• leaves of absence or lay-off
• part-time or casual service you have with a CSSF employer during which you didn't contribute to the Fund (for example, if you worked part-time for .6000 of a year, you could buy back the .4000 of a year in order to obtain 1.0000 year of pensionable service)
• maternity or parental leave you elected not to purchase in the past
• previous CSSF pensionable service that you had refunded

Cost

The cost to purchase special service buyback is the full actuarial cost. This is the estimated total cost required to fund the increased pension that will be paid at retirement. The employee pays the full cost, with no employer funding.The cost is determined at the date you submit your application and is based on your salary, your age, and the actuarial assumptions adopted for the latest actuarial valuation of the Plan at the time you apply.If you choose to purchase the Special Service Buy Back, your employee account will be credited with service for the applicable period of Special Service and the employee portion of the actuarial cost. The balance of the actuarial cost not credited to your account represents the additional cost required to support the Special Service Buy Back.The following table will help you determine what your approximate cost and pension increase will be:

Approximate Cost to Purchase One Year of Service (Ages 30-45)
(Last updated February 7, 2006)

Approximate Cost to Purchase One Year of Service (Ages 50-60)
(Last updated February 7, 2006)

Example

A 46 year old employee with an annual salary of $37,000 is wondering how much it would cost to buy 2.5 years of service. The closest salary in the left-hand column is $35,000, and the closest age is 45. If the employee follows the $35,000 salary row across to the box under age 45, it contains the number $4,877. This is the approximate cost if the employee wanted to purchase only one year. In this example however, the employee wants to purchase 2.5 years. The total approximate cost would therefore be $12,192.50, which is 2.5 times $4,877. Application You may apply to purchase eligible service at any time prior to termination or retirement.

Tax Information

We recommend that you contact the Canada Revenue Agency for information on possible tax consequences of purchasing past service.

For Income Tax Information and Examples, click here.

Notes

The estimated costs in this illustration are for service worked after 1965. The cost of purchasing service worked prior to 1966 is up to 20% higher.The estimated increase in your monthly lifetime pension is based on your salary when you submit your application to purchase service. Employees further from retirement may experience greater salary increases over the remainder of their career and may therefore see higher increases. Lifetime pension amounts have no continuing payments to a beneficiary in the event of your death. At retirement, you may select an optional reduced pension that provides for continuing payments to a beneficiary following your death. Employees who have a spouse or declared common-law partner at retirement may receive a reduced pension. We recommend that employees within five years of retirement contact our office for detailed information on pension options and amounts. The above information is for illustration only and does not confer or create any rights. Hopefully it will assist you in making a decision on whether to apply for or purchase service.

Prior Service Buy Back - Income Tax Information and Examples

The following explanations and examples have been prepared to assist you in understanding the complex tax rules concerning the purchase of prior service. It is your responsibility to ensure that you understand them prior to making any payment.

1) Buy Back of Service Prior to January 1, 1990

Effective January 1, 1991 Canada Revenue Agency (CRA) changed the allowable income tax deduction rules for buy back payments made to the Superannuation Fund after December 31, 1990 for the buy back of a period of employment worked prior to January 1, 1990. Effective January 1, 1990:

a) The term "While A Contributor" applies to any year in which an individual contributes to any employer's registered pension plan (e.g. Civil Service Superannuation Fund) even if the contributions are only for a portion of that year. The annual income tax deduction permitted "While A Contributor" is $3,500 less current year contributions and past service "While Not A Contributor" contributions for a maximum total deduction of $3,500.All prior service "While A Contributor" contributions will eventually be income tax deductible. Higher income employees may not qualify for this deduction until retirement when their normal Superannuation Fund contributions are less than $3,500. See employee A and C examples below.

b) The term "While Not A Contributor" will apply only to those past service years in which an individual was not a contributor to any employer's RPP.

There is also a prior service "While Not A Contributor" maximum income tax deduction for each year or portion of a year of service up to a maximum of $3,500. Members with annual pensionable earnings over approximately $55,600 may be affected by this maximum. See note #6 and employee B example below.

2) Buy Back for a Period of Employment After December 31, 1989

Under Federal Pension Reform legislation effective January 1, 1991, the value of benefits accrued must be calculated when purchasing prior service worked after 1989. The amount that measures the value of benefits accruing is called Past Service Pension Adjustment (PSPA). In most cases, CRA must certify the PSPA associated with the purchase. If the PSPA is certified and the purchase made, the full amount is deductible in the year contributed.

The CSSB will provide a split by period of employment for 1 and 2 above on income tax documents for members who purchase prior service. PLEASE READ THE FOLLOWING NOTES CAREFULLY

1. The CSSB will complete the application for certification of a PSPA form and forward this form to CRA for employees wishing to purchase eligible service for service worked after 1989. Payments can be made to the CSSB before CRA certifies the PSPA.

2. For 1991 and each subsequent year, CRA has advised individuals of their unused RRSP deduction room in their annual income tax Notice of Assessment.

3. Direct RRSP transfers will be accepted as payment for all or a portion of your Buy Back. RRSP transfers do not qualify as a tax deduction as this deduction has already been claimed.

4. Severance pay or sick pay vesting payments payable at retirement (eligible retiring allowance) can be transferred to the CSSB to be applied to the cost of your buy back.

5. Vacation cash out at retirement can be used to pay for the buy back but does not qualify as a tax free transfer.

6. For employees earning in excess of approximately $55,600 annually, the Income Tax Act restricts the maximum allowable deduction for each year of prior service "While Not A Contributor" that the employee is purchasing to $3,500.

Example

An employee purchases one full calendar year (e.g. 1985) of prior service "While Not A Contributor" by making a lump sum payment of $5,000 in 2002. Only $3,500 of the $5,000 payment qualifies as an income tax deduction.If this employee was only eligible to purchase prior service "While Not A Contributor" for a portion of 1985 (e.g. July 1, 1985 to December 31, 1985) the total cost of $2,500 would be an allowable income tax deduction as it does not exceed $3,500.

7. Employees purchasing prior service should ensure that only buy back contributions eligible for deduction are claimed on their income tax returns (see examples following these notes).

8. If you require additional information concerning allowable income tax deductions, we suggest that you contact CRA at 1-800-959-8281.

A. Examples for Buy Back of a Period of Service Prior to 1990

1. EMPLOYEE A - Purchase of Prior Service "While A Contributor"

Date started contributing to the Fund: January 1, 1985
Buy Back service: January 1, 1987 to June 30, 1987 = 0.5000 years and July 1, 1989 to December 31, 1989 = 0.5000 years
Current Annual Salary: $35,000
Cost of Buy Back: $5,106 paid by lump sum payment

Allowable Income Tax Deductions

2. EMPLOYEE B - Purchase of Prior Service "While A Contributor" and "While Not A Contributor"

Date started contributing to the Fund: July 1, 1989
Buy Back Service: July 1, 1987 to June 30, 1989
Cost of Buy Back: $10,000 paid by lump sum payment

a) the service from July 1, 1987 to December 31, 1988 (1.5000 years) is the purchase of past service "While Not A Contributor" (Cost $7,500).

b) the service from January 1, 1989 to June 30, 1989 (.5000 years) is the purchase of past service "While A Contributor" (Cost $2,500).

Allowable Income Tax Deductions

Employee B's maximum "While Not A Contributor" deductible contributions are $7,000; $500 of this employee's contributions are not income tax deductible.

3. EMPLOYEE C - Purchase of Prior Service "While A Contributor"

Date started contributing to the Fund: January 1, 1980
Buy Back Service: July 1, 1985 to December 31, 1985 = 0.5000 year
Current year's salary: $70,000
Cost of Buy Back: $4,200

a) Normal current year contributions: $4,509

Since current year contributions exceed $3,500, the cost of the prior service buy back "While A Contributor" cannot be deducted on any income tax return until current year contributions are less than $3,500 which could be after the employee's retirement date.

B. Buy Back of a Period of Service After 1989

As explained previously, CRA's PSPA approval of unused RRSP room is required for post-1989 prior service buy back contributions to be tax deductible. Please refer to your CRA Notice of Assessment for the last Income Tax return you have filed to find this information. Please contact CRA to confirm your eligible income tax deduction.

Note

The 2002 PSPA for our pension formula improvement will mean that many employees will not have any unused income tax deduction room for the 2002 etc. tax years.

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