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SUPERANNUATION ADMINISTRATION MANUAL SPECIAL BULLETIN:
2002-005
December 6, 2002
SUBJECT: CPP/QPP Contribution Rate, PSSA Indexation, PSSA Thresholds/Employer Rate, PA Calculations
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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 the following
information:
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i) the change in the Canada Pension Plan (CPP) and Quebec
Pension Plan (QPP) employee contribution rates and the Average
Maximum Pensionable Earnings (AMPE) for 2003;
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ii) the Public Service Pension Fund (PSPF) employee contribution
rate for 2003;
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iii) the rate of pension indexing for 2003;
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iv) the Public Service Superannuation Act (PSSA)
salary thresholds for 2003;
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v) to provide examples of how to calculate the Pension
Adjustment (PA) for 2002;
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vi) the employer contribution rates for Public Service
Corporations; and
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vii) information pertaining to the usage of form PWGSC-TPSGC
2196, Naming or Substitution of a Beneficiary for Supplementary
Death Benefit.
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1.2
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In this text, use of the masculine is generic and applies
to both men and women.
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2
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POLICY
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2.1
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CPP/QPP
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Effective January 1, 2003, the CPP/QPP employee contribution
rate will increase to 4.95 %.
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The 2003 changes related to CPP/QPP are:
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MAXIMUM PENSIONABLE EARNINGS
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$39,900.00
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BASIC EXEMPTION
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$ 3,500.00
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MAXIMUM CONTRIBUTORY EARNINGS
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$36,400.00
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MAXIMUM CONTRIBUTIONS
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$ 1,801.80
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The 5 year Average Maximum Pensionable Earnings (AMPE)
for 2003 is $38,460.00. 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 2003 will be based on the
lesser of the 5-year average salary and the AMPE at the
earlier of the termination date or the date the employee
reaches age 65 and is in receipt of CPP or QPP retirement
benefits or the date the employee becomes entitled to receive
CPP/QPP disability benefits. (refer to SAM
4-7-2)
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2.2
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PSPF Employee Contribution Rate
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Effective January 1, 2003, the employee contribution rate
is:
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4.0% on salaries up to the YMPE ($39,900.00);
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7.5% on salaries in excess of the YMPE ($39,900.00).
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2.3
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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 1.6 % effective January 1, 2003.
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2.4
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PSSA Salary Threshold and RCA Contributions
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For 2003, employees whose annual salary rate is in excess
of $100,100 will contribute to the PSPF 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
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Crown Corporations -- Employer Contribution Rate
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PSPF
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The employer contribution rate for the PSPF has been established
effective January 1, 2003, 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 January 1, 2003, as follows:
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For current contributions, single rate LWOP and single
rate past service, the employer rate is 15.00 times the
employee's single rate contributions.
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For double rate LWOP and double rate past service, the
employer rate is 7.00 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
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PA Calculations
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The following are the various maximums related to the PA
for 2002 and 2003:
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The maximum PA for 2002 is $14,900.00.
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The maximum PA for 2003 is $14,900.00.
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The maximum Registered Retirement Savings Plan (RRSP) contribution
for 2003 as specified in the 1996 federal budget is $13,500.00.
Consequently, employees whose PA for 2002 is $13,500.00
or over could have no RRSP room in 2003.
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The 2002 YMPE is $39,100.00.
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The 2003 YMPE is $39,900.00
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The maximum salary used in the PA calculation for 2002
is $99,800.00.
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The maximum salary used in the PA calculation for 2003
is $100,100.00.
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The maximum Benefit Entitlement accrued for 2002 and 2003
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 (for 2002, there
are 27 pay periods).
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You will find in Appendix A of
this bulletin, examples of PA calculations for 2002 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 form PWGSC-TPSGC 2386 (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 form PWGSC-TPSGC 2577,
Request for Return of Superannuation Contributions. For
additional information, refer to Superannuation
Administration Manual (SAM) Special Bulletin 1998-14
dated December 17, 1998.
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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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When an election is made not to count a period of LWOP
as pensionable, a PA reported for any calendar year previous
to this period cannot be cancelled. This rule applies even
if the employee terminated immediately following the LWOP
and received a return of superannuation 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 employment immediately
following a LWOP period, it is 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).
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 1999-03 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, for example 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 62 (previously 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 62 in the RPS. Please note that this
period will be from the date on which the code 62
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 62 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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2.6.5
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Naming or Substitution of a Beneficiary for Supplementary
Death Benefit (PWGSC-TPSGC 2196)
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Compensation advisors should forward a PWGSC-TPSGC 2196
form to the participant without delay as soon as the PWGSC-TPSGC
2018, Notification of Contributory Status has been received
from the Superannuation Directorate. When using the electronic
version of the PWGSC-TPSGC 2196, compensation advisors are
reminded that this is a three-ply form. Lately, the Superannuation
Directorate has been receiving only one copy. All three
copies must be completed by the participant; copies 1 and
2 should be forwarded to the Superannuation Directorate
and copy 3 should be forwarded to the personnel office.
If the personnel office receives all three copies from the
participant, they must ensure that copies 1 and 2 are forwarded
to the Superannuation Directorate as it is very important
that they receive two copies of the form. Copy 3 is to be
retained by the personnel office.
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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 content of this
bulletin should be addressed to your Public Works and Government
Services Canada (PWGSC) Compensation Services Office.
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Original Signed by
B. Bartley
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R. Jolicoeur
Director General
Compensation Sector
Government Operational Service
Reference: CJA 9006-12, 9006-24
9007-7-8, 9007-10-8
9207-2-37)
APPENDIX "A"
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PENSION ADJUSTMENT CALCULATION FOR 2002
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Example 1 -- Annual pensionable salary: $42,000.00
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Step 1:
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Determine the annual benefit :
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(1.3% x $39,100.00) + [2.0% x ($42,000.00 - $39,100.00)]
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=$508.30 + $58.00
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=$566.30 (benefit entitlement)
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Step 2:
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If the annual benefit entitlement is greater than $1,722.22,
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IMPOSE $1,722.22
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(In this case, the benefit entitlement does not exceed
$1,722.22)
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Step 3:
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Prorate the benefit entitlement by the number of pensionable
pay periods.
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[A]
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Full year $566.30 x 27/27 = $566.30
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[B]
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Partial year $566.30 x 13/27 = $272.66
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Step 4:
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Multiply the result of step 3 by a factor of 9.
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[A]
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Full year $566.30 x 9 = $5,096.70
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[B]
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Partial year $272.66 x 9 = $2,453.94
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Step 5:
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Prorate $600.00 by the number of pensionable pay periods.
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[A]
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Full year $600.00 x 27/27 = $600.00
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[B]
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Partial year $600.00 x 13/27 = $288.89
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Step 6:
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Subtract the result of step 5 from the result of step 4;
this result, rounded to the nearest dollar, is the PA for
2002.
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[A]
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Full year $5,096.70 - $600.00 = $4,496.70
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[B]
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Partial year $2,453.94 - $288.89 = $2,165.05
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Step 7:
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If the result is greater than $14,900.00,
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IMPOSE $14,900.00
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Example 2 -- Annual pensionable salary: $95,000.00
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Step 1:
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Determine the annual benefit :
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(1.3% x $39,100.00) + [2.0% x ($95,000.00 - $39,100.00)]
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=$508.30 + $1,118.00
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=$1,626.30 (benefit entitlement)
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Step 2:
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If the annual benefit entitlement is greater than $1,722.22,
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IMPOSE $1,722.22
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(In this case, the benefit entitlement does not exceed
$1,722.22)
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Step 3:
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Prorate the benefit entitlement by the number of pensionable
pay periods.
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[A]
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Full year $1,626.30 x 27/27 = $1,626.30
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[B]
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Partial year $1,626.30 x 22/27 = $1,325.13
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Step 4:
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Multiply the result of step 3 by a factor of 9.
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[A]
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Full year $1,626.30 x 9 = $14,636.70
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[B]
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Partial year $1,325.13 x 9 = $11,926.17
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Step 5:
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Prorate $600.00 by the number of pensionable pay periods.
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[A]
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Full year $600.00 x 27/27 = $600.00
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[B]
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Partial year $600.00 x 22/27 = $488.89
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Step 6:
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Subtract the result of step 5 from the result of step 4;
this result, rounded to the nearest dollar, is the PA for
2002.
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[A]
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Full year $14,636.70 - $600.00 = $14,036.70
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[B]
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Partial year $11,926.17 - $488.89 = $11,437.28
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Step 7:
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If the result is greater than $14,900.00,
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IMPOSE $14,900.00
(In this case, the result is less than $14,900.00)
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Example 3 -- Annual pensionable salary: $120,000.00
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Step 1:
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Determine the annual benefit :
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(1.3% x $39,100.00) + [2.0% x ($99,800.00* - $39,100.00)]
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=$508.30 + $1,214.00
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=$1,722.30 (benefit entitlement)
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Step 2:
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If the annual benefit entitlement is greater than $1,722.22,
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IMPOSE $1,722.22
(In this case, the benefit entitlement does exceed $1,722.22)
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Step 3:
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Prorate the benefit entitlement by the number of pensionable
pay periods.
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[A]
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Full year $1,722.22 x 27/27 = $1,722.22
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[B]
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Partial year $1,722.22 x 13/27 = $829.22
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[C]
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Partial year $1,722.22 x 22/27 = $1,403.29
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Step 4:
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Multiply the result of step 3 by a factor of 9.
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[A]
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Full year $1,722.22 x 9 = $15,499.98
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[B]
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Partial year $829.22 x 9 = $7,462.95
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[C]
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Partial year $1,403.29 x 9 = $12,629.61
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Step 5:
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Prorate $600.00 by the number of pensionable pay periods.
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[A]
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Full year $600.00 x 27/27 = $600.00
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[B]
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Partial year $600.00 x 13/27 = $288.89
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[C]
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Partial year $600.00 x 22/27 = $488.89
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Step 6:
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Subtract the result of step 5 from the result of step 4;
this result, rounded to the nearest dollar, is the PA for
2002.
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[A]
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Full year $15,499.98 - $600.00 = $14,899.98
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[B]
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Partial year $7,462.95 - $288.89 = $7,174.06
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[C]
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Partial year $12,629.61 - $488.89 = $12,140.72
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Step 7:
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If the result is greater than $14,900.00,
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IMPOSE $14,900.00
(In this case, the result is less than $14,900.00)
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*FOR THE 2002 TAXATION YEAR, THE MAXIMUM SALARY USED
IN THE PA CALCULATION WILL BE $99,800.00.
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PENSION ADJUSTMENT WORKSHEET
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EMPLOYEE IDENTIFICATION
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Name:
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PRI:
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PA Calculation for (year):
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INFORMATION REQUIRED TO CALCULATE THE PA:
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A. Yearly Maximum Pensionable Earnings (YMPE) for this
year
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$
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B. Pensionable earnings (element 734*)
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$
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C. Number of pensionable pay periods (element 118*)
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D. Total number of pay periods in the year (biweekly =
27 for year 2002)
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E. Annualized pensionable earnings: (B ÷ C) x D
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$
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*For clients serviced by the Regional Pay System
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CALCULATION
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Step 1: Annual benefit entitlement (maximum $1,722.22 for
2002 and 2003):
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If E is equal to or lesser than the YMPE
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0.013 x E
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If E is greater than the YMPE
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(0.013 x YMPE) + [0.02 x (E - YMPE)]
(0.013 x
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) + [0.02 x (
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-
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)] = $
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*
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(* If greater than $1,722.22, impose $1,722.22)
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Step 2: Benefit entitlement accrued:
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(Annual benefit entitlement ÷ D) x C
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(
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÷
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) x
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= $
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Step 1
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(D)
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(C)
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Step 3: Pension adjustment (maximum $14,900.00 for
2002 and 2003):
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(9 x benefit entitlement accrued) - ($600.00 ÷ D x
C)
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(9 x
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) - ($600.00 ÷
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x
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) = $
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*
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Step 2
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(D)
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(C)
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(* If greater than $14,900.00, impose $14,900.00)
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