ARCHIVED SAM - Special Bulletin 1999-003

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February 15, 1999

SUBJECT: EMPLOYEES ON LEAVE WITHOUT PAY TO SERVE AS FULL-TIME PAID OFFICIALS OF BARGAINING AGENTS

1. PURPOSE

1.1. The purpose of this Bulletin is to advise you of the policy for Public Service employees who are granted a leave of absence to serve as full-time paid officials of a union with respect to pension coverage and the reporting of Pension Adjustments.

1.2. In this text, use of the masculine is generic and applies to both men and women.

2. POLICY

2.1. Revenue Canada Taxation, Treasury Board Secretariat and Public Works and Government Services Canada (PWGSC) have confirmed the application of the Income Tax Regulation in regards to employees on leave without pay (LWOP) to serve as full-time paid officials of a union.

Pension Adjustment Reporting

A Pension Adjustment (PA) must be reported for all pensionable LWOP.

In some cases, however, where an individual is on LWOP and serving as a full-time paid official of a union, the union has been reporting the PA in respect of the LWOP under the Public Service Superannuation Act (PSSA). These individuals receive a PA from their current employer (the union) and a PA from the PSSA employer in respect of the same period. This has the effect of reducing the individual's RRSP room twice for the same benefit accrual.

Effective immediately, where an individual provides confirmation that the union (i.e. the current employer) has reported a PA for the pensionable LWOP under the PSSA, that period MUST NOT be included in the PA reported by the former employer (i.e. the department or corporation from whom the employee is on leave). This confirmation should be in the form of a letter from the union advising that the benefit accrual under the PSSA has been included in the PA reported by the union.

It should be noted that not all unions operate in the same way. It is only where the union has reported a PA for the PSSA benefit accrual that the former department or corporation is not required to report a PA for that period of leave.

It is also important to note that this situation applies only to individuals on LWOP to serve as a full-time official of a union. This does NOT apply where the employee is employed elsewhere even though the new employer may be providing pension coverage and a PA.

Five year Limit on Pensionable LWOP

As noted in Chapter 2.6.1 of the Superannuation Administration Manual, there is a limit to the total amount of LWOP that can be counted as pensionable under the PSSA. A detailed Bulletin regarding the application of these limits will be issued in the near future. However, it should be noted that LWOP for the purpose of serving as a full-time paid official of a union is NOT included in the 5 year limit.

3. PROCEDURES/INSTRUCTIONS

3.1. Clients Serviced by the Regional Pay System

PA

Where an individual or Union has provided confirmation that the Union will include (or has included) the PSSA benefit accrual in the PA reported by the Union, the PA reported by the Regional Pay System must be reduced.

The Compensation Specialist for the employee who is on LWOP must provide the Pay Office, in writing, with the number of pay periods and pensionable earnings to be excluded from the PA calculation.

The Pay Office responsible for the Temporarily Struck Off Strength (T-SOS) account will process a Pay Action Code (PAC) 12A Fd 118 and a PAC 30 Fd 734 on the master employee record, for the applicable taxation year, with the number of pay periods and pensionable earnings reported by the client.

Five-year Limit for Pensionable LWOP

The 5-year limit will not apply to employees on LWOP to serve as full-time paid officials of a union

3.2. Clients not Serviced by the Regional Pay System

PA

Where an individual or union has provided confirmation that the Union will include (or has included) the PSSA benefit accrual in the PA reported by the Union, the PA must be reduced by the period of LWOP.

Five-Year Limit for Pensionable LWOP

The 5-year limit does not apply to employees on LWOP to serve as full-time paid officials of a union.

4. INQUIRIES

4.1. Any request for information regarding the foregoing should be addressed to your PWGSC Compensation Service Office.

Original Signed by
P. Charko

P. Charko
Director General
Compensation Sector
Government Operational Service