Your Online Pension Statement Guide - Crown Corporations (2015)

This guide applies to employees who were members of the public service pension plan on or before , who will continue to be able to retire with an unreduced pension at age 60 with at least two years of pensionable service (or at age 55 with at least 30 years of service).

Table of Contents

Introduction

This Guide is intended to explain the pension benefits and options described in Your Pension Statement.

Your pension plan is designed to provide you with income during your retirement. In the event of your death, the plan provides an income for your eligible survivors and children.

Your plan is referred to as a "defined benefit pension plan". A defined benefit plan is one in which the benefits payable on retirement, termination of service, disability, and death are specified in the plan document—in this case, the Public Service Superannuation Act (PSSA) and related regulations. The benefits are directly related to each employee's salary and pensionable service under the plan.

Disclaimer

This Guide to your statement is provided for information purposes only and is not a legal document outlining your rights and obligations. Should there be any discrepancy between the information in this document and that contained in the PSSA and related regulations or other applicable laws, the legislative provisions will apply.

The following corresponds to the sections found on Your Pension Statement:

Graphic 1 - Page 1 of Your Pension Statement – Crown Corporations

Snapshot of Your Pension Statement, Part 1. Text version below:

A. Your personal information—This section includes your name, date of birth, language preference, pension number, and Personal Record Identifier (PRI).

B. Calculation date—The information provided is based on your pay and pension records as of this date. These amounts will change with any additional service or salary increase after this date.

C. Service and average salary—This section contains the information used to calculate your estimated pension benefits.

Graphic 2 - Page 2 of Your Pension Statement – Crown Corporations

Snapshot of Your Pension Statement, Part 2. Text version below:

D. Retirement or departure from the public service—This section provides estimated pension benefit amounts for the various options you may be entitled to if you leave the public service, based on the pensionable service you have accrued as of the calculation date.

Graphic 3 – Page 3 of Your Pension Statement – Crown Corporations

Snapshot of Your Pension Statement, Part 2 continued and Part 3. Text version below:

E. Retirement on grounds of disability—If you retire because of disability and you have more than two years of pensionable service, you may be eligible to receive an immediate annuity. This section provides estimates for your immediate annuity and the reduction of your public service pension due to the coordination of benefits with the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP).

F. Protection for your survivors—In the event of your death, your eligible survivor(s) and children may be entitled to the listed amounts.

G. Post-retirement benefits—This section outlines the amenities and coverage you and your survivors have access to after retirement. See Part III of this Guide for more information.

Part I–Basic data for the calculation of your pension benefits

1. Your estimated pension benefits are calculated as of the date indicated on your statement

The information in Your Pension Statement was extracted from your pay and pension records as they stood on the date shown on your statement. The amounts shown on your statement are based only on your pensionable service and on your average salary for the five consecutive years of your highest paid service. It provides amounts only for those benefit options for which you have qualified as of the date of your statement.

These amounts will change with any additional service or salary increases after this date. If you have to make a decision in the near future concerning your pension options, please contact the Pension Centre in order to obtain the most up-to-date information.

2. Service and average salary for purposes of the pension plan

Current service

Is the period of service during which you contribute daily to the pension plan to a maximum of 35 years. It includes previous periods of employment in the public service as a contributor under the public service pension plan for which no return of contributions was paid.

Note: You stop contributing to the pension plan on January 1 following the year you reach age 71. If you are turning 71, please contact the Pension Centre for further information.

Transferred service

Means any period of service transferred from another employer's pension plan that has been added to your credit under the public service pension plan. This is generally done through a pension transfer agreement between the Government of Canada and eligible employers. The transferred service could also include any period of service with the Canadian Forces or the Royal Canadian Mounted Police or as a Member of Parliament.

Service buyback

(Elective service) refers to any period of employment, either in the public service or with another employer that occurred before your most recent participation in the public service pension plan and has been purchased in order to count elective service toward your pension. It may include periods of leave without pay that you have elected to count under the public service pension plan as well as service as a member of the Canadian Forces or the Royal Canadian Mounted Police.

If your service buyback request has been confirmed, your statement will show the period of prior service that will be added to your pensionable service and the Request status field will show "Approved". When you fill out a request to purchase prior service, your payments will begin even though your service buyback has not yet been confirmed and your statement will show "Pending" in the Request status field.

A Service Buyback Estimator tool is available online; it enables you to estimate the cost of buying back prior service (elective service) and to compare your pension benefits with and without the service buyback.

Total pensionable service

Means the years (complete or partial) to your credit as of the date of your statement. It includes periods of transferred service and any periods of elected service regardless of whether or not you have paid fully for that service. For purposes of determining your pensionable service, each year of part-time service counts as one year of pensionable service.

Note: The maximum period of pensionable service that may be used to calculate your pension is 35 years. Once you reach the maximum of 35 years of pensionable service, you are only required to contribute 1 per cent of your salary for indexing. Maximum service includes service to your credit under the Canadian Forces and the Royal Canadian Mounted Police pension plans.

Average salary

Is based on your salary during the five consecutive years of your highest paid pensionable service. It includes any salary you earned after completing 35 years of service up to age 71, if that salary is the highest.

For the purposes of the public service pension plan, salary is defined as the basic pay received by a person for the performance of the regular duties of a position. It does not include special remuneration or payment for overtime, although certain allowances may be considered as forming part of a person's basic pay. Contact the Pension Centre for further details.

If your salary exceeds $157,700 in 2015, then a portion of your pension contributions and eventual pension benefits will be subject to a Retirement Compensation Arrangement (RCA).

The Income Tax Act (ITA) limits tax-sheltered pension contributions and the payment of pension benefits for registered pension plans, like the public service pension plan. The Retirement Compensation Arrangements Regulations, No. 1 (RCA No. 1) were established to allow the accumulation and payment of benefits that are above the limits allowed under the ITA.

There is a maximum salary for which contributions can be made under the public service pension plan. It is referred to as the maximum contributory threshold and it increases annually. For the 2015 year, the maximum contributory threshold is $157,700. This means that employees whose annual salary is in excess of $157,700 will contribute to the public service pension plan for the portion of their salary that is below the limit and to the RCA No. 1 for the portion of their salary that is above the limit.

Part II–Pension benefits under the Public Service Superannuation Act (PSSA)

Please note that the pension benefit or options are calculated as of the date shown on your statement; however, the amounts shown may not necessarily reflect all salary adjustments at the time of printing.

1. Retirement or departure from the public service

Division of pension benefits

If your marriage or relationship of a conjugal nature breaks down, the pension benefits you have acquired during the course of that marriage or during the period of cohabitation in a relationship of a conjugal nature may, on application, be divided according to the terms of the Pension Benefits Division Act (PBDA). If you have had a pension benefits division under the PBDA, it is indicated on your statement and the annual pension amounts shown have been adjusted accordingly.

Part-time service

If you have periods of part-time pensionable service, your benefits are adjusted to take into account your assigned hours of part-time work compared to the full-time hours of the position. Pensionable part-time service will be reflected in the amounts shown on your statement even if you are no longer in a part-time position.

Pension options

If you leave the public service, you may choose among a number of options, depending on your age and the years of pensionable service to your credit. These options are a return of contributions, an immediate annuity, a deferred annuity, an annual allowance, or a transfer value. You may also choose to transfer your service to a new employer's pension plan if your new employer has concluded a pension transfer agreement under the PSSA or if the new employer is interested in the possibility of entering into such an agreement.

More information on pension options is available online.

Return of contributions

If you have less than two years of pensionable service to your credit, generally you are only entitled to a return of contributions. A return of contributions is a reimbursement of all pension contributions that you have made to the public service pension plan plus quarterly interest.

Immediate annuity (annual amount)

An immediate annuity is a pension benefit that is immediately payable to contributors who retire at or after age 60 with at least two years of pensionable service or between age 55 and 60 with 30 or more years of pensionable service. Generally, the formula for calculating your pension is as follows:

Lifetime pension

Your annual lifetime pension payable from the public service pension plan is based on:

  • Your average salary, that is, your salary during your five consecutive years of highest paid service. It includes any salary you earned after completing 35 years of service, if that salary is the highest. Your salary is converted to equivalent full-time salary for periods during which you worked less than full time; and
  • Your years of pensionable service, that is, the complete or partial years of service credited to you at retirement–including the service buyback (whether or not it has been fully paid).

The following table illustrates how your annual lifetime pension is calculated.

Figure 1: Annual Lifetime Pension Calculation
Annual Lifetime Pension Calculation. Text version below:
Figure 1 - Text version

1.375 percentFootnote 1 multiplied by your average salary up to the Average Maximum Pensionable EarningsFootnote 2 multiplied by your years of pensionable service (maximum 35 years)

plus

2 percent multiplied by your average salary in excess of the Average Maximum Pensionable Earnings multiplied by your years of pensionable service (maximum 35 years)

Bridge benefit

If you retire before age 65, you will also receive a bridge benefit payable until age 65 or until you become entitled to CPP/QPP disability pension, whichever occurs first.

The following table illustrates how your bridge benefit is calculated.

Figure 2: Bridge Benefits Calculation
Bridge Benefits Calculation. Text version below:
Figure 2 - Text version

0.625 percentFootnote 3 multiplied by your average salary up to the Average Maximum Pensionable Earnings multiplied by your years of pensionable service (maximum 35 years)

Examples of how to calculate your pension are available online.

Deferred annuity (annual amount)

A deferred annuity is a pension benefit that is payable at age 60 to contributors who are not entitled to an immediate annuity at the time of their departure from the public service. A deferred annuity is calculated using the same formula as that described for an immediate annuity. If you choose this benefit, you may request an annual allowance (reduced pension) at any time after you reach age 50. If you become disabled before age 60, please see the section entitled "Retiring on grounds of disability."

Annual allowance (annual amount)

An annual allowance is a reduced pension payable as early as age 50 to contributors who are eligible for a deferred annuity. If you leave the public service and opt for an annual allowance, the deferred annuity that would be payable to you at age 60 is reduced to take into account the early payment of benefits. If you choose an annual allowance, the reduction is permanent.

The reduction applicable to your annual allowance is calculated using one of two formulas, depending on your age when you retire or when you opt for the annual allowance and on the years of service you have to your credit.

Reduction Formula 1

The amount of your deferred annuity is reduced by five per cent for every year, to the nearest one-tenth of a year, that you are under age 60 at the time the allowance is payable.

Reduction Formula 2

If you have 25 or more years of pensionable service and are at least 50 when you leave the public service, an annual allowance is calculated by determining the amount of your deferred annuity and reducing it by the greater of the following two amounts:

  • five per cent for every year, to the nearest one-tenth of a year, that you are younger than 55 when you retire or when you opt for the annual allowance, whichever is later; or
  • five per cent for every year, to the nearest one-tenth of a year, that your pensionable service is less than 30 years.

If Formula 1 results in a lesser reduction than Formula 2, your pension will automatically be calculated using Formula 1. In other words, your annual allowance would be determined using the more beneficial formula.

Examples of how to calculate your pension are available online.

Transfer value

If you leave the public service before you reach age 50 and have at least two years of pensionable service, you may take your earned pension benefits as a transfer value rather than as a future monthly pension. A pension transfer value is a lump sum equal to the present value of your future pension benefit (deferred pension). If you choose this option, you must do so within one year of leaving the public service.

In accordance with the limits specified in the Income Tax Act (ITA), a transfer value may have three components:

1. Amount within tax limits

This is the amount that will be transferred on a tax-sheltered basis to a retirement pension plan or vehicle that you choose. The limit calculated as follows: multiply the annual pension payable at age 65 (plus applicable indexing) by nine. This portion of the transfer value is not paid to you directly. Instead, it must be transferred to one of the following:

  • another registered pension plan; or
  • a locked-in Registered Retirement Savings Plan (RRSP) that complies with the requirements of the Pension Benefits Standards Act, 1985 (PBSA) (Canada) and is administered in accordance with the requirements of those provisions; or
  • a financial institution to buy an annuity.
2. Amount in excess of tax limits

Where a portion of the transfer value exceeds the tax limits, the payment will be made directly to you and that amount becomes part of your taxable income. However, if you have sufficient contribution room in your RRSP, no tax will be deducted on the amount that you transfer to your RRSP. A T4A will be issued to you and your financial institution will provide you with a receipt for tax-filing purposes.

3. Amount under the Retirement Compensation Arrangement (RCA)

If your average salary exceeds the PSSA maximum contributory threshold, the transfer value calculation will include an additional amount to the two amounts described above – the amount that would be paid under the RCA established under the Special Retirement Arrangements Act. The RCA transfer value amount cannot be transferred to a tax-sheltered vehicle; it must be paid directly to you and taxed as required by the ITA. For a more detailed explanation of the RCA and how it may affect you, see "Average salary" in Part I of this Guide.

The amount of a transfer value can vary widely, depending on prevailing interest rates. When you know your termination date, you can obtain an estimate of the transfer value of your pension through the Pension Centre.

Transfer your service

If you leave the public service to work for another employer who has entered into a pension transfer agreement under the PSSA, it may be possible for you to transfer all or part of your public service pensionable service to your new employer's pension plan.

If your new employer does not have such an agreement but would be interested in discussing the possibility of entering into one, you should ask your new employer to contact the Pension Centre at the address below:

Government of Canada Pension Centre – Mail Facility
PTA and Insurance Team, Policy and Advisory Services Division
PO Box 8000
Matane QC G4W 4T6

Co-ordination of benefits with the Canada Pension Plan and the Quebec Pension Plan

When the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) came into effect on , the federal government, like most Canadian employers offering a pension plan for their employees, decided to coordinate the new CPP/QPP with the public service pension plan. The government did this so that its employees would not have to set aside a greater proportion of their salary for retirement savings. It means that while you are employed in the public service, you and the federal government, like all Canadian workers and employers, must also contribute to the CPP (if you work outside Quebec) or the QPP (if you work in Quebec).

The coordination of the public service pension plan with the CPP/QPP affects not only your contributions but also your benefits. You contribute less to the public service pension plan on earnings up to the maximum covered by the CPP/QPP ($53,600 for 2015) and your public service pension is reduced to partially recognize benefits payable from CPP/QPP. This means that the public service pension benefits are reduced automatically by a standard formula once you reach age 65, which is the normal age of eligibility for CPP and QPP benefits, or immediately if you are entitled to a CPP/QPP disability pension.

Like other plans, the public service pension plan has begun to use the terms lifetime pension and bridge benefit to explain this coordination. Your statement shows the amount of public service pension reduction at age 65; however, the reduction amount can also be referred to as a bridge benefit amount.

The amount of reduction (or bridge benefit amount) shown on your statement is calculated as if you started receiving the CPP or QPP pension benefit on the date of your statement.

Information on the coordination of your pension plan with the CPP/QPP is available online.

2. Retiring on grounds of disability

Disability is defined under the public service pension plan as a physical or mental impairment that prevents a plan member from engaging in any employment for which he or she is reasonably suited by virtue of his or her education, training, or experience and that can reasonably be expected to last for the rest of that person's life.

For you to qualify for retirement on grounds of disability, Health Canada must certify that your situation corresponds to this definition.

If you retire because of disability and you have two years or more of pensionable service, you will receive an immediate annuity, regardless of your age. If you were entitled to an annual allowance, your immediate annuity would be adjusted to take into account any amount you had already received as an annual allowance.

If you are receiving a public service pension and you become entitled to a disability pension under the CPP or QPP before you reach age 65, your basic public service pension will be reduced immediately.

The amount of reduction shown on your statement is calculated as if you started receiving the CPP or QPP pension benefit on the date of your statement.

3. Protection for your survivors

Survivor allowance (annual amount)

Generally, once you have two or more years of pensionable service to your credit, your eligible survivors and children become entitled to an immediate allowance in the event of your death.

The term "survivor" refers to (a) a person who was married to the contributor (plan member) at the time of the contributor's death or (b) a person who, in accordance with subsection 25(4) of the PSSA, "establishes that he or she was cohabiting in a relationship of a conjugal nature with the contributor for at least one year immediately before the death of the contributor."

The following basic benefit formula is used to calculate the survivor allowance:

1 per cent multiplied by the number of years of pensionable service (maximum 35 years) multiplied by the average salary of the plan member.

A survivor allowance can be apportioned if you are survived by both a legal spouse and another eligible survivor with whom you were living in a relationship of a conjugal nature at the time of your death.

More information about survivor benefits is available online.

Allowance for each child (annual amount)

The term "child" refers to your natural child, your stepchild, or a child that you have adopted either legally or is financially dependent on you or your survivor. To be eligible for an allowance, your child must normally be under age 18. Children between 18 and 25 may receive allowances if they are enrolled in a school or other educational institution on a full-time basis and have attended continuously since their 18th birthday or the date of your death, whichever is later.

Eligible children are entitled to allowances equal to one-fifth of the survivor benefit. The combined amount of children's allowances payable can be no more than four-fifths of the survivor benefit. If there are more than four eligible children, the maximum combined amount payable may be divided among them.

If there is no eligible survivor, orphan children receive double the amount of a regular child's allowance. Each orphan will receive two-fifths of the survivor benefit, up to a maximum of eight-fifths.

Five-year minimum benefit

The public service pension plan provides for a minimum benefit equal to the payment of your pension for a period of five years (five-year minimum benefit). If you and your eligible survivors have not received, in total, pension payments equal to five times the amount of your annual pension entitlement, the balance in the form of a lump sum becomes payable to your designated beneficiary or, if none, to your estate.

The minimum benefit is therefore payable only when there are no longer any eligible survivors or children to whom pension payments can be made.

Your designated beneficiary is the beneficiary you have named under the Supplementary Death Benefit Plan.

Supplementary Death Benefit Plan

The Supplementary Death Benefit Plan is a decreasing term life insurance designed to protect your family during the years you are building up your pension. It is provided pursuant to Part II of the PSSA.

Upon your death, the plan provides a benefit equal to twice your annual salary. If that amount is not a multiple of $1,000, the benefit amount is adjusted to the next highest multiple of $1,000. The amount of the benefit automatically goes up as your salary increases.

Beginning at age 66, your basic supplementary death benefit coverage will decline by 10 per cent of the initial amount each year until your coverage reaches the greater of 1/3 of your annual salary or $10,000 if still employed, or $10,000 if retired.

Note: Some employers who participate in the public service pension plan do not participate in the Supplementary Death Benefit Plan. Refer to Part II of your statement, under "Protection for your survivors," to see if you are a plan member.

Designated beneficiary

As a participant in the Supplementary Death Benefit Plan, you may change your designated beneficiary at any time. It is important to update the designation of your beneficiary to ensure that your selection still corresponds to your wishes. To help us serve you quickly and efficiently, please advise the Pension Centre of any changes to the address of your designated beneficiary. If you have not named a beneficiary, the benefit will be paid to your estate or succession.

For information about your beneficiary, you are asked to contact the Pension Centre by phone or email. For security reasons, a pension expert will ask you to provide additional personal information prior to disclosing the name of your beneficiary. All email inquiries will be followed up with a telephone call from a pension expert. Please do not include detailed personal information, such as your Personal Record Identifier or Social Insurance Number, in your email.

If you want to change your designated beneficiary, you must fill out a form entitled "Naming or Substitution of a Beneficiary" and forward it to:

Government of Canada Pension Centre – Mail Service
150 Dion Blvd
PO Box 8000
Matane QC G4W 4T6

Part III–Post-retirement benefit

1. Indexed public service pensions

Upon your retirement, your pension is indexed to take into account increases in the cost of living. Your public service pension will be adjusted each year, based on increases in the Consumer Price Index (CPI). The first increase, payable the year after you retire or leave the public service, will be pro-rated to reflect the number of full months since your retirement or departure date. If there is no change in the CPI or if it goes down, your pension will not be adjusted that year. The indexing applies not only to your retirement benefits but also to your disability pension, survivor benefit, and child's allowance.

If you retire with an entitlement to a deferred annuity, when it becomes payable at age 60, your basic pension will be increased by a percentage equal to the increases in the cost of living since you left the public service.

If you become re-employed in the public service and begin to make contributions under the public service pension plan, payment of your benefit, including indexing, will cease. When you again cease to be employed in the public service, indexing will be based on the amount of your basic pension at that time. Your retirement date for determining the annual percentage increase will be the most recent termination date.

More information about pension indexing is available online in the protection from inflation section.

2. Supplementary Death Benefit Plan (under the public service pension plan)

If you leave the public service with an entitlement to an immediate annuity or an annual allowance payable within 30 days of ceasing to be employed, you are deemed to have elected to continue your participation in the Supplementary Death Benefit Plan. In other words, you do not have to take any action. The required contributions will be deducted automatically from your monthly pension.

If you decide to retain this benefit, you will be covered for the exact amount for which you are covered at the time you leave the public service. Beginning at age 65, whether you are retired or employed, you will no longer be required to pay contributions for $10,000 of your coverage. This portion of your coverage is known as the paid-up benefit and will be provided to you for life at no cost.

Beginning at age 66, your basic supplementary death benefit coverage will decline by 10 per cent of the initial amount each year until your coverage reaches the greater of 1/3 your annual salary or $10,000 if still employed, or $10,000 if retired.

More information about the Supplementary Death Benefit Plan is available online.

Appendix–Useful Web Links

Canada.ca/pension-benefits

This section provides access to all of your pension and benefits information and tools.

Acts and Regulations

The Department of Justice Canada provides up-to-date legislative material. The Public Service Superannuation Act governs your pension plan.

Compensation Sector Website —Pension Benefits Calculator and Service Buyback Estimator

This website provides tools for public service pension plan members to estimate the value of their future pension benefits (Pension Benefits Calculator) and the cost of buying back prior pensionable service (Service Buyback Estimator).

Old Age Security and Canada Pension Plan

Links to Old Age Security and the Canada Pension Plan can be found on the home page of Service Canada.

Public Sector Pension Investment Board

This site provides information on the Investment Board that is responsible for investing the employer and employee contributions in the financial markets.

Quebec Pension Plan

This site provides information on the Quebec Pension Plan and the benefits available to plan contributors.

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