |
Listings of affected employees who are paid through the Regional Pay System have been provided to the Departments. Crown Corporations and Agencies not on the Regional Pay System were advised to identify their affected employees. |
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3.2 |
Affected employees should have already been advised of this provision. Attached is a sample letter that may be used to advise employees who have not already been informed of these changes. |
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4 |
INQUIRIES |
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4.1 |
Any request for information regarding the foregoing should be addressed to your PWGSC Client Services Center.
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Original Signed by
P. Charko
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P. Charko
Director General
Compensation Sector
Government Operational Service
Dear
The Public Service Superannuation Act was recently amended to comply with the requirements of the Income Tax Act. Under the Tax Act, an employee cannot continue to accrue benefits under a Registered Pension Plan after the employee reaches age 71.
Because you were 71 on ...................., you will cease to contribute to the Public Service Superannuation Account effective from ................. .. . If you are currently a member of the Supplementary Death Benefit plan, as an employee your SDB coverage will continue, based on 1/3 of your salary, or $5,000 whichever is greater.
If you have prior eligible service which you would like to purchase in order to maximize your benefits under the Public Service Superannuation Act, you must complete the election for that service prior to the date you cease to contribute under the pension plan .
You should consult with your Pay and Benefits Specialist to determine how these changes to the pension plan impact your own situation.
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