Interest on Return of Contributions - Age Limit (69) - Contributions to the Public Service Pension Plan - Information Notices
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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.
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