SUPERANNUATION ADMINISTRATION MANUAL
SPECIAL BULLETIN: 2004-002

1

PURPOSE

1.1

The purpose of this bulletin is to remind compensation advisors that there are two methods by which a plan member may transfer his pensionable service credits from a previous employer to the Public Service Pension Plan (PSPP). This should be clearly explained to new employees.

1.2

This bulletin should be read in conjunction with the Superannuation Administration Manual (SAM) Special Bulletin 2000-002 and Chapter 3-3-5 of the Superannuation Administration Manual (SAM).

1.3

In this text, use of the masculine is generic and applies to both men and women.

1.4

A notice of information to plan members, concerning the above, is included with this SAM Special Bulletin and will also be posted in the "Who are you? - Public Service Employee" page of the Compensation Sector Web site.

2

POLICY

2.1

Under the Public Service Superannuation Act (PSSA), a plan member may transfer his pensionable service credits under the terms of a Pension Transfer Agreement (PTA) or he may make an election under the pensionable employment elective service provisions, provided that the necessary requirements are met. In both instances, the plan member must have been subject to a pension plan registered under the Income Tax Act (ITA). Please note that if a PTA exists with an outside employer, then their pension plan would already be registered under the ITA for the purposes of an election.

2.1.2

Compensation advisors should be aware that a PTA may not always be the most cost-effective way for a plan member to have pensionable service credits from an outside pension plan recognized under the PSPP. Therefore, an affected plan member should be informed of his options so that he can compare the impact of a PTA to that of an election, and consequently, make the best decision.

3

PROCEDURE

3.1

When inquiring about the transfer of service credits from an outside pension plan under the terms of a PTA, compensation advisors must also advise the employee of the option to count the service under the election provisions. It is of the utmost importance that plan members be informed of both options.

3.2

Estimate of Cost

3.2.1

When providing the employee with a copy of the appropriate Appendix A or A1 form for the purpose of requesting an estimate under the terms of a PTA, compensation advisors must also provide the employee with an estimate of "Pensionable Employment (PE)" using the "Estimate of Cost" application. An estimate in no way obliges the employee to elect to purchase past service. Due to the time constraints of a normal election, compensation advisors should ensure that the estimate is given to the employee within a reasonable time frame as the normal election period will not be extended, even if the employee does not request an estimate.

When providing the estimate of cost for election purposes, compensation advisors must inform the employee that it is an estimate only and that the final cost could change.

3.2.2

Please note that the Superannuation Directorate is responsible for calculating the estimate of the required federal transfer amount for PTA's.

3.2.3

In order to be able to make an informed decision, it is extremely important that the employee be able to do a comparison between the two options.

3.3

PTA Estimate not Received within the Normal Year for Making an Election

In circumstances where the end of the normal year for making an election is approaching and the employee has not received the estimate for counting the service under an existing PTA, compensation advisors must inform the employee that in order to protect his rights under the normal election provisions, he should sign the election form. However, the employee must not surrender his benefit entitlement with the former employer's pension plan. Once the PTA estimate has been provided to the employee, should the transfer of service credits under the terms of a PTA be more advantageous than under the election provisions, then the election can be invalidated since the employee has not surrendered his pension entitlement with the former pension plan.

3.4

Initiation of a PTA

If an employee is interested in transferring his service credits from his former employer to the PSPP under the terms of a PTA and no agreement exists, then the following steps are required in order to initiate a PTA:

Employee

The employee should write to the appropriate officials of the outside employer (usually the pension plan administrator) to indicate his interest in a having a PTA negotiated.

In writing to his former employer, the employee should request that the employer contact Treasury Board Secretariat (TBS) for information pertaining to the negotiation of a PTA.

Former Employer

If the employer is interested in negotiating a PTA, they should write to TBS confirming that:

• they are interested in entering into a PTA;

• their plan is registered under the ITA; and

• they have at least ten active members.

• The employer must include a copy of their most recent pension plan document.

The information from the employer should be sent to:

Pensions and Benefits Sector

Treasury Board of Canada, Secretariat
West Tower, L'Esplanade Laurier
140 O'Connor St.

Ottawa, ON K1A 0R5

4

INQUIRIES

4.1

Any request for information regarding the foregoing should be addressed to your PWGSC Compensation Services Office.