This document provides
administrative information regarding special retirement benefits related
to operational service and does not constitute a legal document. For
further information on the conditions that apply to operational service,
please consult sections 53 to 58 of the Public Service Superannuation
Regulations (PSSR). |
Members of the Public Service Pension
Plan (PSPP) who are employed in operational service make additional pension
contributions and are entitled to special retirement benefits. The members'
eligibility for benefits is established according to different age and service
criteria.
However, contributors may choose a regular benefit calculated on the basis of
the total years of pensionable service
pursuant to subsection 13(1) of the Public
Service Superannuation Act (PSSA) . Benefits under subsection 13(1) are
available to all plan members of the PSPP and are briefly explained in Considering
the Benefits Available.
This document explains the main features of the PSPP regarding operational
service (OS):
All CSC employees who contribute to the Public Service Pension Plan and who
are employed in operational service on or after March 18, 1994 are eligible for
special retirement benefits, with the following exceptions:
- Any person who, on March 18, 1994, was eligible for an immediate
annuity under the PSSA (that is, who was age 60 and who had five or more
years of pensionable service or who was age 55 with 30 or more years of
pensionable service);
- Any person who became employed in operational service for the first time
at the age of 35 years or older, and who could not meet the eligibility
criteria for special retirement benefits (see the eligibility criteria
for benefits)
- Any person who became employed in operational service between the age of
30 and 35 years and who has to his credit at least five years of pensionable
service that is not operational service pursuant to the PSSA.
Additional pension contributions of 1.25% over the current
contributions to the PSPP.
A contributor, who has been employed in operational service for a period of
at least 10 years, may, when he ceases to be in operational service while
remaining in CSC, choose to continue to pay the additional pension contribution
of 1.25% of his salary. Note that certain periods of absences from operational
service, such as periods of leave without pay, do not count in the calculation
of the 10 years.
When an employee terminates employment with CSC while remaining in the Public
Service, that employee is no longer entitled to continue accumulating OS and
ceases to pay the additional pension contribution of 1.25% of his salary. If an
employee reaches one of the eligibility criteria that provide an entitlement to
an annual allowance or an immediate annuity prior to termination with CSC, he
maintains that benefit entitlement.
The formula used to calculate the basic pension is the same as that used to
calculate the regular benefit paid to contributors pursuant to the PSSA. The
formula is as follows:
2% X total pensionable service X average
salary for 5 consecutive years of highest paid service
However, the eligibility criteria for special retirement benefit related to
OS are different:
Regular
retirement benefit
Subsection 13(1) of the PSSA |
Special
retirement benefit related to OS
Sections 53 to 58 of the PSSR |
Immediate annuity:
age 55 with 30 or more years of pensionable service |
Immediate annuity:
age 50 with 25 or more years of OS |
Annual
allowance: age 50 with 2 or more years of pensionable service |
Annual allowance:
age 45 with 20 or more years of OS |
For example, John is 50 years old and he retires with 25 years of
operational service and an average salary of $50,000 for the five
consecutive years of highest paid service. He will be entitled to an
immediate annuity that would be calculated as follows:
2% X 25 X $50, 000 = $25,000 per year*
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An annual allowance is calculated by one of two formulas, depending on the
contributor's age when he opts for the annual allowance and the years of OS he
has to his credit. The annual allowance is calculated by determining the amount
of the deferred annuity and reducing
it by the greater of the following amounts:
- 5% X (50 less the contributor's age)
- 5% X (25 less the contributor's years of OS)
For example, Ann is 45 years old and she retires with 22 years of
operational service and an average salary of $50,000 for the five
consecutive years of highest paid service. Her deferred annuity would be
reduced by the greater of the following amount:
50 - 45 = 5 years X 5 % = 25 %
25 - 22 = 3 years X 5 % = 15 %
Since 25% is the greater reduction, her annual allowance would be:
2% X 22 X $50,000 =
$22,000
25% X $22,000 = 5,500
*Annual allowance = $16,500
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*NOTE: Your retirement benefits will be reduced at age
65 or if you begin receiving a Canada
Pension Plan (CPP)/Quebec Pension
Plan (QPP) disability pension because you pension
plan is integrated with the CPP/QPP. For further information, click on Understanding
the Integration of Your Pension Plan with the CPP/QPP.
If the contributor has to his credit a period of OS and a period of
non-operational service, he may choose:
- two benefits (for two types of service), that is, one
benefit calculated on the basis of the OS period and another benefit
calculated on the basis of the non-operational service; or
- one benefit combining the two periods of service (OS and
non-operational service), that is, the total years of pensionable service in
accordance with the provisions set out in subsection 13(1) of the PSSA
(regular benefit based on total pensionable service).
NOTE: The choice of two benefits (for two types of
service) can lead to different eligibility dates for pension benefits
and indexing. Your compensation advisor can help you to understand your pension
options based on operational service.
When a plan member chooses a special retirement benefit related to his
operational service, an "85 formula" applies. Benefits are indexed
when the combination of age and number of years of service equals 85. For
example:
- age 59 and 26 years of OS
- age 58 and 27 years of OS
- age 57 and 28 years of OS
- age 56 and 29 years of OS
- age 55 and 30 years of OS
Indexing will not be payable before age 55 but will not be delayed past age
60. Indexing is immediately payable if an individual becomes disabled. Indexing
is based on the year the employee ceases to be employed in operational service.
It will be paid for the full month in which the plan member reaches the required
age. All subsequent indexing will be effective on January 1st, thereafter.
For example, Paul retires at age 52 with 29 years of OS. The sum of his
age and pensionable service equals 81. As indexing does not begin until
age plus years of pensionable service equal 85, Paul will have to wait
until age 56 (56 + 29 = 85) before indexing will be paid.
NOTE: Indexing will be paid for the full month in
which Paul turns 56.
Let's take the previous example with Ann who opted for an annual
allowance at age 45 with 22 years of OS. The sum of her age and
pensionable service equals 67, therefore indexing would only be paid at
age 60.
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