Pension transfer in: Additional information

Limits on the service to be transferred

Under the Public Service Superannuation Act (PSSA), the maximum pensionable service credit allowed is 35 years. This includes pensionable service that remains to your credit under the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act. We cannot accept service from an outside pension plan if the addition of such service will exceed the 35-year limit under the PSSA.

Excess amounts

When the amount available for transfer from your former employer's pension plan is greater than the federal transfer amount, only the federal transfer amount will be transferred. Since each pension plan deals with excesses differently, you must contact your former employer's pension plan administrator for information on how excess amounts are handled.

Service not credited by the pension transfer agreement

After the funds have been received, the Government of Canada pension centre will issue an Elective Service Notice, confirming the amount received and the service purchased by the transfer. If the amount transferred was insufficient to purchase all of the pensionable service credit you had with your former employer's pension plan, the Pension Centre will also provide you with an estimate of cost for Elective Pensionable Service form. This form will identify the pensionable service credit not purchased by the transfer, as well as the cash cost and monthly installments payment associated with purchasing this. These figures are valid for six months from the date the estimate of cost for Elective Pensionable Service form is issued.

Note: You may opt to buy back all or part of the period of pensionable service credit not purchased by the transfer. A detailed estimate for a portion of this period can be provided to you, by the Pension Centre, upon request.

The cash cost to purchase the remaining pensionable service credit is the difference between the federal transfer amount (defined benefit or defined contribution) required to purchase all the service and the amount the employer transferred. In the case of service buyback for part of the service, the cost is proportionate to the amount of service you are buying back. You can pay this amount in a lump sum, by installments or a combination. The installments payment method includes a life insurance/mortality charge as well as interest on the unpaid balance. Therefore, its total cost over the repayment period is greater than paying in full with a lump sum amount. Both methods of payment and their total costs should be compared before selecting a payment option.

If you decide to buy back your service by making a lump sum payment for the whole amount, or a portion of the amount (with monthly salary deductions for the balance), your cheque or money order should be made payable to the "Receiver General for Canada" and sent along with your Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only) to the Pension Centre.

If you transfer funds from a Registered Retirement Savings Plan (RRSP) to buy back service, you must complete Area 1 of the Canada Revenue Agency T2033 form titled "Direct transfer under subsection 146.3(14.1) or paragraph 146(16)(a) or 146.3(2)(e)" and forward it along with the Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only) to the Pension Centre at the address indicated on the form. When completing the T2033 form, please provide your current address, the RRSP account number and select "in cash".

You can refer to Tax implications for information on the tax deductibility of service buyback payments.

If you do not purchase the remaining service within the six-month period, you will be able to do so at a later date as long as you are an active contributor under the PSSA. However, the cost to purchase this service will be determined using the same methodology as was used to calculate your pension transfer and it will be recalculated as of the date you sign your Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only). Therefore the cost will likely be higher.

Medical requirements associated with a pension transfer agreement

A medical examination is not required for a lump sum transfer of funds to the PSSA under a Pension Transfer Agreement (PTA). If you buy back the balance of service, which was not purchased by the transfer, and pay in full for this service with a lump sum, a medical is not required.

However, if you choose to pay for this balance of service credit by monthly installments, you will be required to undergo and pass a medical examination. You are responsible for any medical expenses incurred as a result of this requirement. The Pension Centre will provide you with the necessary forms to complete your medical examination. Detailed instructions can be found in the Completing and forwarding the medical forms page. It is your responsibility to undergo the medical examination and the Pension Centre will not issue any reminders of this requirement.

The medical examination must take place no earlier than six months before or one year after the date of forwarding the Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only). If your medical examination is undergone outside these parameters your service buyback will be declared invalid. If you undergo your medical examination but do not pass, you will be provided with three options. They are as follows:

You may receive a conditional Service Buyback Notice (PWGSC-TPSGC 2097) which will confirm the cost and the amount of service to be credited before we receive the interpretation of the medical examination from Health Canada. This Service Buyback Notice does not mean that a medical examination is no longer required. Until we receive confirmation from Health Canada that the medical requirement has been met, the service purchased will not show to your credit on the Compensation Web Applications or on your Pension and Insurance Benefits Statement, and a benefit cannot be paid in respect of this service.

Tax implications surrounding a pension transfer agreement

In order to comply with the provisions of the Income Tax Act (ITA), when you opt for a pension transfer of service, which occurred after December 31, 1989, a past service pension adjustment (PSPA) must be calculated and must be reported to the Canada Revenue Agency (CRA). This PSPA must be approved by the CRA before the transfer can be finalized. The PSPA approval applies to the entire period of pensionable service, under your former employer's plan.

PSPA approval depends on the RRSP room you have available. If you've made maximum RRSP contributions over the years, you may be short of room. The CRA will allow a maximum of $8,000 in excess contributions to an RRSP as a result of a PSPA. In this case, you would be unable to make additional RRSP contributions until earned RRSP room balances out the negative $8,000.

The CRA will allow you to withdraw RRSP assets to make room for this PSPA amount. The CRA will contact you if this applies to your situation. For additional information regarding your situation please contact your local Canada Revenue Agency office. You may also consult their Tax Information Phone Service (T.I.P.S.) at 1-800-267-6999.

If you decide to buy back prior service, either in lieu of transferring service credits under the terms of a PTA or in addition to service credited by the PTA, it is important to refer to the Service buyback package.

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