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1 |
PURPOSE
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1.1 |
The purpose of this Bulletin is to provide the
following information: |
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i) the change in Canada Pension Plan (CPP) and
Quebec Pension Plan (QPP) employee contribution rates for 2001; |
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ii) the rate of pension indexing for 2001; |
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iii) the employer contribution rate to the Retirement
Compensation Arrangement (RCA) and the Public Service Superannuation
Act (PSSA) salary thresholds for 2001; and |
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iv) to provide examples of how to calculate
the Pension Adjustment (PA) for 2000.
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1.2
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In this text, use of the masculine in this text
is generic and applies to both men and women.
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2 |
POLICY
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2.1
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CPP/QPP |
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Effective January 1, 2001, the CPP/QPP employee
contribution rate will increase to 4.3 %.
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The 2001 changes related to CPP/QPP are: |
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| MAXIMUM PENSIONABLE EARNINGS |
$38,300.00 |
| BASIC EXEMPTION |
$ 3,500.00 |
| MAXIMUM CONTRIBUTORY EARNINGS |
$34,800.00 |
| MAXIMUM CONTRIBUTION |
$ 1,496.40 |
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The Average Maximum Pensionable Earnings (AMPE)
for 2001 is $37,200.00. The AMPE is calculated based on the average of the
Yearly Maximum Pensionable Earnings (YMPE) for the current year plus the
four previous years. The annual CPP/QPP reduction in the benefit payable
under the PSSA for individuals who retire in 2001 will be based on the lesser
of the 5-year average salary and the AMPE at the earlier of the termination
date and the date the employee reaches age 65 and is in receipt of CPP or
QPP retirement benefits.
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2.2
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PSSA Employee Contribution Rate |
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Effective from January 1, 2001, the employee
contribution rate is: |
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4.0% on salaries up to the YMPE ($38,300.00) and
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7.5% on salaries in excess of the YMPE ($38,300.00).
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2.3 |
Pension Increase under the Supplementary Benefits Provision of the PSSA
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Part III of the PSSA provides for annual pension
increases depending on the cost of living index, for all pensions payable
to former public servants or their survivors.
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The pension increase authorized under Part III
of the PSSA is 2.5 % effective January 1, 2001.
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2.4 |
PSSA Salary Threshold and RCA Contributions |
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For 2001, employees whose annual salary rate
is in excess of $99,600.00 will contribute to the PSSA in respect of salary
below this limit and to the RCA in respect of those salaries above the limit.
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2.5 |
Public Service Corporations--Employer Contribution Rate
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PSSA |
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The employer contribution rate for the PSSA
has been established effective from January 1, 2001, as follows: |
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For current contributions, single rate Leave
Without Pay (LWOP) and single rate past service, the employer rate is 2.14
times the employee's single rate contributions.
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For double rate LWOP and double rate past service,
the employer rate is 0.56 times the employee's double rate contributions.
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RCA |
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The employer contribution rate for the RCA has
been established effective from January 1, 2001, as follows: |
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For current contributions, single rate LWOP
and single rate past service, the employer rate is 14.74 times the employee's
single rate contributions.
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For double rate LWOP and double rate past service,
the employer rate is 6.87 times the employee's double rate contributions.
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SDB |
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The employer's monthly contribution rate for
Supplementary Death Benefit (SDB) premiums continues to be $0.01 per
$250.00 of the basic benefit of each employee.
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2.6 |
PA Calculations
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The following are the various maximums related
to the PA for 2000 and 2001: |
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The maximum PA for 2000 is $14,900.00. |
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The maximum PA for 2001 is $14,900.00. |
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The maximum Registered Retirement Savings Plan
(RRSP) contribution for 2001 as specified in the 1996 federal budget is
$13,500.00. Consequently, employees whose PA for 2000 is $13,500.00 or over
could have no RRSP room in 2001. |
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The 2000 YMPE is $37,600.00. |
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The 2001 YMPE is $38,300.00. |
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The maximum salary used in the PA calculation
for 2000 is $99,300.00. |
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The maximum salary used in the PA calculation
for 2001 is $99,600.00. |
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The maximum Benefit Entitlement accrued for
2000 and 2001 is $1,722.22. |
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The PA calculation will be based on the benefit
entitlement multiplied by the factor 9, less $600.00 prorated, if necessary,
by the number of pensionable pay periods.
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You will find in Appendix
A of this Bulletin, examples of PA calculations for 2000 and a worksheet
that has been developed as an aid to calculate the PA figure. Please note
that in cases where Rehabilitation Leave and Dual Employment have occurred,
adjustments are required prior to the calculation (refer to Subsection 2.6.4
of this bulletin).
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2.6.1
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Terminated Employees Who Receive a Lump Sum
Benefit Payment |
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Until further notice, the PWGSC-TPSGC
2386
(PDF 602k) (Certification Notice--Pension Support System) must continue
to be used to indicate PA figures from 1990 to the year of termination for
terminated employees who received a lump sum benefit (i.e. Transfer Value
or transfer of funds to another pension plan under a Reciprocal Transfer
Agreement [RTA] or a Pension Transfer Agreement [PTA]). In cases where the
employee received a Return of Contributions, the PA figures are to be reported
on the PWGSC-TPSGC 2577
(PDF 620k) (Request
for Return of Superannuation Contributions). Refer to Superannuation
Administration Manual (SAM) Special Bulletin 1998-014 dated December
17, 1998, for additional information.
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2.6.2
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LWOP |
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It is important that an employee proceeding
on LWOP be informed of the effect of PA reporting when he elects not to
count the LWOP as pensionable service.
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Where the employee elects not to count a period
of LWOP as pensionable before the end of a calendar year, the period
of non-pensionable LWOP for that year will not be included in the
PA calculation. The PA for any subsequent years will not be reported until
the employee returns to duty and recommences accumulating pension credits.
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However, the PA reported for any calendar year
previous to the year of the election not to count a period of LWOP as pensionable
cannot be cancelled. This rule applies even if the employee terminated
immediately following the LWOP and received a return of pension contributions.
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Please refer to Compensation
Directive 1995-010 dated March 6, 1995, which provides additional details
on situations where an employee opts not to count a period of LWOP as pensionable.
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In cases where an employee terminates immediately
following a LWOP period, it's important to remember that for pension purposes,
the termination date is the day following the date on which the Superannuation
Directorate is notified in writing that the employee has ceased to be employed
(refer to Section 2.2.3 of the
Superannuation Administration Manual [SAM]). There are instances where
the employee is terminated for pay purposes, but because the Superannuation
Directorate is not notified in time, the termination date is extended for
pension purposes. In this case, when the additional pension contributions
are calculated, the PA must also be amended to reflect the additional pensionable
service.
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2.6.3
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Employees on LWOP to Serve as Full-time Paid
Officials of Bargaining Agents |
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In cases where a contributor, who is on LWOP
to serve as a full-time paid official of a bargaining agent (union), provides
written confirmation that the union has reported a PA for the pensionable
LWOP under the PSSA, that period must not be included in the PA reported
by the former employer. This confirmation should be in the form of a letter
from the union advising that the benefit accrual under the PSSA has been
included in the PA reported by the union. Please refer to SAM
Special Bulletin 1999-003 dated February 15, 1999, for additional details.
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2.6.4
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Clients serviced by the Regional Pay System
(RPS) |
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It is the responsibility of departmental personnel
to advise the pay office of the required information concerning specific
situations such as: dual employment (employee on pensionable LWOP
and occupying a term position where he contributes to PSSA, e.g. relocation
of spouse) and situations where the employee is on pensionable LWOP for
educational leave. Please refer to Compensation
Directive 1994-012 dated March 23, 1994, for additional information.
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In addition, any employee who was on rehabilitation
leave with a pension type code 59 in Field 39, at any time during the
calendar year, will not have a PA reported automatically for this
period. In order to have a PA calculated for the rehabilitation leave period,
departments must report to the pay office, by memorandum, the employee's
number of pensionable pay periods and the amount of pensionable earnings
for the period reflected under code 59 in the RPS. Please note that this
period will be from the date on which the code 59 was input into
the system and not from the effective date of the rehabilitation leave.
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On receipt of the department's written notice
for any employee on rehabilitation leave with pension type code 59 in Field
39, the pay office will credit Master Employee Record (MER) Element 734
by the amount of pensionable earnings and adjust MER Element 118 by the
proper number of pensionable pay periods.
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3
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INQUIRIES |
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3.1
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Any request for information regarding the foregoing
should be addressed to your Public Works and Government Services (PWGSC)
Compensation Services Office. |
