ARCHIVED SACCO 2000-001
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July 7, 2000
SUBJECT : Public Sector Pension Investment Board Act--Implementation of the Public Service Pension Fund (PSPF) and System Enhancements
1. PURPOSE
1.1. The purpose of this Special Advice is to provide information to Public Service Corporations and Territorial Governments not using the Regional Pay System (RPS) with information regarding the implementation of the Public Service Pension Fund (PSPF). New remittance and reporting procedures have been developed and are described herein. Public Works and Government Services Canada (PWGSC) pension system enhancements are also described in this directive.
This Advice should be read in conjunction with Superannuation Administration Manual (SAM) Special Bulletins 1999-005 dated April 20, 1999, 1999-009 dated September 23, 1999, and 1999-011, dated December 15, 1999.
1.2. In this text, use of the masculine is generic and applies to both men and women.
2. BACKGROUND
2.1. The Public Sector Pension Investment Board Act (PSPIBA), which was given royal assent in September 1999, amended several existing Acts, including the Public Service Superannuation Act (PSSA), and provided for the creation of a new pension fund whereby contributions paid by plan members and employers are to be invested in financial markets by a Pension Investment Board (PIB).
As a result, contributions and benefits must be identified as Public Service Superannuation Account (PSSA) or PSPF separately, accurately and in greater detail, effective April 1, 2000.
3. POLICY
3.1. April 1, 2000, will be referred to as the "effective date" hereunder.
PSSA can also be referred to as Fund 1 or PSSA 1. PSPF can also be referred to as Fund 2 or PSSA 2.
Employees with 35 years of pensionable service will continue to contribute at a rate of 1%. For employees who have reached 35 years of service before the effective date, employee contributions and employer matching contributions at the old rate will continue to be credited to the PSSA even after April 1, 2000. For employees who have reached 35 years of service on or after the effective date, employee contributions and employer matching contributions at the new rate will be credited to the PSPF.
Contributions required prior to the effective date will be credited to the PSSA. Contributions required on or after the effective date will be credited to the PSPF.
Contributions for Leave Without Pay (LWOP) deficiencies where the LWOP occurred prior to the effective date will be credited to the PSSA. Deficiencies for LWOP where the LWOP occurred on or after the effective date will be credited to the PSPF.
Where an individual elected not to count his LWOP, and later signs an election to count the leave period which is dated on or after April 1, 2000, the service will be credited to PSPF.
Contributions for past service elections and reciprocal transfer agreements (RTAs), and service credits for pension transfer agreements (PTAs) or pension surrenders, where the election, transfer or surrender was made prior to April 1, 2000, will be credited to the PSSA. Contributions for past service elections and RTAs, and service credits for PTAs or pension surrenders, where the election, transfer or surrender was made on or after April 1, 2000, will be credited to the PSPF.
Elections made on or after April 1, 2000, (PSPF) must also be broken down to identify elections at the single rate and at the double rate.
Contributions, including retroactive contribution recovery and/or adjustments in respect of PSSA service will be credited to that account.
Retirement Compensation Arrangements (RCA) contributions will continue to be credited to the RCA account.
Benefits accrued prior to the effective date will be charged to the PSSA. Benefits accrued on or after the effective date will be charged to the PSPF. RCA benefits will continue to be charged to the RCA Account (RCAA).
All benefit entitlements such as: Returns of Contributions (ROCs), pension payments, Transfer Values (TVs), Pension Benefits Division Act (PBDA) payments and survivor benefit payments must be clearly identified for accounting purposes as PSSA or PSPF. Although PSSA and PSPF funds are identified separately, one blended payment will be issued.
4. PROCEDURES/INSTRUCTIONS
Instructions on revised procedures and forms are provided below.
4.1. REMITTANCES
A separate breakdown of contributions for the PSSA and the PSPF must be provided on monthly remittances. Election and deficiency payments must also be identified by fund as well as a breakdown between the single rate and the double rates.
Monthly remittances are required by the fifth working day of the following month. Late remittances will be subject to interest penalties.
The employee contribution rate remains unchanged.
The following table contains Public Service Corporation contribution types and employer rates effective April 1, 2000, for contributions to the PSPF.
| Contribution Type | Employer Rate |
|---|---|
| Current Service | 2.14 x employee contribution |
| Elective/LWOP single rate | 2.14 x employee contribution |
| Elective/LWOP double rate | 0.56 x employee contribution |
Public Service Corporations are expected to match employee contributions at the higher rate starting April 1, 2000. It is recognized that, in general, April 1 is not at the beginning or end of a pay period . Public Service Corporations are expected to determine the percentage of the remittance that should be credited to each fund and to adjust the remittance accordingly at the organizational level.
Example:
The last biweekly pay period of March 2000 ends on March 29, 2000; March 30 and 31 are part of the new pay period, but the remittances for those two days should be credited to the PSSA, with a lower employer matching rate. The following shows a hypothetical Public Service Corporation that has collected $5,000 in contributions from its employees for the pay period. The second pay period following April 1, 2000, will not have any of these complications.
- Employee contributions for the pay cycle spanning April 1:
- Credit to the PSSA (20%--2 days out of a 10 working day period) $1,000.00
- Credit to the PSPF (80%--8 days out of a 10 working day period) $4,000.00
- Total: $5,000.00
- Employer contributions for the pay cycle spanning April 1:
- Credit to the PSSA (20%--2 days out of a 10 working day period--previous rate) $1,000.00
- Credit to the PSPF (80%--8 days out of a 10 working day period--new rate) $8,560.00
- Total: $9,560.00
- Total remittance: $14,560.00
The PWGSC-TPSGC 2292 "Monthly Remittance of Superannuation Contributions (Public Service Corporation)" has been redesigned to reflect the split between PSSA and PSPF and the requirement to submit more detailed arrears information.
The form consists of five sections. The following provides instructions on how to complete each of the sections.
Section 1: PSPF (Public Service Pension Fund)
Line 5: Employee contributions for current service (currently 4% on salaries up to the Yearly Maximum Pensionable Earnings (YMPE) ($37,600 for the 2000 taxation year) and 7.5% on salaries in excess of the YMPE; this line should also contain any retroactive or lump sum payments for the year in question; this will also include contributions for employees with more than 35 years service (i.e. 1%)).
Line 6: Employee contributions for prior years resulting from retroactive pay increases (this line will not to be required until 2001; it is anticipated that the employer contribution rate will remain constant for the next four years, when the rate changes, this form will be redesigned).
Line 7: Employee contributions for LWOP or on loan service--Single rate (note that LWOP and elective service are now reported separately).
Line 8: Employee contributions for elective service--Single rate (note that all elections signed after March 31, 2000, even for service prior to April 1, 2000, will be recorded here).
Line 9: Employee single rate contributions requiring employer remittance (total of lines 5 to 8).
Line 10: Employer contributions--Single rate (line 9 x applicable single matching rate [currently 2.14]).
Line 11: Employee contributions for LWOP or on loan service--Double rate.
Line 12: Employee contributions for elective service--Double rate.
Line 13: Employee double rate contributions requiring employer remittance (total of lines 11 and 12).
Line 14: Employer contributions--Double rate (line 13 x applicable double matching rate [currently 0.56]).
Line 15: Total contributions credited to the PSPF (total of lines 9, 10, 13 and 14).
Section 2: PSSA (Public Service Superannuation Account)
Line 16: Employee contributions for current and retroactive service prior to April 1, 2000.
Line 17: Employee contributions for LWOP or on loan service--Single rate.
Line 18: Employee contributions for elective service--Single rate.
Line 19: Employee single rate contributions requiring employer remittance (total of lines 16, 17 and 18).
Line 20: Employer contributions--Single rate (line 19 x applicable single matching rate [1.0]).
Line 21: Employee contributions for LWOP or on loan service--Double rate.
Line 22: Employee contributions for elective service--Double rate.
Line 23: Total contributions credited to the PSSA (total of lines 19 to 22).
Section 3: RCAA (Retirement Compensation Arrangement Account)
Line 24: Employee contributions for current service.
Line 25: Employee contributions for LWOP or on loan service--Single rate.
Line 26: Employee contributions for elective service--Single rate.
Line 27: Employee single rate contributions requiring employer remittance (total of lines 24, 25, and 26).
Line 28: Employer contributions--Single rate (line 27 x applicable single matching rate [currently, 11.93).
Line 29: Employee contributions for LWOP or on loan service--Double rate.
Line 30: Employee contributions for elective service--Double rate.
Line 31: Employee double rate contributions requiring employer remittance (total of lines 29 and 30).
Line 32: Employer contributions--Double rate (line 31 x applicable double matching rate [currently 5.465]).
Line 33: Employee contributions prior year 1 (identify year).
Line 34: Employer contributions prior year 1 (identify year and apply the appropriate rate for that year).
Line 35: Employee contributions prior year 2 (identify year).
Line 36: Employer contributions prior year 2 (identify year and apply the appropriate rate for that year).
Line 37: Total contributions credited to the RCA (total of lines 27, 28, 31, 32, 33, 34, 35 and 36).
Section 4: SDBA (Supplementary Death Benefit Account)
Line 38: Employee SDB contributions (currently $0.15 per $1,000 of coverage).
Line 39: Employer SDB contributions (currently $0.04 per $1,000 of the basic benefit).
Line 40: Total contributions credited to the SDBA (Note: Please do not remit provincial sales tax on Supplementary Death Benefit [SDB] premiums.) [total of lines 38 and 39].
Section 5: Total Remittance and Certification
Line 41: Total Remittance (total of lines 15, 23, 37 and 40).
4.2. TERMINATION AND CONTRIBUTIONS ADVICE
The PWGSC-TPSGC 2321 "Terminations and Contributions Advice" form is being redesigned to reflect the requirements of Pension Reform. Information will be required for long term absences such as educational leave, and on loan to unions or other organizations. Current procedures should be maintained until the new form has been redesigned. Information on the changes to the form and procedures will be forthcoming.
4.3. SUPERANNUATION REMITTANCE FOR EMPLOYEES ON LWOP
Submission of the PWGSC-TPSGC 4005 "Superannuable Remittance for Employees on Leave Without Pay" will become a requirement for employees remitting contributions directly to the Superannuation Directorate. Currently, submitting the form is an option. Superannuation Directorate will be charging Public Service Corporations for employer contributions directly related to employee contributions. Information on the changes to the form and procedures will be forthcoming.
4.4. ANNUAL REPORTING
The annual method of reporting individual contributions is being changed. For the 2000 calendar year, the following information will be required:
- individual contributions, superannuable salary and service
for the year as it would normally be identified on the PWGSC-TPSGC 2020 "Salary Service Information Pension Support System". PWGSC is currently developing a Data Collection and Remittance System (DCRS) which will help Public Service Corporations to do their annual reporting. The DCRS is expected to be ready for implementation by the end of 2000. Information on the annual reporting process and the DCRS will be forthcoming.
5. PWGSC SYSTEMS
PWGSC systems have changed as a result of Pension Reform. Instructions on the elements that have changed are provided below.
5.1. RE-TOS APPLICATION
Version 2.3.1 of the RE-TOS software can be used in order to calculate LWOP deficiencies. The deficiencies will automatically be calculated and attributed to PSSA or PSPF based on the period of the LWOP. The RE-TOS application is available for downloading from the Compensation Sector Web site under the menu item SOFTWARE, at the following addresses: Internet--/compensation
Example:
Period of single rate LWOP from February 1, 2000, to April 30, 2000
Period of double rate LWOP from May 1, 2000, to May 31, 2001
Deficiencies:
- 01 02 00 1 to 31 03 00 2--Single rate (PSSA)
- 01 04 00 1 to 30 04 00 2--Single rate (PSPF)
- 01 05 00 1 to 31 05 01 2--Double rate (PSPF)
LWOP deficiencies, paid while the employee is still on leave, must be clearly identified as PSSA or PSPF when remitted to the Superannuation Directorate. The PWGSC-TPSGC 4005 will change as described in subsection 4.3. This form should be used for all LWOP remittances to the Superannuation Directorate including on loan cases.
The PWGSC-TPSGC 2480 "Election Not to Count Leave Without Pay as Pensionable Service" must reflect deficiencies credited to each fund. The amended form will be available shortly at which time a Forms Advice will be issued. Until the amended forms are available, deficiencies for each fund must be reported separately on the current version of the form.
The PWGSC-TPSGC 2481 "Statement of Option--Leave Without Pay" remains unchanged.
5.2. PENSION SYSTEMS
Effective April 1, 2000, the total contributions "To date" will be managed daily by the Contributor System.
5.2.1. CONTRIBUTOR INQUIRY SYSTEM
5.2.1.1. PENSION REFORM ENHANCEMENTS
The Contributor Inquiry System has been amended to reflect Fund 1 (PSSA) and Fund 2 (PSPF) information. The Summary screens will provide the total contributions credited under both funds. Separate screens have been created to display the breakdown between Fund 1 and Fund 2. Even though, as stated above, there will continue to be a single RCAA, PWGSC systems have been modified to reflect RCA contributions after April 1, 2000, as RCA Fund 2.
The following screens have been created or revised:
| Screen name | Acronym | Status | Comments |
|---|---|---|---|
| Contributions Summary | CON | Revised | Contains total contributions by fund for all funds. |
| PSSA Contributions | CNP | New | Provides detailed Fund 1 and Fund 2 contributions and interest. Linked to Contributions Summary screen. |
| RCA Contributions | CNR | New | Provides detailed Fund 1 and Fund 2 RCA contributions, if applicable, and interest. Linked to the Contributions Summary screen. |
| SOS Summary | SOS | Revised | Displays all SOS records. Highlighted SOS records will display payment details. |
| SOS Details | SOD | New | Displays the lump sum detail for Fund 1, Fund 2, RCA 1, RCA 2 and interest attributed to each. |
Example:
| CONTRIBUTIONS | INTEREST TO-DATE | |
|---|---|---|
| PSSA Fund 2: | $ XXXX.XX | $ XXX.XX |
| PSSA Fund 1: | $ XXXX.XX | $ XXX.XX |
| RCA Fund 2: | $ XXXX.XX | $ XXX.XX |
| RCA Fund 1: | $ XXXX.XX | $ XXX.XX |
| GRAND TOTAL: | ||
5.2.1.2. OTHER SYSTEM ENHANCEMENTS
The Entitlement Summary screen (SUM) will now display the Adjusted Average, the Adjusted RCA Average and the Adjusted CPP/QPP Average salaries for part-time employees. This screen will only display information when a SUBMIT for benefit has been processed.
5.2.2. PENSION SUPPORT SYSTEM (PSS)
5.2.2.1. PENSION REFORM ENHANCEMENTS
The PSS will automatically calculate Fund 1 and Fund 2 benefit information. The summary screens will provide the total benefit credited under both funds. Separate screens have been created to display the breakdown between Fund 1 and Fund 2.
The following screens have been modified or revised.
| Screen name | Acronym | Status | Comments |
|---|---|---|---|
| Pension Calculation Summary | CAL | Revised | Displays total benefits for Fund 1 and Fund 2 |
| Pension Calculation Fund 1 | CL1 | New | Displays Fund 1 information |
| Pension Calculation Fund 2 | CL2 | New | Displays Fund 2 information |
| Transfer Value Calculation Summary | TVC | Revised | Displays total value for Fund 1 and Fund 2 |
| Transfer Value Calculation Fund 1 | TC1 | New | Displays Fund 1 values |
| Transfer Value Calculation Fund 2 | TC2 | New | Displays Fund 2 values |
NOTE: Elections that are in progress (deductions commenced but not yet finalized by the Superannuation Directorate) may be included in benefit calculations in the Elective Service area. A message will be displayed advising that the election in progress is included as part of the calculation.
5.2.3. ESTIMATES OF COST SYSTEM
5.2.3.1. PENSION REFORM ENHANCEMENTS
There will be no change in procedures. Compensations Advisors will not be required to split the period of estimation as the fund to which the service and contributions will be credited is determined by the date the election is signed.
Lump sum payment information and monthly instalment costs at the single and the double rates are provided in the estimates.
Estimates that are processed by the Superannuation Directorate will be displayed on a revised PWGSC-TPSGC 2057 "Estimate of Cost for Elective Pensionable Service". Separate estimates will be provided for each period of service with the appropriate cost either at single or at double rate.
5.2.3.2. OTHER SYSTEM ENHANCEMENTS
The Estimate of Cost Calculation Screen (CAL) has been modified to display the Assigned Work Week (AWW) and Scheduled Work Week (SWW).
5.2.4. ELECTIONS SYSTEM
5.2.4.1. PENSION REFORM ENHANCEMENTS
When an employee completes an election on or after April 1, 2000, Compensation Advisors must ensure that new deduction codes for PSPF at the single or double rate are used when starting the monthly deductions.
Lump sum payments for periods of elective service must clearly reflect the correct fund and the breakdown by single and double rate.
The PWGSC-TPSGC 2097 "Elective Service Notice" will now have the SWW and AWW and the monthly deduction requirement at single and/or double rate.
The PWGSC-TPSGC 2092 "Election to Surrender Benefits" has been revised and should be used for all surrenders made on or after April 1, 2000.
5.2.5. PENSION BENEFITS DIVISION SYSTEM
5.2.5.1. PENSION REFORM ENHANCEMENTS
For Public Service Corporations that have access to the Pension Division System, enhancements are described below. Public Service Corporations without access to the Pension Benefits Division System should continue to use the PWGSC-TPSGC 2055-1 "PBDA Information Request Worksheet--Public Service Corporations".
The following screens have been created or revised:
| Screen name | Acronym | Status | Comments |
|---|---|---|---|
| Contribution Calculation | CON | Revised | Used to calculate contributions to be divided. Contributions are now captured quarterly. |
| Special Process | CSP | New | Used for part-time employees and to calculate Fund 1 and Fund 2. |
| Fund Information | CFU | New | Provides pension division information by Fund 1 and Fund 2 . |
| Pension Division Request | CAR | Revised | The cohabitation period will be displayed by Fund 1 and Fund 2 (system generated). This screen will also display the date on which the employee reached 35 years of pensionable service, if applicable. |
| Service Calculation | CSR | Revised | Displays information by fund. |
| Calculation | CCA | Revised | Displays total payment. |
| Pension Benefit Request | CPI | Revised | Displays RTA/CFSA/RCMP values. |
| Pension Benefit Report | CP1 | Revised | Provides breakdown of contributions and displays elective service (LWOP/RTA/CFSA/RCMP) and non-elective service. |
5.2.5.2. OTHER SYSTEM ENHANCEMENTS
The Pension Benefits Division System has been enhanced and now calculates an accurate division calculation where the employee has part-time service. Such requests should therefore no longer be sent to the Superannuation Directorate.
Where an estimate for pension division includes RCA salary in excess of the PSSA salary threshold, the Pension Division System now splits the payment between PSSA, PSPF and RCA.
5.2.6. ANNUITANT SYSTEM
The Annuitant System is used by the Superannuation Directorate to issue benefit payments. Although PSSA and PSPF benefits are managed separately, one blended payment will be issued.
6. INCOME TAX REPORTING
There are no changes to income tax reporting requirements for pension contributions. The combined contributions of both funds are to be reported as a single value.
7. MANUALS
The following manuals will be updated to reflect Pension Reform changes:
- Superannuation Administration Manual (SAM)
- Pension Support System Manual (PSS)
- Superannuation Procedures Manual for Public Service Corporations (PSC)
- Pension Benefits Division System Manual (PBDS)
- Pension Benefits Division Act (PBDA)--Information kit
8. HELP TEXT
Element Help (F4) in on-line systems has been updated to reflect the changes described in this Directive.
9. FORMS
The amended forms are available electronically in the ELF application or may be ordered from the appropriate Printing Plant.
10. INQUIRIES
10.1. Any request for information regarding the foregoing should be addressed to your PWGSC Compensation Services Office.
R. Jolicoeur
Director General
Compensation Sector
Government Operational Service
Original Signed by
B. Bartley
- Date modified: