Supplementary Death Benefit

The following information is intended to provide you, the Employer, with general Supplementary Death Benefit (SDB) coverage information.

Reference to Compensation Advisor in the following text is the equivalent of an Employer representative.

On this page

• Introduction
• Naming or changing your beneficiaries form (PWGSC-TPSGC 2196 (Public Works and Government Services Canada - Travaux publics et Services gouvernementaux Canada))
• Persons required to contribute
• Periods of coverage
• Amount of coverage and contributions
• Supplementary Death Benefit contributions
• Supplementary Death Benefit contribution payment for periods of leave without pay
• Supplementary Death Benefit contribution payment upon termination
• Public Service (Crown) Corporation Employer's Rate
• Salary for Death Benefit Purposes
• Paid up Supplementary Death Benefit coverage starting at age 65
• Supplementary Death Benefit reduction starting at age 66
• Commercial Supplementary Death Benefit

Introduction

The Supplementary Death Benefit (SDB) Plan came into effect on January 1, 1955 and forms Part II of the Public Service Superannuation Act (PSSA). The death benefit is a one-time, tax free, lump sum payment payable only upon the death of the participant. The death benefit is a one-time, tax free, lump sum payment payable only upon the death of the participant.

The SDB plan applies to almost all public service employees who contribute to the public service pension plan. Coverage for eligible employees begins when they become public service pension plan members. SDB plan participants can name the beneficiaries of their choice by completing the Naming or changing your beneficiaries form PWGSC-TPSGC 2196 - This site is only accessible to federal government employees, and only to federal departments and agencies.

Since February 1, 2010, the Government of Canada Pension Centre (Pension Centre) is responsible for providing new plan members with information and guidance about the pension plan and the SDB. Upon receipt of the Plan Member Contact Information form PWGSC-TPSGC 577 - This site is only accessible to federal government employees, and only to federal departments and agencies., the Pension Centre sends the plan member a Notification of Plan Membership, along with an Orientation Information Kit which includes information on the SDB plan and a link to the Naming or changing your your a beneficiaries form PWGSC-TPSGC 2196 - This site is only accessible to federal government employees, and only to federal departments and agencies..

Naming or changing your beneficiaries form (PWGSC-TPSGC 2196)

Effective May 1, 2008, the Pension Centre is responsible for administering all activities regarding the designation of beneficiaries under the SDB Plan.

Compensation Advisors are no longer responsible for providing plan members with the Naming or changing your beneficiaries form PWGSC-TPSGC 2196 - This site is only accessible to federal government employees, and only to federal departments and agencies or for forwarding the form on their behalf.

Members requesting information related to the completion of the PWGSC-TPSGC 2196 and the naming of beneficiaries should be referred to the Pension Centre. Please visit the "Contact Us - Your Public Service Pension and Benefits" Web site for the Pension Centre "Contact us" information.

The existing regulation that permits the Pension Centre to accept the PWGSC-TPSGC 2196 if the Deputy Head certifies that the form was received prior to the participant's death is still in force. If a member sends a completed PWGSC-TPSGC 2196 to their employing organization instead of the Pension Centre, the department's Human Resources (HR) is responsible for date stamping the envelope when it is received. In addition, the Compensation Advisor is responsible for returning the PWGSC-TPSGC 2196 to the member with a note informing him to submit it to the Pension Centre. A copy of the note, along with a copy of the completed PWGSC-TPSGC 2196 must be placed in the member's file. If the member dies before the Pension Centre receives the form, the Head of HR of the employing organization will be asked by the Pension Expert to send a letter to the Pension Centre indicating the date the form was received and the date it was returned to the member.

Persons required to contribute

Most employees who are required to contribute to the public service pension plan are also required to contribute to the SDB plan.

Some government agencies have their own group life insurance plan and are excluded from the SDB plan. Schedule III of the Supplementary Death Benefit Regulations lists the Crown Corporations and Boards that are excluded.

Periods of coverage

Employees retain SDB coverage during the following periods:

1. leave with pay
2. leave without pay, authorized or unauthorized
3. suspension
4. periods between seasons, in the case of seasonal employees
5. strike
6. periods between sessions of Parliament, in the case of sessional employees

Note 1

Once a plan member has accumulated 35 years of pensionable service, their current contributions cease, however, they continue to contribute to the SDB plan as their SDB coverage is retained.

Note 2

For plan members who reach 71 years of age on or after January 1, 2008, both current and indexing contributions cease effective January 1st of the year following the year in which they reached age 71. However, they retain their SDB coverage and continue to contribute to the SDB plan.

"New" employees, 71 years old and older, will contribute to the SDB plan once the eligibility criteria have been met (for example, term over 6 months, indeterminate, etc.).

Amount of coverage and contributions

The SDB plan provides coverage equal to twice the participant's final annual pensionable salary adjusted to the next highest multiple of $1,000.

SDB contributions are at the rate of $0.15 a month per $1,000 of coverage.

Example 1

• Salary - $30,485
• SDB Basic Benefit - $61,000
• $61,000 / $1,000 x $0.15 = $9.15
• Contributions - $9.15 per month

Note 1

When a participant receives a retroactive salary increase, the SDB basic benefit is increased, based on the revised salary, on the first of the month following the date of the authorization of the increase.

Note 2

For a part-time employee, coverage is based on the employee's assigned work week (AWW). The salary is doubled and rounded up to the next multiple of $1,000.

Example 2

• Salary - $47,450 x 22.5/37.5 = $28,470 x 2 = $56,940
• SDB Plan coverage is $57,000

Supplementary Death Benefit contributions

Compensation Advisors continue to be responsible for starting SDB deductions, providing information and contribution amounts related to periods of leave without pay (LWOP) and certifying arrears/deficiencies amounts upon termination.

Contributions are paid monthly, by deduction at source from the plan member's salary, starting the month in which the employee becomes a contributor to the public service pension plan. Contributions cease effective the month in which the employee ceases to be employed, dies, or becomes employed in an excluded organization.

A full month's contribution is required for each partial month of coverage. Both the first and the last months are treated as complete months for contribution purposes regardless of the date on which the employee starts or ceases to be employed, or ceases to be a contributor.

Note

Crown Corporations are now responsible for reporting their plan members' SDB contributions via the Data Capture Tool (DCT). The amounts reported for plan members residing in Quebec or Ontario should exclude the sales tax.

Supplementary Death Benefit contribution payment for periods of leave without pay

SDB contributions for all periods of leave without pay (LWOP) are based on the rate of salary the employee would have received had they been on duty.

SDB contributions are always payable at the single rate regardless of the type of leave and will be paid as follows:

1. from salary, if there is sufficient salary due for the month (when only a part of a pay period is without pay)
2. if there is insufficient salary or if a whole pay period is without pay, deductions will be recovered when the employee returns to duty

For periods of LWOP other than those listed in (c) below and for which deductions were not paid in a lump sum within thirty days of the return to duty, the recovery will be extended over a period equal to twice the period of the absence.

In addition, in cases where the employee was on LWOP due to illness or disability which has been certified as such by the deputy head of the department, the payment period may be extended by the Minister if they are is of the opinion that undue hardship may be caused to the participant.

3. when the employee is absent by reason of:
   1. being on loan to an international organization
   2. being on loan to the government of another country
   3. being on loan to serve as a full-time paid official of a public service bargaining agent
   4. being on loan to serve as a full-time paid official of a credit union
   5. being on loan to serve outside the public service on any federal royal commission, board or agency that is an agent of His Majesty in right of Canada

Contributions for reason of absence under (c) are to be paid to the Pension Centre quarterly, semi-annually, or annually in advance, at the participant's discretion.

Note

PSSA and SDB contributions should be paid with separate cheques. Any shortages in contributions have to be recovered from the salary when the employee returns to duty.

Supplementary Death Benefit Contribution Payment upon Termination

All arrears/deficiencies amounts must be identified on Termination/Retirement Information form PWGSC-TPSGC 4242 - This site is only accessible to federal government employees, and only to federal departments and agencies. upon termination.

If deficient contributions resulting from a period of leave without pay are not fully paid upon termination, the Compensation Advisor provides the member with the following payment options:

1. Repay the full amount owing by personal cheque payable to Receiver General for Canada
2. Repay the full amount owing from termination payments
3. Repay the full amount owing by having deductions taken from their pension payment once it becomes payable

Public Service (Crown) Corporation Employer's Rate

Every Crown corporation, agency or public board not set out Schedule III of the regulations shall pay to the Consolidated Revenue Fund each month an amount equal to $0.04 for every $1,000 of basic benefit of each participant who is employed by the Crown Corporation, agency or public board at any time during that month.

Employers will be invoiced monthly for the SDB employer share of employee paid premiums and for arrears received from employees for periods of LWOP.

Salary for Death Benefit Purposes

The basic benefit of a participant to the SDB Plan is based on their salary. The following information will help employers calculate the SDB contributions.

"Salary" is defined as the compensation received for the performance of the regular duties of an employee's position or office in the public service expressed in terms of an annual rate:

1. includes any bonus or allowance, the value of which is fixed by Treasury Board, that normally forms part of the salary for superannuation purposes
2. is the sum of salaries received by an employee in respect of employment in the public service on a full-time or on a part-time basis
3. corresponds to the total of all salaries received for someone who is in receipt of more than one salary in respect of full-time employment in the public service

Note 1

For SDB purposes only, seasonal employees are considered to be in receipt of their full-time or part-time salary (deemed salary), as applicable, during the off-season. In cases where, during the off-season, the employee is also receiving a salary in respect of full-time or part-time employment, regardless of whether the employee is hired to work less or more than 12 hours per week in the public service, that part-time or full-time salary is to be combined with the deemed salary when determining the SDB basic benefit.

Note 2

When a plan member receives a pre-authorized salary increase (i.e. statutory increment), the revised salary for death benefit purposes is deemed to take effect on the date of the salary increase.

Example 3

• Pre-authorized salary increase dated May 15, 2008
• Increase of SDB coverage: May 15, 2008
• Increase of SDB contributions: May 1, 2008

Note 3

When a plan member receives a retroactive salary increase due to the signing of a new Collective Agreement, promotion or reclassification, the revised salary for death benefit purposes is deemed to take effect on the first of the month following the month during which the authorizing instrument was issued.

Example 4

• Collective Agreement signed: November 29, 2009
• Retroactive salary increase effective: June 21, 2008
• Increase of SDB coverage and contribution: December 1, 2009

Note 4

When a retired member receives a retroactive salary increase, the revised salary for SDB purposes is deemed to be effective on the first of the month following the month during which the authorizing instrument was issued. However, the increase has to be authorized no later than the month prior to the month of termination (SOS) for the retired member to be entitled to the increase of the SDB coverage.

Example (retired member entitled):

• New collective agreement signature date: May 15, 2008
• Member termination date: June 27, 2008
• Increase of SDB coverage: June 1, 2008
• Member is entitled to increase of SDB coverage since the increase is effective prior to the SOS

Example (retired member not entitled):

• New collective agreement signature date: June 4, 2008
• Member termination date: June 27, 2008
• Increase of SDB coverage: July 1, 2008
• Member is not entitled to increase of SDB coverage since the increase is only effective after the SOS date

Paid up Supplementary Death Benefit coverage starting at age 65

If a participant reaches the SDB age of 65 while employed, and they have completed 2 years of continuous employment in the public service or 2 years of continuous participation in the SDB, they automatically have a "paid up" coverage of $10,000 for life at no cost. In other words, the participant will receive $10,000 of their SDB coverage without having to pay contributions. Starting at the SDB age of 65, SDB contributions will decrease by $1.50 per month (the contribution required for $10,000 paid up coverage), and the participant will continue paying contributions on the balance of coverage.

Note

The "SDB age" is April 1st or October 1st following the participant's actual birthday. The $10,000 paid up coverage, for example, starts on April 1st or October 1st following the participant's 65th birthday.

Supplementary Death Benefit reduction starting at age 66

The SDB plan is similar to a decreasing term life insurance. The basic benefit is reduced by 10% of the original basic for each year starting at the SDB age of 66 (April 1st or October 1st following the participant's 66th birthday. If a participant is still employed, the SDB coverage is never reduced to an amount that is below:

• 1/3 of their final salary rounded up to the next multiple of $1,000
• $10,000

whichever is greater. See example below.

Supplementary Death Benefit reduction, coverage and contribution

• Salary - $34,850
• SDB Basic Benefit - $70,000

Outlines the SDB reduction, coverage and contributions from SDB age of 60 to 75.

SDB Age	Reduction	Coverage	Contribution
60	Nil	$70,000	$10.50
64	Nil	$70,000	$10.50
65	Nil	$70,000	$9.00 ($10.50-$1.50)
66	10%	$63,000	$7.95 ($9.45-$1.50)
67	20%	$56,000	$6.90 ($8.40-$1.50)
68	30%	$49,000	$5.85 ($7.35-$1.50)
69	40%	$42,000	$4.80 ($6.30-$1.50)
70	50%	$35,000	$3.75 ($5.25-$1.50)
71	60%	$28,000	$2.70 ($4.20-$1.50)
72	70%	$21,000	$1.65 ($3.15-$1.50)
73	80%	$14,000	$0.60 ($2.10-$1.50)
74	90%	Minimum coverage ($10,000 if retired or $12,000 if employed)	Nil (if retired) $0.30 (if Active)
75	100%	Minimum coverage ($10,000 if retired or $12,000 if employed)	Nil (if retired) $0.30 (if Active)

Commercial SDB

SDB participants who cease to be employed in the public service with an entitlement to an immediate pension (Immediate Annuity or an Annual Allowance payable within 30 days of termination), will automatically continue their SDB coverage if they have been employed in the public service without interruption for two years or if they have been an SDB participant for two years. Participants who are not entitled to an immediate pension must elect if they wish to continue their SDB coverage and must pay a higher, "commercial" rate of contribution.

The Pension Centre is now responsible for providing counseling in regards to Commercial SDB. When applicable, a Commercial SDB estimate will be added to the Retirement Information Kit sent by the Pension Centre upon termination.

Members requesting information related to Commercial SDB should be referred to the Pension Centre. The contact information can be found on the "Contact Us - Your Public Service Pension and Benefits" Web site.