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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 Departments and Pay Offices with further details relating to a change in procedures for employees who are on a type of Leave Without Pay (LWOP) which requires that Public Service Superannuation Act (PSSA) contributions be paid in advance, i.e. employees who are "on loan" [refer to the Superannuation Administration Manual (SAM) Chapter 2.6.5].
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1.2
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Previously, the Superannuation Directorate was responsible for calculating contributions and advising affected employees of the amounts required for on loan cases on an annual basis.
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1.3
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Effective for 1998 and future years this activity will be the responsibility of the employing Department.
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2
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POLICY
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2.1
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When on loan, superannuation contributions must be paid:
a) annually,
b) quarterly,
c) or in a lump sum payment paid in advance; (Refer to SAM 2.6.5).
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2.2
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Contributions may be required at either a single or double rate, as described in SAM Chapter 2 and must be paid "in advance" in the following situations:
i) On loan from the Government of Canada to the government of a foreign country;
ii) Serving as a full time paid official of a Public Service bargaining agent;
iii) Serving as a full time paid official of a credit union; or
iv) Serving with an international organization (refer to exception SAM 2.6.5).
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2.3
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Supplementary Death Benefit (SDB) contributions are always required at single rate and must always be paid in advance.
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2.4
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When an employee is on LWOP, arrears for a past service election, are required monthly. If arrears are not paid monthly as required, the election will be in default. For administrative purposes election installments may be remitted in advance together with required current contributions.
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2.5
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The contributor is not required to pay in advance when the LWOP is to serve with the United Nations (UN) and the employee is required to contribute to the UN pension plan. In this case, the pension contributions will be transferred from the UN plan to the PSSA on the employee's return to duty.
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2.6
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However, Supplementary Death Benefit premiums are still required in advance. Also, if the employee has a past service election, arrears payments are required monthly. For administrative ease, arrears payments for a specific period may also be remitted in advance.
Return to Duty
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2.7
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On return to duty, the employer or the Pay Office in the case of the Regional Pay System (RPS) is required to reconcile the contributions for the full period of LWOP.
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2.8
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Where a contributor has not submitted all the required contributions while on loan, the outstanding deficiencies are to be recovered either in a lump sum within 30 days of the employee's return to duty, or from salary over a period equal to the period the employee was on loan.
Elections Not to Count LWOP
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2.9
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Employees, including those "on loan" may opt not to count the LWOP as pensionable service. However, contributions required for the first three months however must still be paid in advance. SDB contributions for the full period of leave are still required when an employee has opted not to count the LWOP.
Tax Limits on LWOP
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2.10
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Changes to the PSSA regulations, effective January 1, 1996, applied new limits to the total period of LWOP, exclusive of sick leave without pay, that can be treated as pensionable. The maximum permitted is five years of LWOP, plus up to three years of child care leave (refer to SAM 2.6.1). It is important to keep this rule in mind, particularly for on loan cases. Further details regarding the tax limits on pensionable LWOP will be covered in a SAM Bulletin to be published later.
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3
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PROCEDURES/INSTRUCTIONS
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3.1
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Compensation Specialists must calculate and provide to the employee, on an annual basis, the PSSA/Retirement Compensation Arrangement (RCA) and SDB contributions required while the employee is on loan. If an employee has a past service election, monthly payments are still required.
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3.2
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The Compensation Services Offices of Public Works and Government Services Canada (PWGSC) will provide a one time listing to the Departments and Agencies by mid January 1998 to identify contributors who are currently "on loan" as described in Section 2.2. Thereafter, it is the department's responsibility to identify new employees who are on loan and require annual letters.
Compensation Specialists must calculate the contributions required for 1998 and advise the affected employees by January 31, 1998. Thereafter, annual projections must be provided by January 31st of each year.
There are now approximately 400 active "on loan" cases across the Public Service. If no employee has been identified in a particular Department, that Department will not receive a list.
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3.3
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For employees proceeding "on loan" on or after January 1998, the Compensation Specialist must provide the employee with the amount of contributions required from the beginning of the on loan period to the end of that year.
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3.4
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A PC application, "RE-TOS Application" has been developed for calculating LWOP deficiencies. It can be obtained by contacting Susan Knight at:
- Public Works and Government Services Canada (PWGSC)
Application Management Services
Main Building, Wing 2401
Tunney's Pasture
Ottawa, Ontario
K1A 1G7
(613) 957-3485
NOTE: The RE-TOS application calculates a single or double rate of contributions based on the reason code. The first three months of LWOP are automatically calculated at single rate, supporting the LWOP regulations amended effective May 22, 1991. When providing estimates for a double rate of contributions, Compensation Specialists should enter the original T-SOS date each time an annual calculation is being performed. The generated summary report will provide a breakdown of deficiencies by year.
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3.5
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When a salary revision is reported after the employee has been advised of the annual contributions required, the revised salaries should be included in the next annual projection.
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3.6
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Compensation Specialists may wish to use the
attached sample letter or a similar letter
to notify the employee of the LWOP contributions required and the importance
of submitting the payments directly to the Superannuation Directorate.
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3.7
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In some specific cases, a new employer may deduct the required PSSA/RCA/SDB contributions from the employee's salary and remit them to the Superannuation Directorate. (e.g. employee's on loan to some unions). The employee should be provided with two copies of the LWOP letter so that one can be provided to the new employer. The employee should however be made aware that the responsibility for submitting LWOP contributions remain with him. Contributions not properly made will be recovered on return to duty or from subsequent pension payments.
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3.8
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Effective with this change in procedures, it is no longer necessary for employing Departments to complete a PWGSC-TPSGC 2000, Non Elective Pensionable Service Record for on loan purposes.
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4
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INQUIRIES
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4.1
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Any request regarding the foregoing should be addressed to your PWGSC Compensation Services Office.
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