ARCHIVED CD 2008-007

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March 26, 2008

SUBJECT: Correctional Service Canada - New Pension Type Code and Deduction Codes for Deemed Operational Service

1. PURPOSE

1.1 The purpose of this directive is to provide client departments with information regarding new Regional Pay System (RPS) pension type code and deduction/entitlement (DEDENT) codes required to comply with the Public Service Superannuation Regulations (PSSR) and the Retirement Compensation Arrangements (RCA) Regulations, for employees accruing deemed operational service with Correctional Service Canada (CSC).

1.2 For additional information regarding the CSC special pension arrangements, compensation advisors should consult the Superannuation Administration Manual (SAM) Special Bulletin 2007-004 entitled "Correctional Service Canada - Changes to Special Provisions for Operational Service". This directive should also be read in conjunction with Compensation Directive 2007-14 and 2005-15.

2. BACKGROUND

2.1 Since March 18, 1994, the PSSR have provided special pension arrangements for CSC employees engaged in operational service that allow for a lower age at retirement and a reduction in the number of years required to qualify for a pension.

2.2 The special provisions of the PSSR for CSC employees engaged in operational service have been modified to provide for "actual operational service" to be distinguished from "deemed operational service". These modifications are considered to have come into force on May 30, 2006.

2.3 Actual Operational Service refers to CSC employees working in federal correctional facilities, parole offices, and community correctional centres. More specifically, operational service is defined as service by a person employed by CSC whose principal place of work is not:

• the national headquarters or a regional headquarters of CSC;
• the offices of the CSC Commissioner; or
• a regional CSC Staff College or any other institution that provides similar training to CSC employees.

Deemed Operational Service refers to CSC employees in operational service for one or more periods totaling at least 10 years, who then cease to be engaged in operational service but continue to be employed by CSC and elect to continue to accumulate operational service.

2.4 The number of years spent in actual operational service and deemed operational service plus the age at which the contributor ceases to be employed will determine pension benefit entitlements. Consequently, it is necessary to distinguish actual operational service from deemed operational service.

3. POLICY

3.1 Up to and including May 29, 2006, all CSC employees engaged in operational service (actual and deemed) were required to contribute under the public service pension plan an additional 1.25% of pensionable earnings. These employees were previously identified with Pension Type Code 18.

3.1.1 Effective May 30, 2006, employees engaged in actual operational service are no longer required to pay the additional pension contribution of 1.25%. However, employees engaged in deemed operational service will continue to pay an additional pension contribution, but at the reduced rate of 0.62%.

3.2 The new Pension Type Code 19 is to be used to identify periods of deemed operational service.

3.3 Using the new Pension Type code 19 , compensation advisors are now able to recreate the history of employees that have operational service by distinguishing deemed operational service from actual operational service. This step is essential in order to provide accurate pension estimates to employees with operational service.

3.4 This new code 19 is designed to withhold from employees engaged in deemed operational service the 0.62% additional pension contribution required for service since May 30, 2006, and the 1.25% additional pension contribution required from March 18, 1994 to May 29, 2006.

4. PROCEDURES/INSTRUCTIONS

4.1 It is necessary for compensation advisors to go back in the history of the employee engaged in operational service to identify in the RPS all periods of deemed operational service with Pension Type Code 19 using the "miscellaneous staffing action" (MSA) pay transaction. Refer to the data input instructions in the Personnel-Pay Input Manual (PPIM) Section 4-4-05. A separate pay action, as applicable, is required for any change in salary during the retroactive period.

4.1.1 As previously stated in Compensation Directive 2007-14 "Correctional Service Canada - Changes to the Additional Pension Contributions Rate", it is imperative that any pensionable pay transaction created by compensation advisors with an effective date prior to May 30, 2006, be split on May 29, 2006: the "effective to" date must be 29-05-06 2 for transactions with an effective date prior to May 30, 2006, and the subsequent transaction must have as the "effective from" date 30-05-06 1. Refer to the above mentioned directive for further instructions.

4.1.2 As previously stated in Compensation Directive 2005-024 "Increase in Contribution Rates for Members of the Public Service Pension Plan", it is necessary to separate all transactions for retroactive payments for the period from January 1, 2006, involving pensionable amounts that overlaps a calendar year. The edits in the on-line system will not allow the input of overlapping periods.

4.1.3 As previously stated in Compensation Directive 2000-008 "Bill C-78 -- Implementation of the Public Service Pension Fund (PSPF)", it is necessary to separate all transactions involving pensionable amounts which overlap April 1, 2000, to ensure that pension contributions are credited to the appropriate fund. The first transaction is a closed PSSA 1 period with an "effective to" date of March 31, 2000; the second is a separate entry for the PSSA 2 period starting on April 1, 2000. The edits in the on-line system will not allow the input of overlapping periods.

Examples for 7C Accounts

• MSA (closed period) with Pension Type Code 19 from 01-06-98 1 to 31-05-99 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-99 1 to 29-03-00 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 30-03-00 1 to 31-03-00 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-04-00 1 to 31-05-00 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-00 1 to 31-05-01 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-01 1 to 31-05-02 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-02 1 to 31-05-03 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-03 1 to 31-05-04 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-04 1 to 31-05-05 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-05 1 to 28-12-05 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 29-12-05 1 to 31-12-05 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-01-06 1 to 29-05-06 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 30-05-06 1 to 31-05-06 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-06 1 to 27-12-06 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 28-12-06 1 to 31-12-06 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-01-07 1 to 31-05-07 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 01-06-07 1 to 26-12-07 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (closed period) with Pension Type Code 19 from 27-12-07 1 to 31-12-07 2 for the salary in effect at that time, H/D/W field left blank;
• MSA (open period) with Pension Type Code 19 from 01-01-08 1 for the salary in effect at that time, H/D/W field left blank;

4.1.4 Employees who became engaged in deemed operational service from March 18, 1994 to May 29, 2006 inclusively, have already paid the additional 1.25% pension contributions until May 29, 2006, and should have paid the additional 0.62% pension contributions from May 30, 2006 to June 13, 2007. A listing of these identified employees will be provided to CSC compensation advisors through the Corporate Human Resources of the CSC. Compensation advisors must then indicate in the free form text (FFT) screen for each of these employees that pension arrears are effective June 14, 2007.

4.1.5 Employees who accrued deemed operational service after May 29, 2006, will be in arrears for 0.62% pension contributions from the date of deemed service, and this date must be indicated on the FFT screen.

4.1.6 It is necessary for compensation advisors, when inputting the MSA transactions, to inform the pay offices (PO) via the FFT screen of the effective date of pension contributions in arrears for each employee with deemed operational service. Note that this date could be different from the date the employee first became employed in deemed operational service as indicated on the MSA input transaction.

4.2 The following new DEDENT codes have been created to identify the additional 0.62% contribution for periods of deemed operational service which occurred on or after May 30, 2006:

• 6B6 Superannuation -- current -- 0.62%
  This new code will be used to identify the 0.62% additional contribution.
• 6B7 Superannuation -- Single Deficiencies -- 0.62%
  This new code will be used to identify the 0.62% public service pension plan low and high single rate deficiencies (includes arrears and leave without pay (LWOP)).
• 6B8 Superannuation -- Double Deficiencies -- 1.24%
  This new code will be used to identify the 1.24% public service pension plan low and high double rate deficiencies (includes arrears and LWOP).
• 6C1 RCA -- current -- 0.62%
  This new code will be used to identify the 0.62% additional contribution under the RCA
• 6C2 RCA -- Single Deficiencies -- 0.62%
  This new code will be used to identify the 0.62% single rate deficiencies (includes arrears and LWOP) under the RCA.
• 6C3 RCA -- Double Deficiencies -- 1.24%
  This new code will be used to identify the 1.24% double rate deficiencies (includes arrears and LWOP) under the RCA.

4.3. Retaken on Strength (RE-TOS) Calculation System

4.3.1 Pension Type Code 19 has been added to the RE-TOS application for calculating pension deficiencies for LWOP. Code 19 has been designed to calculate 1.25% (2.50% double rate) additional pension contribution up to and including May 29, 2006, and 0.62% (1.24% double rate) from May 30, 2006 onwards. Pension Type Code 18 has been modified to calculate 1.25% (2.50% double rate) additional pension contribution from March 18, 1994, up to and including May 29, 2006, but no additional pension contribution from May 30, 2006 onwards.

4.4. Leave Without Pay (LWOP)

4.4.1 Employees engaged in operational service, with a period of LWOP beginning on or after May 30, 2006, and who have since returned to work (RE-TOS), will receive a refund of the extra 1.25% (2.50% double rate) deficiency they paid for actual operational service and the extra 0.63% (1.25% - 0.62% single rate) or 1.26% (2.50% - 1.24% double rate) deficiency they paid for deemed operational service retroactive to May 30, 2006.

4.4.2 Public Works and Government Services Canada (PWGSC) will provide a listing of these affected employees to all CSC personnel offices via the same distribution as the Payroll Registers. In order to identify those accounts that require recalculation of the LWOP pension deficiencies, compensation advisors must inform the POs via fax of all operational service employees that were RE-TOS on or after May 30, 2006. Compensation advisors must also indicate the effective date of deficiencies; either May 30, 2006, or later, depending on when the employee became engaged in actual operational service, deemed operational service or when the LWOP started.

4.4.3 From now on, if all operational service has been identified and input by the department, POs will be able to properly calculate pension deficiencies for employees currently returning to work from LWOP.

5. RESPONSIBILITIES

5.1 It is the responsibility of the compensation advisor to indicate in the FFT screen the effective date of pension arrears for each employee with deemed operational service. Please note that this date could be different from the date that the employee first became employed in deemed operational service.

5.1.1 It is the responsibility of the compensation advisor to inform the POs via fax the effective date of pension deficiencies for LWOP for each employee with operational service.

5.1.2 It is the responsibility of the pay and pension agents to perform the pension arrears calculation according to the date indicated in the FFT screen, and pension deficiencies recalculation according to the date indicated in the fax, and to determine the appropriate codes for input into the RPS.

5.2. Struck Off Strength (SOS) Accounts

5.2.1 Until the Pension Support System (PSS) is available to perform pension estimates, compensation advisors will be required to certify the service of active employees, and of former employees SOS since May 30, 2006, by identifying accounts with deemed operational service and establishing them under the appropriate Pension Type Code 19 under the RPS. In addition, upon request by the Superannuation, Pension Transition and Client Services Sector (SPTCSS), compensation advisors will be required to certify all salary, service and LWOP via the PSS.

6. Personnel-Pay Input Manual (PPIM)

6.1 The PPIM will be updated to incorporate all related information contained in this directive.

7. INQUIRIES

7.1 Any inquiries on the information contained in this document should be addressed to your PWGSC Compensation Services Office.

Original Signed by
B. Fortin

Brigitte Fortin
Director General
Compensation Sector
Accounting, Banking and Compensation

Reference(s): CJA 1270-1-65
CJA 9006-24-2, 9023-14
CJA 9204-3