ARCHIVED SAM - Special Bulletin 2005-001

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| January 20, 2005 (Revised February 2, 2005)

SUBJECT: Changes to the Certification of Leave Without Pay (LWOP) Form PWGSC-TPSGC 2123)

1. PURPOSE

1.1. The purpose of the bulletin is to provide compensation advisors with instructions for the completion of the revised Certification of Leave Without Pay form (PWGSC-TPSGC 2123).

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

2. POLICY

2.1. The form PWGSC-TPSGC 2123 has been revised to include additional information needed to comply with the Income Tax Regulations. This information is required by the Superannuation, Pension Transition and Client Services Sector (SPTCSS) to calculate a past service pension adjustment (PSPA) when a member is electing for past service.

3. PROCEDURES/INSTRUCTIONS

3.1. Completion of the form PWGSC-TPSGC 2123 is required for all elections for prior contributory public service for which a lump sum benefit, such as a return of contributions (ROC), was paid upon termination of employment. The SPTCSS may request the completion of the form PWGSC-TPSGC 2123 for situations where an employee elects to reinstate the full period of service for which he had previously received a transfer value (TV). For those situations, the SPTCSS will contact the client department if the completion of the form is required.

3.1.2. Compensation advisors are to note that for elections that have not been finalized, the SPTCSS will be requesting client departments to provide additional information as per the revised form.

3.2. Section A

3.2.1. A new column has been added entitled "Department Name". For each period of elective service, compensation advisors are to indicate the name of the department, agency or Crown corporation. If an employee worked in more than one department during the period of elective service, then the last employing department should be indicated. This section has also been modified by adding lines.

3.3. Section B - Period(s) of Pensionable Leave Without Pay (LWOP)

3.3.1. This section has been modified for the purpose of reporting periods of LWOP for which contributions were required. If an employee opted to count as pensionable service the full period of LWOP, then the full period should be reported in this section. On the other hand, if the employee opted not to count the portion of the LWOP exceeding the first three months, then only the first three months should be reported in this section. Please note that periods of pensionable LWOP of less than three months should also be reported in this section.

Example 1:

• Period of elective service: January 8, 2001 to March 31, 2004
• Period of LWOP (personal leave): April 1, 2002 to March 31, 2003
• Employee chose to count the full period of LWOP as pensionable service

When completing Section B, the full period (April 1, 2002 to March 31, 2003) must be reported.

Example 2:

• Period of elective service: January 8, 2001 to March 31, 2004
• Period of LWOP (maternity leave): September 9, 2002 to January 5, 2003
• Period of LWOP (parental leave): January 6, 2003 to April 30, 2003

Employee opted not to count the period of LWOP in excess of the first three months as pensionable service, i.e. from December 9, 2002 to January 5, 2003 (maternity leave) and January 6, 2003 to April 30, 2003 (parental leave).

When completing Section B, only the period of September 9, 2002 to December 8, 2002 should be reported.

3.3.2. The list of reason codes for this section has been modified to add parental leave. Compensation advisors must indicate the reason code when reporting periods of LWOP in this section. If the reason code is not included in the list, then the reason for the LWOP must be indicated in the Remarks Section (Section H).

3.4. Section C - Option Not to Count LWOP as Pensionable Service (New)

3.4.1. This section has been added for the purpose of reporting periods of LWOP for which an employee made an option not to count the period in excess of the first three months as pensionable service.

Example:

• Period of elective service: January 8, 2001 to March 31, 2004
• Period of LWOP (maternity leave): September 9, 2002 to January 5, 2003
• Period of LWOP (parental leave): January 6, 2003 to April 30, 2003

Employee opted not to count the period of LWOP in excess of the first three months as pensionable service, i.e. from December 9, 2002 to January 5, 2003 (maternity leave) and from January 6, 2003 to April 30, 2003 (parental leave).

When completing Section C, only the periods of December 9, 2002 to January 5, 2003 (maternity leave) and from January 6, 2003 to April 30, 2003 (parental leave) should be reported. As indicated earlier, the first three months of the LWOP are to be reported in Section B.

3.4.2. The same list of reason codes mentioned in Section B applies to this section as well. Compensation advisors must indicate the reason code when reporting periods of LWOP in this section. If the reason code is not included in the list, then the reason for the LWOP must be indicated in Section H.

3.4.3. Compensation advisors are to note that if the election pertains to one or more periods of LWOP that an employee had previously opted not to count as pensionable service and no pension adjustment (PA) was reported, then the Elective Non-contributory Pensionable Service Record form (Public Works and Government Services Canada (PWGSC)-Travaux publics et Services gouvernementaux Canada (TPSGC) 2001) must be used.

3.5. Section D (New)

3.5.1. The purpose of this section is to indicate if a PA was reported for the periods of LWOP indicated in Section C. For additional information regarding the reporting of PAs for periods of LWOP, compensation advisors should refer to Compensation Directive 1994-012 section 4.7 (iii) and Compensation Directive 1995-010 section 2.4.

3.6. Section E (Formerly Section C)

The purpose of this section is to report any periods of non-pensionable service such as periods of strike and suspension. The list of reason codes has been modified to include periods of LWOP that have exceeded the 5-year limit of permissible pensionable LWOP. If a period of elective service includes a period of LWOP that has exceeded the 5-year limit permissible, then such period should be reported in this section.

3.7. Section F - Pensionable Earnings for Post-1989 Service for Each Calendar Year (New)

3.7.1. This section has been added for the purpose of reporting the pensionable earnings for periods of contributory service that occurred on and after January 1, 1990. The information required when completing this section is the same as the information required when completing section 2 of the form PWGSC-TPSGC 2001.

NOTE: Completion of this section is not required if the ROC was paid prior to January 1, 1997.

| 3.7.2. The pensionable earnings are required to calculate a PA. When completing this section, compensation advisors must report the pensionable earnings in accordance with the payroll calendar year. This means that for each year, the pensionable earnings to be reported are those received up to the last day of the last pay period for that year.

3.7.3. The pensionable earnings must also include allowances which form part of salary for pension purposes.

| Please note that the examples below are based on the current pay cycle (7C) of the Regional Pay System payroll calendar.

| Example:

• Period of elective service: June 10, 2002 to November 28, 2003
• Date of election: September 6, 2004
• Scheduled work week (SWW): 37.50
• Assigned work week (AWW): 37.50
• Annual Salary:
  • June 10, 2002 to June 20, 2002: $40,400
  • June 21, 2002 to June 20, 2003: $41,600
  • June 21, 2003 to November 28, 2003: $42,300
  • Allowance: $800 per annum (bilingual bonus)

When completing this section, the pensionable earnings to be reported are as follows:

Pensionable earnings from June 10, 2002 to January 1, 2003

• June 10, 2002 to June 20, 2002: 9 days at $40,400 = $1,393.74
• June 21, 2002 to January 1, 2003: 139 days at $41,600 = $22,164.98
• Bilingual bonus from June 10, 2002 to January 1, 2003: 153 days at $800 = $469.18

The total pensionable earnings from June 10, 2002 to January 1, 2003 are as follows: $1,393.74 + $22,164.98 + $469.18 = $24,027.90

Pensionable earnings from January 2, 2003 to November 28, 2003

• January 2, 2003 to June 20, 2003: 122 days at $41,600 = $19,454.15
• June 21, 2003 to November 28, 2003: 115 days at $42,300 = $18,646.50
• Bilingual bonus from January 2, 2003 to November 28, 2003: 237 days at $800 = $726.77

Total pensionable earnings from January 2, 2003 to November 28, 2003: $19,454.15 + $18,646.50 + $726.77 = $38,827.42

3.7.4. Retroactive Salary Adjustments

| For purposes of calculating a PA, lump sum payments in terms of retroactive salary adjustments must be reported in the calendar year in which the payments are made. Therefore, if a lump sum payment was made during the period of elective service, then the amount of the lump sum must be included in the pensionable earnings.

| Example 1:

• Period of elective service: February 21, 2000 to December 31, 2001
• Date of election: August 9, 2004
• SWW: 37.50
• AWW: 37.50
• Annual Salary:
  • February 21, 2000 to June 20, 2000: $37,300
  • Pay equity lump sum payment: $8, 230 (paid on April 7, 2000)
  • June 21, 2000 to December 31, 2000: $37,300
  • January 1, 2001 to June 20, 2001: $37,300
  • June 21, 2001 to August 1, 2001: $37,300
  • August 2, 2001 to December 31, 2001: $39,700

A new collective agreement was signed on May 4, 2001. The annual salary was revised on August 2, 2001 and a lump sum payment in the amount of $2,675 was paid on July 27, 2001. The lump sum amount consists of a retroactive salary increase for the period of June 21, 2000 to August 1, 2001.

The pensionable earnings are as follows:

• From February 21, 2000 to June 20, 2000: 87 days at $37,300 = $12,439.05

During this period, a pay equity lump sum payment of $8,230 was paid. The pay equity lump sum amount must be included in the pensionable earnings for this period. Therefore, the pensionable earnings for the period of February 21, 2000 to June 20, 2000 are: $12,439.05 + $8,230 = $20,669.05

• From June 21, 2000 to December 20, 2000: 131 days at $37,300 = $18,730.07
• From December 21, 2000 to June 20, 2001: 130 days at $37,300 = $18,587.09
• From June 21, 2001 to August 1, 2001: 30 days at $37,300 = $4,289.33

  During this period, a retroactive salary increase lump sum payment of $2,675 was paid. The lump sum amount must be included in the pensionable earnings for this period.

• From August 2, 2001 to December 19, 2001: 100 days at $39,700 = $15,217.72

Therefore, the pensionable earnings for the period of June 21, 2001 to December 19, 2001 are: $4,289.33 + $15,217.72 + $2,675 = $22,182.05

• From December 20, 2001 to December 31, 2001: 8 days at $39,700 = $1,217.42

When completing this section of the form, the pensionable earnings to be reported are as follows:

• Total pensionable earnings from February 21, 2000 to December 20, 2000: $12,439.05 + $8,230 + $18,730.07 = $39,399.12
• Total pensionable earnings for the period of December 21, 2000 to December 19, 2001: $18,587.09 + $4,289.33 + $15,217.72 + $2,675 = $40,769.14
• Total pensionable earnings for the period of December 20, 2001 to December 31, 2001: $1,217.42

| Example 2:

• Period of elective service: June 1, 1997 to April 30, 1999
• Date of election: December 16, 2004
• Annual Salary:
  • Pre-revision
    • June 1, 1997: $38,000 
    • June 1, 1998: $38,000
  • Post-revision  
    • June 1, 1997: $39,400
    • June 1, 1998: $40,100

A collective agreement is signed on November 1, 1998 providing for salary increases retroactive to June 1, 1997. A lump sum payment of $3,500 is paid on January 22, 1999 as a retroactive salary increase up to February 3, 1999 and the revised salary becomes payable on the regular pay effective February 4, 1999. Although the salaries were revised retroactively, only the salaries received must be used for the pensionable earnings. However, the lump sum payment of $3,500 will be included in the pensionable earnings as it was paid during the period of elective service.

The pensionable earnings for the period of elective service will be as follows:

• From June 1, 1997 to December 24, 1997: 148 days at $38,000 (salary received) =  $21,557.80
• From December 25, 1997 to May 31, 1998: 112 days at $38,000 (salary received) = $16,314.01
• From June 1, 1998 to December 23, 1998: 148 days at $38,000 (salary received) = $21,557.80
• From December 24, 1998 to February 3, 1999: 30 days at $38,000 (salary received) = $4,369.82 + $3,500 (lump sum payment as a result of a retroactive salary increase, paid on January 22, 1999) = $7,869.82
• From February 4, 1999 to April 30, 1999: 62 days at $40,100 (salary received as a result of salary increase effective June 1, 1998) = $9,530.05

When completing this section of the form, the pensionable earnings to be reported are as follows:

• Total pensionable earnings for the period of June 1, 1997 to December 24, 1997: $21,557.80
• Total pensionable earnings for the period of December 25, 1997 to December 23, 1998:  $16,314.01 + $21,557.80 = $37,871.81
• Total pensionable earnings for the period of December 24, 1998 to April 30, 1999: $7,869.82 + $9,530.05 = $17,399.87

| Example 3:

• Period of elective service: January 8, 2001 to December 31, 2003
• Date of election: January 19, 2005
• SWW: 37.50
• AWW: 37.50
• Annual Salary:
  • January 8, 2001 to June 20, 2001: $79,983
  • June 21, 2001 to June 20, 2002: $83,500
  • June 21, 2002 to March 31, 2003: $85,588
  • April 1, 2003 to December 31, 2003: $87,370
  • On May 2, 2003, a lump sum payment of $3,000 was paid in terms of a performance award.

The pensionable earnings for the period of elective service will be as follows:

• January 8, 2001 to June 20, 2001: 118 days at $79,983 = $36,177.53
• June 21, 2001 to December 19, 2001: 130 days at $83,500 = $41,609.17
• December 20, 2001 to June 20, 2002: 131 days at $83,500 = $41,929.24
• June 21, 2002 to January 1, 2003: 139 days at $85,588 = $45,602.31
• January 2, 2003 to March 31, 2003: 63 days at $85,588 = $20,668.67
• April 1, 2003 to December 31, 2003: 197 days at $87,370 = $65,976.27. During this period a lump sum performance award of $3,000 was paid. This amount must be included in the pensionable earnings. Therefore, the pensionable earnings for this period are: $65,976.27 + $3,000 = $68,976.27.

When completing this section of the form, the pensionable earnings to be reported are as follows:

• Total pensionable earnings from January 8, 2001 to December 19, 2001: $36,177.53 + $41,609.17 = $77,786.70
• Total pensionable earnings from December 20, 2001 to January 1, 2003: $41,929.24 + $45,602.31 = $87,531.55
• Total pensionable earnings from January 2, 2003 to December 31, 2003: $20,668.67 + $68,976.27 ($65,976.27 + $3,000) = $89,644.94

3.7.5. Retirement Compensation Arrangements (RCA) Account

When completing this section, compensation advisors must ensure that the pensionable earnings do not exceed the salary threshold permissible under the Public Service Superannuation Act (PSSA) for the corresponding year. This is because the pensionable earnings exceeding the salary threshold are subject to the RCA account and no PAs are to be calculated on those earnings. The yearly RCA salary thresholds since 1994 are provided in the Chapter 2-5-2 of the Superannuation Administration Manual (SAM).

Example:

• Period of elective service: January 8, 2002 to December 31, 2002
• Total pensionable earnings: $101,200
• Salary threshold for 2002: $99,800

Since the total pensionable earnings for this period exceed the salary threshold permissible, then when completing this section, the amount of $99,800 must be provided. Earnings above the salary threshold are subject to the RCA and therefore are not subject to a PA calculation.

3.7.6. Non-Pensionable LWOP

When calculating the pensionable earnings, all periods of non-pensionable LWOP such as strike and suspension must be excluded. Periods of LWOP for which an employee opted not to count as pensionable service should also be excluded.

3.7.7. PAs

In addition to the pensionable earnings, compensation advisors must also indicate the PA that was reported to the Canada Revenue Agency (CRA) for each calendar year. This information is required to assist the SPTCSS in determining if the PA exceeds the amount of the lump sum benefit (ROC, TV) for the post-1989 service.

3.8. Section G (Formerly Section D)

This section has been modified by adding a box to indicate the date of payment of the ROC. In addition, three boxes have been added to indicate if the ROC has been transferred to a registered retirement savings plan (RRSP), a registered pension plan (RPP) or other type of vehicle. If the ROC was transferred to an RPP, the compensation advisor must indicate in Section H, whether the RPP was a defined benefit or defined contribution type plan. In addition, if the ROC was paid in cash, compensation advisors must indicate it in Section H.

If the ROC was transferred to an RRSP or another RPP, compensation advisors must report in the Amount box, only the portion of the ROC that applies to the service that occurred after December 31, 1989. If the payment of a ROC covered a period of service that includes both pre-1990 and post-1989 service, then the amount must be prorated.

Example:

• Period of service: January 10, 1989 to December 1, 1991
• ROC amount for the full period including interests: $3,600
• ROC transferred to an RRSP
• Number of calendar days in the period of service: 1,056
• Number of calendar days for the post-1989 service: 700
• $3,600 / 1,056 days X 700 days = $2,386.36

Therefore, $2,386.36 is the amount to be reported.

3.9. Section H (Formerly Section E)

There were no changes made to this section. The purpose of the Remarks Section is to provide additional information or clarifications.

3.10. Section I (Formerly Section F)

This section has been modified to provide a space for an email address.

4. INQUIRIES

4.1. Any request for information regarding the content of this bulletin should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.

Original Signed by
R. Jolicoeur

R. Jolicoeur
Director General
Compensation Sector
Finance, Accounting, Banking and Compensation

Reference(s): CJA 9007-10-9