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DATE: September 7, 2000
TO: Heads of Human Resources, Heads of Agencies, Heads of Crown Corporations,
Heads of other Employers subject to the Public Service Superannuation Act
SUBJECT: Pension Transfers: Old rules give way to new
Reciprocal Transfer Agreements will soon be a thing of the past. But that
does not mean the government has changed its mind about pension portability for
its employees.
On the contrary, it is only some of the rules that have changed. In fact, the
Treasury Board Secretariat (TBS) has recently renegotiated several transfer
agreements under new rules and is holding discussions towards more of the same
with numerous other current and possible agreement partners. Agreements
negotiated under the new rules are known simply as Pension Transfer Agreements
(PTAs).
Nevertheless, employees should be made aware that, unless renegotiated under
the new rules and new name in the meantime, the existing transfer agreements
signed under the old rules will expire on October 15th, 2000.
Authority for pension transfers is provided under the Public Service
Superannuation Act (PSSA). Specifically, the federal government may enter
into formal agreements with other employers to enable persons moving to or from
government employ to transfer previous pension credits to the new employer's
pension plan, under certain circumstances.
Such agreements were formerly known as Reciprocal Transfer Agreements (RTAs).
However, PSSA amendments of 1996 changed the rules for pension transfers.
One of the main differences between the new rules and the old is the method
of calculating amounts to be transferred. Under the old RTAs, amounts were
calculated as two times the employee's contributions plus interest. Under the
new PTAs, the calculation is done on an actuarial basis.
Since December 1999, TBS has negotiated five new PTAs with the following
employers: the City of Fredericton, le Journal de Montréal, the Ontario Public
Service Employees' Union, the Province of Nova Scotia, and the International
Fisheries Commission. This brings to seven the total number of agreements signed
under the new rules to date.
Despite such ongoing renegotiation efforts, it is likely that many of the
existing agreements will lapse. It is also likely that some employers will
choose not to replace their current agreements.
New members of the PSSA pension plan should take note. By October 15th,
it will be too late to take advantage of the older agreements. Employees wishing
to transfer pension credits after that date will, in any case, have to wait
until new agreements are negotiated. In some cases, where an employer and the
government decide not to conclude a new agreement, the opportunity for pension
transfer may no longer be available.
Employees who have recently come to the Public Service from an employer
having an RTA with the federal government, and who wish to transfer previous
pension credits to the PSSA, should contact their Compensation Advisor
immediately.
For background on PTAs, see the attached Annex A. PTAs concluded under
the new rules are listed in the Annex B. This list will also appear at the
following Internet address and will be updated as new PTAs are concluded.
Marcel Nouvet
Chief Human Resources Officer
ANNEX A
Backgrounder
Pension Transfer Agreements
- By authority of the Public Service Superannuation Act (PSSA) and
its regulations, the Government of Canada may enter into formal agreements
with other employers to enable persons moving to or from government employ
to transfer previous pension credits to the new employer's pension plan,
under certain conditions.
- Such agreements were formerly called Reciprocal Transfer Agreements.
However, under new rules that resulted from amendments to the PSSA in 1996,
agreements negotiated since that time have been called Pension Transfer
Agreements.
- Since the new rules came into effect, the following changes have also been
made:
- An employer wishing to enter into a new agreement must have a pension
plan that is registered under the Income Tax Act and has at least
10 active members. An exception may be made where the pension plan is set
up for a group of employees who leave the Public Service as a result of a
sale or transfer of a government function.
- Participation in a reciprocal transfer agreement is no longer limited to
employees who move from one employer to the other within a specified
period. Under the old agreements, a period of six months between employers
was the usual limitation.
- The amounts available for transfer under new agreements will be
determined on an actuarial basis. Under the old agreements, amounts were
calculated as two times the employee's contributions plus interest.
- Old agreements negotiated prior to October 15, 1997 (i.e., those known
as Reciprocal Transfer Agreements), will expire on October 15, 2000,
unless they are cancelled or renegotiated under the new rules before that
date.
- Some 300 old Reciprocal Transfer Agreements are due to expire on
October 15, 2000. Compensation Advisors have access to a listing
of the outside employers involved in these agreements and can provide such
information on request.
- Certain Reciprocal Transfer Agreements, applying to very specific groups
of former government employees transferred to new employers, have been
established to support the government's privatization, devolution, and
divestiture initiatives. These agreements will not be subject to the October
15th expiry date, but rather will be continued through
regulation.
ANNEX B
List of employers
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