Special advice to Crown corporations and others 2024-001

Subject: Positive time reporting impact on pension and leave without pay

Date: April 19, 2024

1. Purpose

1.1 The purpose of this special advice is to provide direction to Crown corporations and territorial governments on the use of Positive Time Reporting (PTR) and its impact on the plan member’s Public Service Superannuation Act (PSSA) pension.

1.2 The PTR tool, generally speaking, should only be used by employees who are appointed to an “as and when required position”. The definition of this position can be found here: Employment Status “as and when required”. Employees who become plan members are expected to work their full Assigned Work Week (AWW), and if they have exhausted their paid leave, they must report any missed time as leave without pay (LWOP). As a result, those who contribute to the pension plan should be paid via the Exception Time Reporting (ETR) tool, in lieu of the PTR tool. Employees who are hired for a term of 6 months or less and work 12 hours or more, are qualifying to become pension plan members. They should also be paid via ETR and LWOP periods also need to be reported.

1.2.1 Exception: PTR can be used when members are gradually returning to work under a rehabilitation arrangement. If you need assistance in determining which tool should be used, please contact Employer Support Services (ESS).

1.3 The Government of Canada Pension Centre has encountered situations where the PTR tool appears to have been used by employees who are contributors (plan members). As a result, the scheduled hours not worked and related contributions are not accounted for with respect to the member’s pension.

2. Background

2.1 Eligibility to contribute to the pension plan

2.1.1 When hiring an employee, certain criteria need to be met to be eligible to participate in the pension plan.

2.1.2 To determine eligibility, you need to look at:

• The type and nature of employment (part-time, full-time, seasonal, as required),
• The duration of the employment (indeterminate, six months or less, greater than six months), and
• The expected number of hours to be worked each week, Assigned work week (AWW) vs Scheduled work week (SWW).

2.1.3. Members hired to work at least 12 hours or more per week are required to contribute under the PSSA:

• Upon hiring if hired for a period more than 6 months.
• After completing six months continuous employment depending upon their initial term of employment.
• After their seasonal lay off if they reach the 6 months qualifying during their layoff.

2.1.4 Where, upon hiring, it is not possible to determine in advance the number of hours of work the member will be required to work in a week, the employment status is considered to be “as required” or “on call” for pension purposes.

• Members hired to work “as required” or “on call” as well as part-time members hired to work less than 12 hours per week are not eligible to contribute under the PSSA.

2.1.5 For the full eligibility criterion please consult: Employees required to contribute.

2.2. Pension contribution requirements

2.2.1 Members that contribute to the pension plan are required to pay full pension contributions on their Assigned work week hours (AWW).

2.2.2 Employers are required to pay the employer share for the full AWW including pensionable periods of LWOP.

2.3. Leave requirements

2.3.1 When members who participate in the pension plan do not work their full assigned work hours, they need to submit paid leave or request LWOP to account for the missed time.

• Members are responsible to request and have any LWOP period approved by their employer.
• Employers are responsible to approve and manage paid leave as well as LWOP according to their member’s respective collective agreement.
• Crown employers are responsible to collect and submit both the member and employer share contributions for leave periods of 6 days or less.
• The Government of Canada Pension Center is responsible to calculate and provide a LWOP repayment schedule to Crown employers for deficiencies on leave periods greater than 6 days.

2.4. Impacts of leave without pay not being reported

2.4.1 If LWOP is not reported correctly by the employer and deficiencies are not collected in a timely manner, the member, the employing organization, and pension fund are negatively impacted.

• If the employer’s share is not paid according to regular procedure, the employing organization’s budget will be impacted when the member terminates, and the deficiencies are found at that time.
• Plan members could potentially make retirement decisions based on erroneous pension estimates.
  • The member will receive inaccurate information on the impact of not working their full scheduled week if the LWOP is not entered correctly. They may not be aware that they are still required to pay contributions for the time not worked.
  • If the LWOP is not reported correctly, the plan member’s Income Tax Act (ITA) LWOP limit may be reached without the member, employer or Pension Centre being aware. This could result in the plan member taking LWOP beyond the limits without being informed that it is non-pensionable. An open ended LWOP transaction must be sent when a member is on extended leave, with no set return date. This will ensure that a case will be triggered if the member reaches ITA limit while they are on leave.

2.4.2 LWOP periods exceeding 6 days, must be entered with a from and to date to trigger a LWOP processing case for the Pension Centre. LWOP entered on day-to-day basis will not trigger a case, and deficiencies will not be collected in a timely manner. If a case is not triggered, it is possible that the deficiencies owing will only be caught upon the member’s termination. The member could potentially owe a significant amount in pension contributions which would be deducted from their pension benefit leaving them with less than expected.

3. Direction

3.1 If a plan member is unable to adhere to their agreed upon assigned work week hours, they must submit paid leave or request leave without pay.

3.2 The employing organization has different options available to them according to their Collective Agreement. The member may:

• Submit paid leave such as family related, or vacation for the time missed.
• Take leave without pay, including leave with income averaging, or pre-retirement transition leave if eligible.
• Change the employment conditions. If the plan member is not able to fulfill their position’s AWW requirements, and is not eligible for leave without pay, then a change of employment conditions may need to be considered. The employing Manager would need to discuss with the Human Resources Staffing team, as well as the plan member.

3.3 It is critical that the employer reports LWOP transactions in the Data Capture Tool (DCT) in a manner that keeps pace with contribution submissions. This will facilitate contribution reconciliation and ensure that the Pension Centre is able to counsel plan members with up-to-date account information as well as calculate their benefits accurately.

4. For more information

4.1 If you have any questions, or need assistance in determining PSSA eligibility, or LWOP rules and requirements, please contact Employer Support Services (ESS).