|
DATE: December 3, 2002
SUBJECT: Interest on Return of
Contributions
Please ensure that the following two recent amendments to the Public
Service Superannuation Regulations are distributed to your employees.
One amendment to the Regulations modified the quarterly rate of
interest that is used for calculating interest on a return of contributions,
starting with the quarter ending June 30, 2002. The new quarterly interest rate
is derived from the Public Service Pension Fund rate of return of the previous
year or zero per cent, whichever is greater. This change reflects the fact that
since April 1, 2000, all pension contributions have been made to the Public
Service Pension Fund and invested by the Public Sector Pension Investment Board
rather than being credited with interest at the same rate as interest is
credited to the Public Service Superannuation Account.
This change brings the public service pension plan in line with
the current practice of the Canadian Forces and the Royal Canadian Mounted
Police pension plans.
Who is affected by this change?
All public service employees who cease employment with the
federal government and are entitled to a return of contributions after June 30,
2002, are affected by this change. Typically, these are public service employees
with less than two consecutive years of service.
Age Limit (69) - Contributions to the Public Service Pension
Plan
Effective January 1, 2003, contributors turning age 69 or 70 in
2003 will stop contributing to the public service pension plan at the end of
that year.
This change reflects the requirements of the Income Tax Act
and Regulations, which place limitations on benefits that can be provided on a
tax-sheltered basis under a registered pension plan.
Contributors who turn 69 after 2003 will stop contributing to
the pension plan at the end of the calendar year in which they turn 69.
Currently, no contributions can be made under the PSSA after age
71.
Thank you for your cooperation in conveying this information.
Phil Charko
Assistant Secretary
|
