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1 |
PURPOSE |
|
1.1 |
The purpose of this Bulletin is to provide information regarding the adjustment to 1997 contributions required under the Public Service Superannuation Act (PSSA). |
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2 |
BACKGROUND |
|
2.1 |
Superannuation Administration Manual (SAM)
Special Bulletin 1997-012 dated November 19, 1997, advised that the 1997 PSSA contribution rate would change as a result of changes to the Canada Pension Plan (CPP), retroactive to January 1, 1997. |
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2.2 |
Legislation required to implement the changes to the CPP was passed December 18, 1997. Effective from January 1, 1997, the CPP contribution rate increased from 2.925 % to 3 % . |
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2.3 |
As a result of the retroactive change to the 1997 CPP contribution rate, the revised PSSA contribution rate for 1997 is as follows: i) 7.5 % on salaries up to the CPP exemption of $3,500; ii) 7.5 % less 3 % (4.5 %) on salaries from $3,500.01 to $35,800; iii) 7.5 % on salaries above $35,800. |
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3 |
PROCEDURES/INSTRUCTIONS |
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3.1 |
The contributions required under the PSSA must reflect the new contribution rate retroactive to January 1, 1997. |
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3.2 |
Clients Serviced by the Regional Pay System (RPS) |
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3.2.1 |
For active employees, the 1998 PSSA contributions will be reduced to account for the overpaid 1997 contributions. Example 1998 Pensionable Salary = $45,000 PSSA contributions required for 1998: ($45,000 X 7.5 %) less contributions required under the CPP
| 3,375 - 1,068.80 = |
2,306.20 |
|
| less maximum |
|
|
| 1997 refund |
24.23 |
|
|
2,281.97 |
|
Total PSSA contributions to be deducted in 1998 = $2,281.97 |
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3.2.2 |
The actual reduction will likely occur in one of the Pay Periods this summer. A Compensation Directive will be issued once the exact date is known. Example Pensionable Salary = $45,000 Pensionable Gross for Pay Period (PP) 14/98 = $1,724.93
| 1724.93 |
|
| - 134.61 X 7.5 % = |
10.10 |
| 1590.32 X 4.3 % = |
68.38 |
| PSSA for PP14 |
78.48 |
78.48 less refund of 24.23 = 54.25 Total PSSA deducted in PP14/98 = $54.25 |
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3.2.3 |
The 1997 T4 and Relevé 1 statements will not be amended, nor will a T4A or Relevé 2 be issued to reflect the reduction made in 1998. The 1998 T4 and Relevé 1 statements will simply indicate the total PSSA contributions paid in 1998 including the refund. |
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3.2.4 |
Employees who are in Temporarily Struck off Strength (TSOS) status and employees who are in Struck off Strength (SOS) status and who have not received a Return of Contributions (ROC) at the time the adjustment is made, will receive a supplementary payment to refund the over deducted contributions. A T4A or Relevé 2 will be issued in these cases. |
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3.2.5 |
SOS employees who have already received an ROC at the time the refund is issued are not entitled to receive an additional refund. Any overpaid contributions would have been included in the ROC payment. |
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3.3 |
Clients Not Serviced by the Regional Pay System (RPS) |
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3.3.1 |
It will be the responsibility of clients not serviced by the RPS, to calculate the required adjustment of PSSA contributions and to reduce the 1998 contributions accordingly. |
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3.3.2 |
In the case of active employees, the employer matching share of 1998 contributions will be based on the reduced employee contributions and no further adjustments will be required. |
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3.3.3 |
For inactive employees, it is necessary to calculate and request the refund of both the employee and employer shares from the Superannuation Directorate. The reason for the request must be identified with the following explanation: "Refund of 1997 PSSA contributions due to 1997 CPP contribution rate change." |
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3.3.4 |
In order to calculate the adjustment (refund) of the employee share, the following formula may be used: Total of 1997 Pensionable Earnings between $3,500.01 and $35,800.00 X 0.075 %. Note: 0.075 % is the difference between the previous contribution rate of 4.575 % and the revised contribution rate of 4.5 % required on the above range of salaries. Example Total 1997 Pensionable Earnings = $40,000 40,000.00
- 3,500.00
36,500.00
- 4,199.99 (40,000 - 35,800.01)
32,300.01 Total of 1997 Pensionable Earnings between $3,500.01 and $35,800.00 = $32,300.01 $32,300.01 X 0.075 % = $24.23 Refund = $24.23 |
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4 |
INQUIRIES |
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4.1 |
Any request for information regarding the foregoing should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office. |
