Guide to Retirement from the Federal Public Service

Introduction

On behalf of the Government of Canada, the President of the Treasury Board is responsible for the Public Service Pension Plan, and is supported by the Secretariat as the administrative arm of the Treasury Board and Public Works and Government Services Canada as the day-to-day administrator.

The President of the Treasury Board is also responsible for ensuring that the Public Service Pension Plan is adequately funded to fully meet plan member benefits. To determine the plan’s funding requirements, the President enlists the help of the Office of the Chief Actuary, to provide advice and a range of actuarial services, and the Public Sector Pension Investment Board to manage the pension assets for the public sector pension plans. The Public Service Pension Advisory Committee advises the President on the administration, design and funding of the benefits and on other pension-related matters referred to it by the President.

The roles and responsibilities of each organization are as follows:

• Treasury Board of Canada Secretariat
  The President of the Treasury Board is responsible for the overall management of the Public Service Pension Plan on behalf of the Government of Canada, the plan sponsor. In support of the Treasury Board’s role as employer for the public service, the Secretariat is responsible for policy development in respect of the funding, design and governance of the Public Service Pension Plan and other retirement programs and arrangements. In addition, the Secretariat is responsible for providing strategic direction, program advice and interpretation; developing legislation; communicating to plan members; and liaising with stakeholders.
• Public Services and Procurement Canada
  Public Services and Procurement Canada is responsible for the day-to-day administration of the Public Service Pension Plan. This includes developing and maintaining the public service pension systems, books of accounts, records, and internal controls, as well as preparing the Account Transaction Statements for reporting in the Public Accounts.In addition, Public Services and Procurement Canada processes payments and carries out all accounting and financial administrative functions. Through its pay and pension services, Public Services and Procurement Canada’s Pay and Pension Services for Government Employees ensures that federal government employees and retired pension plan members receive their pay and pension benefit payments accurately and on time. In total, this involves payments of approximately $29 billion annually.
• Public Sector Pension Investment Board
  The Public Sector Pension Investment Board is a Canadian Crown corporation established by the Public Sector Pension Investment Board Act and is governed by an 11-member board of directors, accountable to Parliament through the President of the Treasury Board. Its legislative mandate is to maximize returns without undue risk of loss, having regard to the funding, policies and requirements of the Public Service Pension Plan, the Royal Canadian Mounted Police pension plan, and the Canadian Forces Regular Force and Reserve Force pension plans. The Public Sector Pension Investment Board has been investing on behalf of the pension plans the amounts transferred by the Government of Canada since April 1, 2000.
• Office of the Chief Actuary
  The Office of the Chief Actuary, an independent unit within the Office of the Superintendent of Financial Institutions Canada, provides a range of actuarial services and advice to the Government of Canada that includes the Public Service Pension Plan. The Office of the Chief Actuary is responsible for conducting an annual actuarial valuation of the pension plan for accounting purposes as well as a triennial (i.e., once every three years) funding valuation.
• Public Service Pension Advisory Committee
  The Public Service Pension Advisory Committee, established under the Public Service Superannuation Act, provides advice to the President of the Treasury Board on matters relating to the Public Service Pension Plan’s administration, benefit design, and funding.The committee is composed of 13 members: 1 pensioner, appointed from pensioners nominated by the public servant pensioner association; 6 members representing employees, appointed from the employees nominated by the National Joint Council of the Public Service of Canada; and 6 members nominated by the President of the Treasury Board, who are traditionally chosen from the executive ranks of the public service. All members are appointed by the Governor in Council to hold office for a term not exceeding three years and are eligible for reappointment for one or more additional terms.

Important Terminology and Definitions

Annual Allowance

If you became a member of the Public Service Pension Plan on or before December 31, 2012:

• An annual allowance is a benefit available to plan members who have more than two years of pensionable service, who retire before age 60 and are not entitled to an immediate annuity. This benefit is a reduced pension that takes into account the early payment of a retirement pension. It becomes payable at age 50 at the earliest.

If you became a member of the Public Service Pension Plan on or after January 1, 2013:

• An annual allowance is a benefit available to plan members who have accumulated more than two years of pensionable service, who retire before age 65 and are not entitled to an immediate annuity. This benefit is a reduced pension that takes into account the early payment of a retirement pension. It becomes payable at age 55 at the earliest.

Annuity

A contract purchased from an insurance company to provide periodic (usually monthly) payments to a person for his or her lifetime.
Average Salary (For Pension Purposes)
Salary of the five consecutive years of highest paid pensionable service in the public service. The average salary of those five years is used to calculate pension benefits under the public service pension plan. Salary includes performance pay and bonuses paid.

Bridge Benefit

When you retire, you will receive both a lifetime pension and a bridge benefit. A bridge benefit is a temporary benefit, payable until age 65 (the bridge benefit stops if you become entitled to CPP/QPP disability benefits). Regardless of when you start receiving your CPP/QPP pension, your bridge benefit payments will stop at age 65.

Common-Law Partner

For the purpose of federal pension legislation, a person who has been cohabiting with a member in a conjugal relationship for at least one year.

Compensation Web Applications

Compensation Web Applications (CWA) is a suite of self-service pay, pension and insurance applications enabling employees to monitor and manage their personal compensation information, as well as calculate pay, pension and insurance “what if” scenarios to assist with financial planning. CWA allows employees to view their Pension and Insurance Benefits Statement, their Statement of Earnings (Pay Stub), and request changes to their Voluntary Deductions. Employees can also use the Pension Benefits Calculator, the Service Buyback Estimator, the Retirement Package, the Pension Portability Package, the Service Buyback Package and the Public Service Health Care Plan (PSHCP) Web Application to help make important pension and insurance related decisions.

Continuous Employment

The period during which an employee is continuously employed by the same employer. Continuous employment may be defined in the pension plan (or by law) to include certain periods of absence and/or of employment with an associated or former employer.

Deferred Annuity

If you became a member of the Public Service Pension Plan on or before December 31, 2012:

• A benefit that is available to most plan members who leave the public service and have accumulated at least two years of pensionable service. This benefit is calculated using the same formula as an immediate annuity, but payment is deferred.

If you became a member to the Public Service Pension Plan on or after January 1, 2013:

• deferred annuity is available to most plan members who leave the public service before age 65 and have accumulated at least two years of pensionable service. This benefit is calculated using the same formula as an immediate annuity, but payment is deferred.

Defined Benefit Plan

A type of registered pension plan that promises a certain level of pension, usually based on the plan member’s salary and years of service. The Public Service Pension Plan is a defined benefit pension plan. This is contrasted with defined contribution pension plans where the benefit at retirement is determined by the amount of annuity that the accumulated contributions plus interest can purchase at retirement.

Immediate Annuity

If you became a member of the Public Service Pension Plan on or before December 31, 2012:

• You can receive an immediate annuity if you leave the public service at age 60 or over with at least 2 years of pensionable service or have attained age 55 or over with at least 30 years of pensionable service.

If you became a member to the Public Service Pension Plan on or after January 1, 2013:

• You can receive an immediate annuity if you leave the public service at age 65 or over with at least 2 years of pensionable service or at age 60 or over with at least 30 years of pensionable service.

Indexation

It is the automatic adjustment of pensions in pay, or accrued pension benefits (deferred annuities), in accordance with changes in the Consumer Price Index. Public service pensions are indexed in January of each year.

Operational Service – Correctional Services Canada

Service with Correctional Services Canada (CSC) is broken down into two types:

• Actual operational service

You accumulate actual operational service when your CSC principal place of work is not one of the following:

• The national headquarters or a regional headquarters of CSC;
• The office of the CSC Commissioner; or
• A regional Correctional Staff College or any other institution that provides similar training to CSC employees.
• Deemed operational service

If you have accumulated at least 10 years of CSC operational service and have ceased to be employed in actual operational service but continue to be employed by CSC, you may accumulate operational service while employed by CSC, subject to certain conditions. You are encouraged to contact the Pension Centre to fully understand the conditions.

• For Contribution Rates, visit Operational Service Provisions Contribution Rates.

Pension Adjustment (PA)

The estimated value of a member’s pension benefits accruing in a particular year as determined under the Income Tax Act. For defined benefit plans, the PA is determined by a formula. A person’s RRSP contribution room is reduced by the value of the previous year’s PA.

Pension Benefit

The periodic amount that a member or former member is or may become entitled to under the terms of the pension plan.

Pension Benefit Credit

The aggregate value, at any given time, of a person’s pension benefit and other benefits provided to them under a pension plan.

Pensionable Age

The age specified in the plan text as the age at which members are entitled to a pension that is not reduced because of early retirement. It can be a specific age or be the age at which a certain number of years of service are attained, or require the attainment of both a certain age as well as a minimum number of years of service.

Pensionable service

Pensionable service means the complete or partial years of service credited to you at retirement. Your total pensionable service is the sum of your periods of current service, service that has been bought back and service transferred through a Pension Transfer Agreement. Your pensionable service is used to determine your eligibility for pension benefits and to calculate your pension benefits.

Plan Administrator

The person or group that is responsible for managing your pension plan and the pension fund. The plan administrator may hire a third party service provider to manage the day-to-day work, but the plan administrator is ultimately responsible.

Portability / Transfer Options

The options available on cessation of membership, death, marriage breakdown, or plan termination. Members, or survivors in the case of a member’s death, can transfer the commuted value of accrued pension benefits to a Locked-in RRSP, a LIF, an RLIF, another pension plan (if there is a reciprocal transfer agreement in effect and the transfer is accepted by the new plan), or the commuted value can be used to purchase an immediate or deferred annuity. A member can forego these options and elect to receive a deferred pension from the plan at retirement.

Retirement Compensation Arrangement (RCA)

A plan which provides benefits that exceed the allowable limits for a registered pension plan under the Income Tax Act. For 2019, employees whose annual salary rate was in excess of $169,300 were required to contribute to the RCA in respect of the portion above this amount (https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/bapr-samb/2019/bapr-samb-2019-001-eng.html). For executives, this includes base salary and any performance award or bonus received.

Return of Contributions

A benefit that is available to plan members who leave the public service with less than two years of pensionable service under the public service pension plan. It includes employee contributions only plus interest, if applicable.

Service Buyback

Purchase of prior eligible service that an active plan member may count as pensionable, at his/her option, subject to certain conditions. You are encouraged to contact the Pension Centre to fully understand the conditions.

Spouse

For the purposes of pension legislation, a person married to the member or former member (includes a void or null marriage).

Supplementary Death Benefit

Decreasing term life insurance benefit equal to twice the annual salary of the plan member; coverage decreases by 10 percent per year starting at age 66. A minimum amount of coverage ($10,000) is provided at no cost to the plan member at age 65 for plan members entitled to an immediate annuity or an annual allowance payable within 30 days after termination of employment in the Public Service. This minimum coverage is maintained for the plan member’s life.

Survivor

The survivor of a plan member is the person who, at the time of the plan member’s death:

• was married to the plan member before retirement; or
• was cohabitating in a relationship of a conjugal nature with the plan member prior to retirement and for at least one year prior to the date of death.

Survivor Benefit

A pension benefit that is paid to the eligible survivor of a plan member who dies. The common-law survivor of a plan member may be entitled to a survivor benefit if this person has lived with the plan member in a relationship of a conjugal nature prior to retirement and for at least one year prior to the date of death.

Transfer Agreement

An agreement negotiated between the Government of Canada and an eligible employer to provide portability of accrued pension credits from one pension plan to the other.

Transfer Value

A benefit option available to plan members who leave the public service before age 50 with at least two years of pensionable service. This benefit is the actuarial value of the plan member’s future pension benefits. It must be transferred to another registered pension plan, to a retirement savings vehicle or to a financial institution for the purpose of purchasing an annuity.

Vested Benefits

Pension benefits to which an employee is entitled upon cessation of membership under a pension plan, provided that they have accumulated at least two years of pensionable service. Under federal legislation, an employee’s pension benefits are vested immediately when they join a pension plan.

Waiver

The removal of the normal reduction to an annual allowance that is applied because the individual, at termination, did not meet the age and service thresholds to receive an immediate annuity. This reduction would normally be 5% for every year that the individual’s pensionable service credit is less than 30 years or the age is less than 60 years for plan members employed on or before December 31, 2012 and less than 65 years of age for plan members employed on or after January 1, 2013.

Year’s Maximum Pensionable Earnings (YMPE)

The maximum earnings for which contributions can be made to the Canada Pension Plan/Quebec Pension Plan (earnings ceiling) during the year. The YMPE changes each year according to a formula using average wage levels. The YMPE is set annually by the Canada Revenue Agency (CRA) and is available on their website.
Source: Public Services and Procurement Canada (PSPC)

Making Sense of Retirement*

 

The Retirement Process

The Government of Canada has developed Questions and Answers to help you with the retirement process. This information is found at: https://www.canada.ca/en/treasury-board-secretariat/services/pension-plan/active-members/preparing-retirement-pension.html?utm_source=ens-july5-2021&utm_medium=email&utm_campaign=tbs-sct-ens-21-22&utm_content=preparing-retirement-pension-eng.

The Questions and Answers are supplemented with a video “What to Expect in the Retirement Process”, found at: https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/services-pension-services/pension/video/5-1-eng.html?utm_source=ens-july5-2021&utm_medium=email&utm_campaign=tbs-sct-ens-21-22&utm_content=pension-video-retirement-eng. The video covers topics such as Choosing a Pension Benefit Option; the Pension Retirement Package; and Choosing a Retirement Date.

Further assistance is provided online by the Pension Centre in the form of 17 videos that are intended to help you understand your public service pension plan and how to complete retirement-related forms. This information can be found at: https://www.tpsgc-pwgsc.gc.ca/remuneration-compensation/services-pension-services/pension/video/index-eng.html?utm_source=ens-july5-2021&utm_medium=email&utm_campaign=tbs-sct-ens-21-22&utm_content=index-pension-retirement-eng#a4. These videos cover:

• How Your Pension Plan Works
• New to the Public Service Pension Plan
• Taking a Leave of Absence from the Public Service
• Increasing Your Pensionable Service
• Planning and Preparing Your Retirement
• Pension Modernization

 

Entitlements

The pension benefits you will be entitled to when you leave the public service depend on your age and the number of years of pensionable service to your credit.

If you are eligible to receive a monthly pension payable immediately, you should expect to receive your first payment within 45 days of termination of employment, provided that you and your compensation service provider have submitted to the Pension Centre, all required documentation prior to your termination of employment.

Your pension is payable in monthly installments at the end of each month. Your pension payment is deposited directly to your bank account through direct deposit, on the third last banking day of each month.

The date you became a member of the Public Service Pension Plan determines when you will be eligible to receive your pension benefits:

a) Plan Member On or Before December 31, 2012:

If you became a member of the Public Service Pension Plan on or before December 31, 2012, you are eligible to receive an unreduced pension benefit at age 60 with at least two years of pensionable service or when you have attained age 55 with at least 30 years of service.
The pension plan offers several types of pension benefits depending on your circumstances at the time of termination.

I. Monthly Benefits – If you joined the plan before December 31, 2012:
There are three different types of monthly pension benefits payable under the Public Service Pension Plan. Your public service pension can be paid as an immediate annuity, an annual allowance or a deferred annuity, depending on the circumstances of your retirement – Refer to Important Terminology and Definitions. You must select a pension option within one year of leaving the public service. After one year, if you have not made your selection of a benefit, you will be deemed to have opted for a deferred annuity.Each pension benefit includes a lifetime pension which is payable until your death and a temporary bridge benefit which is payable until the first of the month following your 65^th birthday or until you become entitled to disability benefits from the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), whichever happens first.

II. Lifetime Pension
When you retire, you will receive a lifetime pension. Your annual lifetime pension is based on your average salary for your five consecutive years of highest paid service and years of pensionable service.
Note:  If your pension includes part-time service, the benefits are adjusted to reflect the part-time assigned hours of work compared to the full-time hours of the position.

III.Bridge Benefit
If you retire before age 65, you may also receive a bridge benefit payable until age 65 or until you become entitled to CPP or QPP disability benefits, whichever happens first. The bridge benefit amount was previously referred to as the CPP or QPP reduction. If you receive early or late CPP or QPP retirement benefits (before or after age 65), your bridge benefit will still stop at age 65 (or earlier if you become entitled to Canada Pension Plan or Quebec Pension Plan disability benefits).

IV.Total Pension
Your total pension (lifetime pension and bridge benefit), payable until age 65 or until you become entitled to CPP or QPP disability benefits, will be equal to 2 per cent of your average salary (including any performance awards or bonuses received) for your five consecutive years of highest paid service multiplied by the number of years of your pensionable service. If you are age 65 or older when you retire, the bridge benefit is not paid.

VImmediate Annuity
An immediate annuity is a monthly pension benefit payable immediately if you terminate employment:

• at age 60 or over with at least two years of pensionable service;
• at any age if approved for a medical retirement, with at least two years of pensionable service;
• between ages 55 and 60 with at least 30 years of pensionable service.If you qualify for an immediate annuity, you can calculate your benefit by using the pension benefits calculator located in the Compensation Web Applications under Active Member Pension Applications.

VI.Annual Allowance
An annual allowance is a monthly pension benefit payable if you are between ages 50 and 60 with at least two years of pensionable service. It is reduced to take into account early receipt of the pension benefit. This reduction is permanent, except if you become disabled and are entitled to an immediate annuity before reaching age 60. An annual allowance is payable from the later of your 50^th birthday, date of termination or date of option. It is important to note that if you are 50 years of age or over and wish to receive your annual allowance at date of retirement, your option for an annual allowance must be made prior to your retirement date.
The reduction applied to the pension is calculated according to age and/or service. The reduction is calculated based on one of the following formulas:

 

1. Formula 1 (if you are between 50 and 60 years of age with less than 25 years of service):

• The reduction is 5% for every year you are under age 60 (60 minus your age to the nearest tenth of a year).
• If you terminate employment prior to age 50, the reduction is determined using Formula 1 only, regardless of the number of years of pensionable service you have.
• If you terminate employment and opt for an annual allowance prior to age 50, the age used in Formula 1 will always be 50, which is the age at the time the allowance becomes payable.Note: Formula 1 is only used to calculate the reduction if you have less than 25 years of pensionable service.

 2. Formula 2 (if you are between 50 and 60 years of age with at least 25 years of service):

• The reduction is the greater of a) or b):
  • 5% for every year you are under age 55 (55 minus your age to the nearest tenth of a year).
    or
  • 5% for every year that your pensionable service is less than 30 years (30 minus your service to the nearest tenth of a year).
    If you are age 55 and over with at least 25 years of service, compare Formula 1 and 2 and apply the lowest reduction.
    If you qualify for an annual allowance, you can calculate this benefit by using the Pension benefits calculator located in the Compensation Web Applications under Active Member Pension Applications.

b) If you became a Plan Member On or After January 1, 2013:

If you begin to participate in the plan on or after January 1, 2013, you are eligible to draw an unreduced pension benefit at age 65 with at least two years of pensionable service or at age 60 with 30 years of pensionable service.

As noted above, the date you became a member of the Public Service Pension Plan determines when you will be eligible to receive your pension benefits.

Severance

Federal Budget 2011 announced the end to executive severance accumulation for resignation and retirement in the public service. Federal public service departments and separate agencies were advised of this change by TBS-OCHRO on August 2, 2011.

Severance benefits for retirement and resignation ceased to accumulate effective close of business day, October 1, 2011.

Severance benefits accumulated up to October 1, 2011 were eligible to be cashed out based on options presented to executives at the time (see Options for Severance Cash-out below).

For executives who had completed at least one full year of service as of October 1, 2011, the cash-out payment was calculated at the rate of one (1) week of pay, as of that date, for each year of completed service, up to a maximum of 28 weeks.

Partial years of service were prorated if the executive had been employed on an indeterminate basis.

Options for Severance Cash-out

As of October 1, 2011, indeterminate executives who had at least one (1) year of completed service, were asked to select one of the following three options to initiate the cash out of their accumulated severance:

• Cash out based on their substantive rate of pay as of October 1, 2011;
• Cash out upon separation from the Core Public Administration at the rate of pay in effect at that time;
• A combination of the two options above. This included the option of electing to cash out part of the accumulated weeks of severance immediately and the balance when separating from the Core Public Administration. Executives who left the Core Public Administration on or after October 2, 2011 for an organization outside the Core Public Administration had their accumulated severance paid out in its entirety if the new employer did not have an identical severance plan or did not accept the accumulated severance liability.

Severance benefits were maintained for cases of lay-off, death, termination on probation, and termination for reasons of incapacity or incompetence, though the years of service were reset to zero as of the date when the elimination of further accrual of severance benefits came into effect and accumulation commenced anew to avoid paying severance benefits twice for the same period.

No executive is eligible to receive a severance cash-out twice.

Executives were provided until January 31, 2012 to select an option. No extensions to this deadline were permitted and executives who did not select an option by the deadline were deemed to have chosen the severance cash out as a single payment at the time of their termination of employment from the Core Public Administration.

Executives wishing to confirm their decision from 2011 should contact their Compensation Service Provider.

Are Pensions Affected by the Cash-out of Severance?

Severance payments are not pensionable.

Deductions Taken from the Cash-out of Severance

While the cash-out of severance is taxable, it is not subject to Public Service Superannuation Act pension contributions. Employment Insurance (EI) and Canada Pension Plan/Quebec Pension Plan (QPP) may be deducted from a severance payment, if the executive has not reached their maximum annual contribution limit at the time the payment is made.

Calculating the Severance Payment

All payments in lieu of severance are based on the number of years of eligible years of service accumulated up to October 1, 2011 multiplied by the executive’s weekly rate of pay for their substantive position in effect either on the elected date of cash out or the date of termination of employment from the Core Public Administration.

Transferring Your Severance Pay

On or after retirement, you may be able to transfer some of your severance pay to your own Registered Pension Plan (RPP), a Specified Pension Plan (SPP), a Registered Retirement Savings Plan (RRSP) or a Pooled Registered Pension Plan (PRP). Important information regarding the Eligible and Non-Eligible part of your severance pay is available at the following Government of Canada site: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/transferring/transferring-retiring-allowances-severance-pay.html.

Death

If an executive dies while employed in the federal public service, their estate shall receive a severance payment in respect of any unpaid severance.

Pension Indexation

Your pension benefits increase each January after you terminate employment to take into account increases in the Consumer Price Index (CPI). The first increase payable the year after you terminate employment will be prorated to reflect the number of full months left in that year. If there is no change in the CPI, or if it drops, your pension will not be adjusted that year.

If you are entitled to a deferred annuity when you terminate your employment, when payable, your pension will be increased by the total accumulated percentage increases from your date of termination.

Example: If an employee terminates employment on August 20, then he or she would be entitled to a pension indexing increase of 4/12 of the total adjustment for the following year.

When you stop receiving the bridge benefit, either at age 65 or when you become entitled to CPP or QPP disability benefits, your indexing will be recalculated based on your lifetime pension amount only.

Supplementary Death Benefit

The Supplementary Death Benefit (SDB) plan is a form of decreasing term life insurance protection. The plan provides a benefit equal to twice your annual salary, rounded up to the next multiple of $1,000.

If you maintain coverage under this plan, you may name or change your beneficiary at any time. In order to do so, you must complete the Naming or substitution of a beneficiary (PWGSC-TPSGC 2196) form.

Supplementary Death Benefit contributions will be determined based on your eligible annual salary at termination of employment and the type of pension benefit payable at termination.

Note 1: Certain agencies and public service corporations do not participate in the SDB plan. Former employees of those agencies or corporations cannot participate in this plan as pensioners. If you are unsure if your employer participates in the SDB plan, please contact the Pension Centre.

Note 2: If you choose to transfer your pensionable credits to the Canadian Forces pension plan, you may have SDB coverage under their plan.

Supplementary Death Benefit Participant at Regular Rate

If you are entitled to receive an immediate pension benefit (immediate annuity or immediate annual allowance payable within 30 days of termination) your SDB coverage automatically continues at the same contribution rate as an active plan member and will be deducted from your monthly pension.

Effective April 1^st or October 1^st, following your 65^th birthday, whichever comes first, you will be credited with $10,000 in paid up coverage and your contributions will be reduced accordingly. In addition, your coverage and contributions will be reduced effective April 1^st or October 1^st following your 66^th birthday, whichever comes first, by 10% yearly until age 75. At age 75 you will retain the paid-up $10,000 benefit.

At any time after 30 days following your termination, you may cancel your coverage or reduce it to $10,000 by completing the Election to reduce benefit to $10,000 (PWGSC-TPSGC 2041-1) form.

If you are eligible to continue your SDB coverage at the regular rate after your termination of employment, please refer to the SDB estimates statement received from the Pension Centre or contact them for your coverage and contribution information.

Supplementary Death Benefit Participant at a Commercial Rate

If you opt for a pension benefit payable in the future (deferred annuity or deferred annual allowance) or a transfer value, you may elect to continue your coverage under the SDB plan at the commercial rate. Contributions are paid annually in advance to the Pension Centre. When your deferred annuity or annual allowance becomes payable, you may choose to have your monthly deductions taken from your pension.

Commercial rates are higher than the regular contribution rate. Your estimated contribution rates are available on the SDB estimates statement received from the Pension Centre or by contacting them.

If you opt for a return of contributions and you at least two years of continuous employment in the public service (without a break of more than three months) or you have been a SDB participant for at least two years including participation as a member of the Canadian Forces, you may choose to continue coverage at the commercial rate. If you are receiving a pension benefit under the Canadian Forces pension plan, you will be eligible to reinstate your SDB coverage under their plan.

If you are entitled to a lump sum payment, contributions are to be paid annually in advance to the Pension Centre.

To apply for continued coverage under the SDB plan, you must complete the form Election to continue as participant under the supplementary death benefit plan (PWGSC-TPSGC 2017) and return it with your annual contributions to the Pension Centre within one year before or within 30 days after ceasing to be employed.

If you decide to continue participating in the SDB plan, your coverage and contributions will reduce by 10% per year effective April 1^st or October 1^st following your 66^th birthday, whichever comes first. Your coverage will reduce until age 75. At age 75 you will retain the paid-up $10,000 benefit.

 

The Changing Value of My Pension*

What is Considered Pensionable

For executives, pensionable earnings include base salary, performance awards and performance-related bonuses.

Source: Superannuation Administration Manual (2-8-5), Public Services and Procurement Canada

The Maximum Amount that You Can Contribute to Your Pension

You can accumulate up to 35 years of pensionable service, including:

• Current service;
• Service buyback;
• Prior service transferred from another pension plan; and
• Pensionable service accumulated under other federal government pension plans for which you are receiving or are entitled to receive a pension, such as the Canadian Forces-Regular Force Pension Plan or the Royal Canadian Mounted Police Pension Plan.

After 35 years of pensionable service, your contribution rate drops to 1% of your salary for the remainder of your service. Even if you stop accumulating pensionable service, your pension will be calculated taking into account your pensionable earnings during that period.

Implications of Leave Without Pay

With Deputy Head approval, an executive is eligible for leave without pay for any purpose not otherwise specified in the Directive on Leave and Special Working Arrangements. This authority cannot be sub-delegated. Examples where such leave might be granted include assignments with an international organization, or to accept an appointment in a Minister’s office.

With regard to counting special leave without pay towards service for the purpose of calculating vacation leave entitlement and severance pay: If the leave is primarily in the interest of the employee, only the first three months of special leave without pay is counted as service. If the leave is primarily in the interest of the department, the whole duration of the special leave without pay is counted as service.

Additional sources of information regarding these leaves:

• Directive on Executive Compensation

Implications of Pre-retirement Transition Leave

Once approved, Pre-retirement Transition Leave enables employees – who are eligible for an unreduced pension or are within two years of becoming eligible for an unreduced pension – to reduce the length of their workweek by up to 40%. Your pay is adjusted to reflect the shorter work week, but your pension and group insurance benefit coverage continues at pre-arranged levels. The Canada Pension Plan, Québec Pension Plan, and Employment Insurance premiums are based on the reduced rate of pay.

To be considered for this leave, you must agree to resign at the end of the pre-retirement transition leave period. Details regarding eligibility criteria and how to request this type of leave can be found at Appendix C of the Directive on Leave and Special Working Arrangements. An application form can be found here.

Pre-Retirement Interchange Canada Assignment

I am considering a pre-retirement Interchange Canada assignment. What do I need to know about this?

Interchange Canada is an exchange mechanism between the core public administration and other organizations in the private, public and not-for-profit sectors in Canada and internationally. Assignments can last up to three consecutive years, whether the assignment takes place with one or more organizations during that time period.

Participants continue to receive their salary and remain subject to the terms and conditions of employment of their home organization, including its performance pay program, if applicable.

An Interchange Canada assignment can be arranged prior to retirement. For more information, you can access the APEX Fact Sheet or the Interchange Canada site.

Pre-retirement Special Deployment

Pre-retirement special deployments permit executives approaching retirement to apply their knowledge of the department’s objectives, programs and procedures in a managerial or advisory role and to share their knowledge and experience to assist new executives or their replacement.

If you accept a pre-retirement special deployment, you must submit, with the signed letter of offer, a signed letter of resignation that will take effect immediately after the special deployment.

Please note that while on special deployment, your continued eligibility for performance pay is at your Deputy Head’s discretion. You may wish to work this out prior to signing the letter of offer.

For more details, consult Appendix E of the Directive on Executive Compensation.

Leave with Income Averaging

Leave with income averaging (LIA) is an arrangement whereby eligible persons reduce the number of weeks worked in a specific 12-month period by taking leave without pay for a period of between a minimum of 5 weeks and a maximum of 3 months (note: separate agencies may have different parameters, so please consult your Human Resources Advisor).

If participating in this arrangement, your pay would be reduced and averaged out over the 12-month period to reflect the reduced time at work; however, your pension and benefits coverage, as well as premiums and contributions, would continue at the pre-arrangement levels. You receive income throughout the 12-month period, but are deemed to be on leave without pay during the non-work period of the arrangement.

Importantly, the non-work days (leave without pay) portion of the LIA working arrangement count as pensionable service under the public service pension plan. Your contributions to the public service pension plan are deducted based on the unreduced rate of pay. Contributions and pensionable earnings to the Canada or Québec Pension Plan are based on your reduced rate of pay.

Details regarding LIA can be found in Appendix D of the Directive on Leave and Special Working Arrangements.

Implications of a Disability

If you are unable to work due to a disability, the Long-Term Disability (LTD) component of the Public Service Management Insurance Plan (PSMIP) provides income-protection. The plan provides a monthly income benefit if you are unable to work for a lengthy period of time because of a totally disabling illness or injury.

You will qualify for a medical retirement if Health Canada certifies that you meet the following definition of disability:

A physical or mental impairment that prevents the individual from engaging in any employment for which the individual is reasonably suited by virtue of his education, training or experience and that can reasonably be expected to last for the rest of the individual’s life.

If you retire because of disability at age 60 or older, your benefits will be the same as if you had retired due to age.

If you have to retire because of disability before you reach age 60, you will receive an immediate annuity unless you have less than two years of pensionable service.

If you become disabled and receive an immediate annuity, but later regain your health and return to work as a plan member, your immediate annuity ceases and is converted to a deferred annuity payable at age 60. If you then wish to convert the deferred annuity to an annual allowance, you may do so at any time after reaching age 50, if you are not employed as a plan member at that time.

Please note that if you become a member of the public service pension plan, your pension will only be payable when you terminate your employment. A medical examination will be required if you wish to retire (for the second time) on medical grounds.

If you wish to pursue retirement for medical reasons, please contact the Pension Centre for further information.

Implications of Resignation

a) Transfer Value

If you leave the public service before you reach age 50, you may choose to receive your earned pension benefits as a transfer value lump sum payment rather than as a future monthly pension. A transfer value is a lump sum equal to the value of your future pension benefit (deferred pension). If you choose this option, you must do so within one year of leaving the public service otherwise, you will be deemed to have opted for a deferred annuity. Once the choice is made, the transfer value option is irrevocable.

Note: If you leave the federal public service with a transfer value payment, you will be covered under the current pension plan rules if you are later re-employed. This means that you could be eligible to receive an unreduced pension if you retire at age 65 or over with at least two years of pensionable service, or at age 60 or over with at least 30 years of pensionable service. To learn more, visit the Information concerning changes to the public sector pension plans page of the Treasury Board of Canada Secretariat’s website.

The rate of return made by funds invested in a locked-in vehicle depends on the rates of return that are available over time in the market place as well as your investment decisions, which will in turn determine the eventual level of income available to you and your dependents. The investment risk is your full responsibility.

If you choose this option, there are no survivor benefits payable under the Public Service Pension Plan in the event of your death. In addition, there is no guarantee that the eventual pension income will be equal to the deferred annuity, associated survivor benefits and pension indexing entitlement payable in the future, had the assets been left in the public service pension fund.

Various economic and demographic assumptions are used in the calculation of a transfer value, including net interest rates. These rates vary monthly and the final transfer value amount will be determined as of the date on which it is paid, using the actuarial assumptions in effect on that date. The final amount may differ from a previously estimated amount due to changes in the actuarial assumptions between the date of the estimate and the date of payment.

A transfer value payment may have tax implications, so it is recommended that you contact the Pension Centre.

b) Buying Back Prior Service

If you are making service buyback payments, only the service that is paid for up to the transfer value payment date can be included in the transfer value calculation. Therefore, it is important to consider the possibility of paying the balance owing on your service buyback before the transfer value payment date, in order to increase the payment amount.

Unpaid deficiencies due to a period of leave without pay or defaulted payments on service buybacks will be recovered from your transfer value payment unless you make payment arrangements before the transfer value is paid.

If you have any prior service that may be purchased in order to count as pensionable under the Public Service Pension Plan, keep in mind that this service must be bought back prior to your ceasing to be employed in the public service. Should your reason for termination be involuntary, you may wish to consider buying back prior service that may increase your pensionable service credit to two years or more, thus changing your available pension benefit options.

For additional information, refer to the Service buyback package.

c) Return of Contributions

If you terminate your employment with less than two years of pensionable service, a return of contributions is your only benefit entitlement under the Public Service Pension Plan. A return of contributions is a lump sum equal to the pension contributions you paid into the plan, plus accrued interest. The rate of interest payable on a return of contributions is calculated at the annual rate of return of the public service pension fund, compounded quarterly to the end of the quarter preceding the date of payment.

If you have two or more years of pensionable service for which you have an established pension benefit entitlement and you voluntarily resign before completing two years of continuous employment in the public service, you are only entitled to a return of contributions for that later period of service which could include a service buyback made during your last period of employment.

If you cannot acquire two or more years of pensionable service because you are already entitled to a pension based on more than 33 years of pensionable service either under the Canadian Forces or the Royal Canadian Mounted Police pension plan, you may have a choice of benefits other than a return of contributions.

You have the option of having your return of contributions paid directly to you or transferring it to a RRSP or another Registered Pension Plan. If you choose to have your return paid directly to you, federal and provincial income tax will be deducted at source based on your province of residence (or country of residence for non-residents). A pension adjustment reversal will be reported to the Canada Revenue Agency to restore your RRSP room, if applicable.

Note: If you leave the federal public service with a return of contributions, you will be covered under the current pension plan rules if you are later re-employed and you become a plan member again. This means that you could be eligible to receive an unreduced pension if you retire at age 65 or over with at least two years of pensionable service, or at age 60 or over with at least 30 years of pensionable service. To learn more, visit the Information concerning changes to the public sector pension plans page of the Treasury Board of Canada Secretariat’s website.

d) Deferred Annuity

A deferred annuity is an unreduced pension benefit payable at age 60, if you have at least two years of pensionable service.

You must elect a pension option within one year of leaving the public service. After one year, if you have not made a selection, you will be deemed to have opted for a deferred annuity pension option within one year of leaving the public service.

Should you choose this option, at any time between age 50 and 60, you may request a reduced pension payable immediately. Please refer to the Annual Allowance section above for more details. If you become disabled before reaching age 60, you may be entitled to an immediate annuity, if Health Canada certifies that you are disabled.

If you qualify for a deferred annuity, you can calculate your benefit by using the pension benefits calculator located in the Compensation Web Applications.

e) Lump Sum Benefits

Lump sum pension benefit options available in lieu of receiving a monthly pension benefit. These options are:

1. Transfer Value

If you leave the public service before you reach age 50, you may choose to receive your earned pension benefits as a transfer value lump sum payment rather than as a future monthly pension. A transfer value is a lump sum equal to the value of your future pension benefit (deferred pension). If you choose this option, you must do so within one year of leaving the public service otherwise, you will be deemed to have opted for a deferred annuity. Once the choice is made, the transfer value option is irrevocable.

Note: If you leave the federal public service with a transfer value payment, you will be covered under the current pension plan rules if you are later re-employed and you become a plan member. This means that you could be eligible to receive an unreduced pension if you retire at age 65 or over with at least two years of pensionable service, or at age 60 or over with at least 30 years of pensionable service. To learn more, visit the Information concerning changes to the public sector pension plans page of the Treasury Board of Canada Secretariat’s website.

The rate of return made by funds invested in a locked-in vehicle depends on the rates of return that are available over time in the market place as well as your investment decisions, which will in turn determine the eventual level of income available to you and your dependants. The investment risk is your full responsibility.

If you choose this option, there are no survivor benefits payable under the Public Service Pension Plan in the event of your death. In addition, there is no guarantee that the eventual pension income will be equal to the deferred annuity, associated survivor benefits and pension indexing entitlement payable in the future, had the assets been left in the public service pension fund.

Various economic and demographic assumptions are used in the calculation of a transfer value, including net interest rates. These rates vary monthly and the final transfer value amount will be determined as of the date on which it is paid, using the actuarial assumptions in effect on that date. The final amount may differ from a previously estimated amount due to changes in the actuarial assumptions between the date of the estimate and the date of payment.

If you are making service buyback payments, only the service that is paid for up to the transfer value payment date can be included in the transfer value calculation. Therefore, it is important to consider the possibility of paying the balance owing on your service buyback before the transfer value payment date, in order to increase the payment amount.

Unpaid deficiencies due to a period of leave without pay or defaulted payments on service buybacks will be recovered from your transfer value payment unless you make payment arrangements before the transfer value is paid.

In accordance with the limits specified in the Income Tax Regulations, a transfer value payment may have three components:

Amount within tax limits

This portion of the lump sum must be moved directly into a Registered Pension Plan (RPP), a locked-in Registered Retirement Savings Plan (RRSP), or a financial institution in order to purchase an annuity.

The amount within the tax limit is calculated as follows: multiply the annual pension payable at age 65 by the age factor at payment date.

In order for the Government of Canada Pension entre to issue your payment, you and your financial institution must complete and return the following forms:

Direct transfer of a single amount under subsection 147(19) or section 147.3 (T2151)

Certification of lock-in for purposes of the Public Service Superannuation Act or the Pension Benefits Division Act (PWGSC-TPSGC 2347-18)

Amount in excess of tax limits

Where a portion of the transfer value exceeds the tax limit amount, the payment will be made directly to you and that amount becomes part of your taxable income in the year it is paid. If you have sufficient RRSP contribution room, no tax will be deducted on the amount that you transfer to your RRSP.

If you wish to transfer all or a portion of this amount to a RRSP, you must provide the Pension Centre with one of the following documents:

– Signed and dated letter certifying that you have checked with the Canada Revenue Agency (CRA) and that you have sufficient RRSP contribution room available. Your letter must also indicate the name and address of your financial institution, your RRSP account number and the specific amount of the payment that is to be transferred to a RRSP; or

– Copy of your latest “Notice of assessment” from CRA indicating the available RRSP deduction limit. You must sign and date this notice and also provide the name and address of your financial institution, your RRSP account number and the specific amount of the payment that is to be transferred to a RRSP.

Amount under the retirement compensation arrangement (RCA)

The Income Tax Act places restrictions on the pension benefits accrued per year of service. Pension benefits, which are within the limits allowed under the Income Tax Act, will be paid under the Public Service Superannuation Act, with the remainder being paid from the RCA. The RCA is a plan which provides benefits that exceed the allowable limits for a registered pension plan. If your average salary for your five consecutive years of highest paid service or your projected survivor benefits exceeds the Public Service Pension Plan maximum benefit threshold, the transfer value calculation will include an amount in addition to the two amounts described above. This amount would be paid under the RCA, established under the Special Retirement Arrangements Act. The RCA transfer value amount cannot be transferred to a tax-sheltered vehicle; it must be paid directly to you and taxed as required by the Income Tax Regulations.

2. Return of Contributions

If you terminate your employment with less than two years of pensionable service, a return of contributions is your only benefit entitlement under the Public Service Pension Plan. A return of contributions is a lump sum equal to the pension contributions you paid into the plan, plus accrued interest. The rate of interest payable on a return of contributions is calculated at the annual rate of return of the public service pension fund, compounded quarterly to the end of the quarter preceding the date of payment.

If you have two or more years of pensionable service for which you have an established pension benefit entitlement and you voluntarily resign before completing two years of continuous employment in the public service, you are only entitled to a return of contributions for that later period of service which could include a service buyback made during your last period of employment. If you cannot acquire two or more years of pensionable service because you are already entitled to a pension based on more than 33 years of pensionable service either under the Canadian Forces or the Royal Canadian Mounted Police pension plan, you may have a choice of benefits other than a return of contributions.

You have the option of having your return of contributions paid directly to you or transferring it to a RRSP or a RPP. If you choose to have your return paid directly to you, federal and provincial income tax will be deducted at source based on your province of residence (or country of residence for non-residents). A pension adjustment reversal will be reported to the Canada Revenue Agency to restore your RRSP room, if applicable.

Note: If you leave the federal public service with a return of contributions, you will be covered under the current pension plan rules if you are later re-employed and you become a plan member again. This means that you could be eligible to receive an unreduced pension if you retire at age 65 or over with at least two years of pensionable service, or at age 60 or over with at least 30 years of pensionable service. To learn more, visit the Information concerning changes to the public sector pension plans page of the Treasury Board of Canada Secretariat’s website.

f) Transfer to the Canadian Forces or the Royal Canadian Mounted Police pension plan

If you have accepted or plan to accept a position with the Canadian Forces or Royal Canadian Mounted Police, you may wish to consider transferring your pensionable service from the Public Service Pension Plan to their pension plan. If you wish to pursue such a transfer, please contact the Pension Centre.

Note: If you transfer your pension credits to the Canadian Forces or the Royal Canadian Mounted Police pension plan, you will be covered under the current pension plan rules if you are later re-employed in the federal public service and you become a plan member again. This means that you could be eligible to receive an unreduced pension if you retire at age 65 or over with at least two years of pensionable service, or at age 60 or over with at least 30 years of pensionable service. To learn more, visit the Information concerning changes to the public sector pension plans page of the Treasury Board of Canada Secretariat’s website.

Implications of Retirement on Performance-based Compensation

Executives who retire during /the cycle may be eligible for a performance award.

To be eligible for at-risk pay, an executive must:

• Have a valid performance agreement; and
• Have been on strength in a position or functions subject to the Directive on the Performance Management Program for Executives for at least three consecutive months during the cycle.

Any amount payable is prorated to time spent in the job during the performance cycle.

Source: Administering Performance-Based Compensation for Executives, published by the Office of the Chief Human Resources Officer (May 2018) – a guide developed for deputy heads, executives and human resources professionals

Implications of Re-employment

Generally, public service pension plan members who left the federal public service prior to January 1, 2013 and opted for:

• an immediate annuity,
• a deferred annuity, or
• an annual allowance

You will continue to be covered under the pre-2013 pension plan terms if re-employed in the federal public service on or after January 1, 2013. However, those who were members of the plan before January 1, 2013, will not remain covered under the pre-2013 pension plan terms when re-employed in the federal public service on or after January 1, 2013, in the following situations:

• plan members who left the public service with less than two years of pensionable service with a return of contributions,
• plan members who left the public service and opted for a transfer value, or
• plan members who left the public service and opted to transfer their pensionable service accumulated under the public service pension plan to a new employer’s pension plan under general portability rules or a Pension Transfer Agreement.

If you become re-employed in the public service and are required to contribute to the public service pension plan, the percentage of salary that is applied towards pension contributions is determined by the applicable pension plan terms: the pre-2013 or post 2013 plan terms. Please refer to Contribution Rates for more information.

It is important to note that re-employment in the federal public service after retirement can have an impact on your public service pension benefits. If you become re-employed in the federal public service in a position that does not require you to resume contributing to the public service pension plan, you can receive both your pension and the salary from your new position.

If you become re-employed in the public service and begin contributing to the pension plan again, your monthly pension (including indexing) will cease as you are unable to receive a public service pension and accumulate pensionable service simultaneously. Your monthly pension will start again once you stop contributing to the public service pension plan, and your pension will most likely be recalculated based on your combined pension credits. The annual percentage increase received as a result of indexing will be based on your most recent date of retirement.

If you are re-employed past age 71, you cannot contribute to the public service pension plan. However, if you are in a position that would normally require you to contribute to the pension plan, your monthly pension (including indexing) will cease to be paid until you stop working, even if you are past age 71.

If you received a transfer value when you left the public service, are re-employed and resume your contributions to the public service pension plan, you may be able to reinstate all or part of the pensionable service for which you received a transfer value. This option is available on a one-time basis only and a one-year deadline applies.

In general, re-employment outside the public service has no effect on any of your entitlements under the public service pension plan, unless you retired on grounds of disability.

 

Marriage or a Common-law Relationship*

Your pension plan offers a survivor benefit for your surviving spouse or common-law partner. For example, your spouse or common-law partner may be entitled to an immediate allowance in the event of your death, whether you are employed or retired at the time. The survivor benefit is usually equal to half of your basic pension.

The Pension Centre recommends that you provide this information soon after your marital status changes or you enter a relationship of a conjugal nature. In the event of your death, the Pension Centre needs to know who your survivors are. When the Pension Centre has current information about your marital status or common-law relationship on hand, it can provide benefits to your survivor(s) more quickly. Additional information can be found under Who is Entitled to Survivor Benefits.

Plan members who wish to provide information about their common-law relationship, may do so by completing the Statutory Declaration (PWGSC-TPSGC 2016) form and forwarding it to the Pension Centre.

A survivor benefit is payable to a spouse or common-law partner with whom you have lived in a relationship of a conjugal nature for at least one year, as long as that relationship began prior to your retirement from the public service.

At the time of death, if you have both a legal spouse and an eligible survivor with whom you have lived in a relationship of a conjugal nature, the survivor’s benefit will be apportioned between them. Each survivor’s share of the benefit will be based on the length of your cohabitation. Additional information obtained from the Pension Centre.

If you marry after you retire, your surviving spouse would not usually receive a survivor benefit. However, you can choose to provide a benefit to your spouse by reducing your own pension to cover the cost of this additional benefit. You can choose this option within one year from the date of your marriage, or from the date your pension begins, whichever is later. For more information please consult the Pension Centre.

If you do not name a beneficiary under the SDB Plan, then the benefit will be paid to your estate. For more information, refer to minimum benefit.

 

Separation or Divorce*

You should inform the Pension Centre in the event of a separation or divorce. Please provide the following documents:

• If you are separated – the separation papers;
• If you are divorced – the divorce decree absolute;
• If you are no longer in a common-law relationship – a letter advising the Pension Centre that the relationship has ended and the date when it ended.

Please include your pension number on all documents. If you do not know your pension number, your Personal Record Identifier (PRI) is an acceptable alternative.

Your pension benefits can be divided in the event of divorce or separation. The Pension Benefits Division Act provides for the division of the pension benefits that you have accumulated under the public service pension plan in the event of your marriage or common-law relationship breakdown.

You or your spouse/common-law partner may apply after you have been separated for at least one year. However, if the application is based on a Court Order pertaining to divorce, annulment or separation, then the one-year separation requirement does not apply.

In the case of a common-law relationship, an application may be made only if your relationship lasted a minimum of one year.

In either case, you must have a Court Order or written agreement signed by you and your spouse that provides for the division of your pension benefits.

If there is a Court Order or written agreement signed by you and your spouse that provides for the division of your pension benefits, you or your former spouse/common-law partner may apply for a pension benefits division by following these steps:

Step 1: Request information on pension benefits division.

Before you submit your request for an estimate, consult the Request for Estimate section in the Division of Pension Benefits Package for more information on the number of estimates you can receive and which documents and forms are required.

If you require an estimate of the division amount before you apply for a division, you must submit the Request for Pension Benefits Division Information (PWGSC-TPSGC 2488) form, along with any other required documents.

Step 2: Apply for pension benefits division.

 You must submit the Application for Division of a Public Service Superannuation Act Pension (PWGSC-TPSGC 2486) form, along with your Court Order or written agreement, and any other required documents.

Step 3: Division of pension benefits.

Once the division is approved, the amount representing the value of the pension benefits earned during the period subject to division is transferred into a chosen registered retirement savings account(s).

These steps are described in further detail in the Division of Pension Benefits Package. Additional information is found under the Pension Benefits Division Act and the Pension Benefits Division Regulations.

If a pension division is approved when you are in receipt of a pension, the pension amount that you receive will be reduced immediately upon completion of the division.

If at the time of your death you were divorced, your former spouse will not be entitled to a survivor benefit.

If at the time of your death you were separated from your common-law partner, that partner’s entitlement to a survivor benefit ends immediately upon separation and therefore, they will not be entitled to a survivor benefit.

If at the time of your death you were separated from your legal spouse but not divorced, your spouse would be entitled to a survivor benefit. However, if you were separated from your legal spouse and your former spouse had applied for a division of pension benefits, your legal spouse would only be entitled to a survivor benefit in respect of the portion not covered by the division.

At the time of your death, there is no impact for Supplementary Death Benefit (SDB) purposes. However, your former spouse will still be entitled to receive your SDB benefit if you have named them as your beneficiary.

To designate a new beneficiary, you must complete a new Naming or Substitution of a Beneficiary form.

Wills, Agreements and Court Orders do not affect who receives your Supplementary Death Benefit (SDB). The person you named as your beneficiary for the SDB Plan receives your death benefit.

You can only name one beneficiary under this plan. If you wish to divide your death benefit among two or more people, you must name your estate as the beneficiary. You may then specify in your Will how it should be divided.

If you wish to cancel a previous designation without naming a person or an organization (religious, educational, charitable or benevolent), you must also name your estate as your beneficiary.

If you do not remember whom you named as the beneficiary of your Supplementary Death Benefit (SDB), contact the Pension Centre. Please note that the Pension Centre will ask you for your pension number or Personal Record Identifier (PRI).

For more information, consult Survivor Benefits under the Public Service Pension Plan.

 

How to Retire*

Selecting a Retirement Date

You should begin by taking stock of any unused leave (annual leave, personal days, etc.). Unless you want to cash out eligible unused leave, be sure to leave enough time when picking your final day so that you can use it all while leaving sufficient time to wrap-up any loose ends in your work.

Do not forget that your annual leave entitlement is advanced to you in full at the start of the fiscal year, so if you leave mid-way through a year, you will have to return a portion of this leave.

As an executive, your performance pay will be pro-rated based on the time you worked in the fiscal year. To be eligible for performance pay, you need to have a valid Performance Agreement, so be sure that you complete this before you leave. You also have to meet the minimum eligibility period (generally three months, but Deputy Heads can establish a longer departmental eligibility period) and obtain a performance rating of “Succeeded Minus” (Level 2) or higher.

There are a number of strategies for picking a retirement date that may be financially more advantageous to you (i.e., December 30^th versus January, Monday versus Friday, after the first 10 working days of the month, etc.). For example, a number of days that would have an impact of less than a 0.5% reduction in your pension entitlement (which translates into 18 days), would not affect your pension. In other words, with the required number of years of service, you could retire 18 calendar days before your 55^th birthday, as an example, with an unreduced pension. Everyone’s situation is different, so it is important to obtain advice that relates to your particular circumstances from the Pension Centre or from a professional advisor who understands your pension plan entitlements.

There may also be family considerations – if you have a partner, are they ready to retire? Will you be retiring together or at different times? Are there other family members who will be adjusting to the transition along with you? How will the timing decision impact your transition?

You may have a financial advisor who can provide advice or service providers such as the Retirement Planning Institute that offer sessions that might be useful to you as you finalize details related to your retirement.

Accounting for the Conversion to Pay in Arrears in 2014

If you were hired by the Government of Canada before May 8, 2014, you received your pay on a Wednesday for work completed up to and including that Wednesday end of day (i.e., the pay day). In other words, you were paid on a “current” basis. As of May 8, 2014, employees are being paid “in arrears” — i.e., the pay that you receive today is based on work that was completed 2 weeks prior.

To convert employees hired prior to May 8, 2014 from payment on a current basis to payment in arrears, your regular bi-weekly pay at that point in time, became a one-time “transition payment” to be recovered upon departure from the government. This transition payment was similar to your regular bi-weekly pay, so it was likely seamless to you. However, you may have noticed that for your bi-weekly pay after this point in time, the date for which the pay was disbursed reflected the pay period two weeks prior to the pay day.

The transition payment ensures that all employees are managed in the same way. Upon leaving the government, all employees will receive their last pay at the end of the pay period two weeks after their last day of work, even if they were paid on a current basis when they started working for the government. For employees hired prior to May 8, 2014, that last pay will be used to recover the transition payment. Depending on how your pay has changed since your transition payment was made (e.g., you may have moved up in the salary range or been promoted), your final payment upon resignation or retirement may be nil.

Example: You were earning $2,000 per bi-weekly pay period in May 2014; therefore, your transition payment was $2,000. When you retire, you are earning $2,700 per bi-weekly pay period. On your last pay period, two weeks after your last day of work, your transition payment will be recovered from your last pay, leaving $700, subject to other adjustments.

It is important to know that because the transition payment amounts to 2 weeks’ salary in most cases, if you select a retirement date that is not the end of a pay period (for example, you select a Friday before a Wednesday pay day), there may not be a sufficient amount in that final pay to cover the recovery of the transition payment. In which case, the remaining amount owing will be transferred to the Pension Centre for recovery from your pension. If this happens, the Pension Centre will either recover it in one pension payment or through a series of smaller amounts over several pension payments. If you are aware that this is going to happen, contact the Pension Centre to inform them of your preference for recovery.

It is important to note that payment in arrears does not impact the calculation of your five consecutive years of highest paid service for pension purposes.

You can consult the Public Services and Procurement Canada website Payment in Arrears for additional information.

Starting the Retirement Process

To start the retirement process, you must submit your retirement resignation letter to your manager for approval.

The accepted resignation letter should then be copied to the Pay Centre or your compensation service provider, as well as the Pension Centre. You should then follow your approved departmental process, which may also include providing a copy of your letter to the identified “Trusted Source”. This should be done at least three months before your proposed retirement date; if possible, notifying six months before this date is recommended.

A compensation advisor at the Pay Centre or your departmental compensation service provider will finalize your pay account, including payment of any severance pay or accumulated vacation leave to which you may be entitled. Once this occurs, they will send a letter to the Pension Centre so that they can initiate payment of your pension.

Documentation

When you advise the Pension Centre of your intention to leave the public service and your expected termination date, the Pension Centre will provide you with your personalized Pension Benefit Options Statement outlining your particular pension choices. They can answer other questions you may have. The Centre may also request the following documents:

• Your Birth Certificate
• Your Spouse’s Birth Certificate
• Your Children’s Birth Certificate
• Your Children’s Adoption Certificate
• Your Spouse’s Death Certificate
• Your Marriage Certificate
• Evidence of Conjugal Relationship for Common Law or Same Sex Partners (Please see section 12 of the Annuitant’s Benefits booklet for more details.)
• Divorce Decree
• Separation Agreement

The Initial Pension Payment

If all of the necessary paperwork that you and your compensation service provider is submitted in advance of your retirement date, the Pension Centre is usually able to process your first pension payment within 45 days of your termination date. It is recommended that you pay close attention to the necessary tasks leading up to your retirement date, including consulting with the Pension Centre to ensure that you are fully aware of their information requirements so that potential delays of your pension payments are well managed.

All future pension payments will be deposited to your bank account on the third last working day of each month.

If you have any questions regarding your pension or retirement, you may contact the Pension Centre by mail at:

Public Services and Procurement Canada
Government of Canada Pension Centre
Policy and Advisory Services Division
PO Box 5155
Shediac NB
E4P 8T9

Executives of the Government of Canada also have access to a dedicated pension service team that is reachable by telephone at: 1-888-742-1300.

Debts Due to the Crown

If your employer informs the Pension Centre that you owe a debt to the Crown, such as overpaid salary or an allowance, these amounts will be recovered from your pension benefit. You will be advised of such a recovery in writing.

Income Tax

If you opt for an ongoing pension, income tax (federal and provincial) will be deducted at source based on your province of residence (for non-residents, based on the country of residence). If you wish to claim more than the basic personal amount, you must complete and provide the Pension Centre with the Personal Tax Credits Return (TD1) form and the applicable provincial or territorial form, which can be found at TD1 forms.

Quebec residents should use the federal Personal Tax Credits Return (TD1 forms) and the provincial Source Deductions Return (TP 1015.3 V) form.

Government of Canada Workplace Charitable Campaign

If you opt for an ongoing benefit payable immediately (immediate annuity or immediate annual allowance) you may have the remaining deductions pledged as an employee deducted from your monthly pension.

You may also choose to complete your pledge by making payments directly to the GCWCC. Arrangements can be made by contacting 613-228-6700. More information can be found on the Government of Canada workplace charitable campaign website.

 

Group Benefits Coverage*

Public Service Group Insurance Benefit Plans

Planning for retirement requires you to make a few important decisions. As an employee in the federal public service, you have may have access to group insurance benefits on retirement.

What group insurance benefits are available to retired members of the federal public service?

The following group insurance benefit plans may be available to you:

• Public Service Health Care Plan
• Pensioners’ Dental Services Plan

Your Public Service Health Care Plan (PSHCP) coverage can continue after you retire if you are entitled to receive an immediate public service pension based on a minimum of six years of cumulative pensionable service. The minimum six years of pensionable service requirement will not apply if:

• You are a retired member of the PSHCP before April 1, 2015
• You became entitled to a deferred pension benefit immediately before April 1, 2015
• You receive an ongoing pension benefit as a result of disability
• You are the survivor of a plan member or of an individual who was eligible to be a member of the Plan at the time of death, and you are in receipt of a survivor pension (even if the plan member did not have six years of service)
• You are eligible for an ongoing pension benefit but you are no longer employed by the federal public service as a result of Work Force Adjustment
• You are a member of the Veterans Affairs Canada Client Group, or a survivor of such a member
• You are eligible for a pension (as a pensioner or survivor) under the Judges Act, the Governor General’s Actor the Lieutenant Governors Superannuation Act

The Public Service Health Care Plan (PSHCP) is a voluntary plan. Members must apply for coverage. There are two steps in applying for coverage.

Registration with the Government of Canada Pension Centre:

• If you are currently a Public Service Health Care Plan (PSHCP) member, when you retire you will be asked to sign a PWGSC-TPSGC 1422 – Deductions From Annuity or Annual Allowance form, to confirm whether you want to continue the same level of PSHCP coverage and to authorize deductions from your monthly pension cheque. If you want to amend your level of PSHCP coverage, you will need to complete and submit a PSHCP Pensioner Application formto the Pension Centre.
• Your PSHCP certificate number will not change when you retire.
• There may be an administrative delay while your pension and PSHCP files are updated. This means that you may not be able to use your PSHCP benefit card temporarily and your paper claims may be rejected during this period. If this situation occurs, keep your receipts and submit them to Sun Life once your PSHCP deductions are confirmed.
• If you are not currently a retired PSHCP member, you can apply for PSHCP coverage at any time. If you meet the eligibility criteria, your coverage will start the first day of the fourth month following the date your PSHCP Pensioner Application formis received by the Pension Centre.

Positive Enrolment with Sun Life

You must complete the positive enrolment process with Sun Life if you did not do so as an active employee or if you wish to update your positive enrolment information.

To complete positive enrolment you must complete and submit either an electronic positive enrolment form through the Sun Life Member Services website, (you must create an account), or a paper form. You can obtain a paper form by contacting Sun Life. You will be asked to provide information about yourself, your spouse/common-law partner and each eligible child.

If you retire with an immediate public service pension with at least six or more years of pensionable service and you confirmed your ongoing participation and authorized deductions from your pension, your Public Service Health Care Plan (PSHCP) coverage as a retired member will start on your retirement date.

If you retire with an option for a deferred annuity based on six or more years of pensionable service, you can apply for PSHCP coverage once your pension becomes payable. If you apply for coverage within 60 days of the date your pension becomes payable, and if you were a PSHCP member while employed, PSHCP coverage will start the first of the month following the date your PSHCP Pensioner Application form is received by the Pension Centre. If you were not a member while employed, or if you apply for PSHCP coverage more than 60 days after your pension becomes payable, coverage will start the first of the fourth month following the date your application is received by the Pension Centre.

If you retire and begin receiving an immediate on-going pension under the Public Service Pension Plan, you may continue your Public Service Health Care Plan (PSHCP) membership without interruption.

If you do not receive an immediate pension, your coverage terminates when your employment terminates. However, if a PSHCP contribution has been taken in the month in which your employment terminates, coverage will continue until the end of the following month.

• Does the cost of Public Service Health Care Plan coverage change on retirement?

Yes. Public Service Health Care Plan (PSHCP) contribution rates for retired members are different from those for active employees.

As a retired member of the federal public service, you and the Government of Canada share the cost of the Extended Health Provision and Hospital Level I coverage under the Hospital Provision for both Supplementary and Comprehensive coverage. If you choose Hospital Level II or III coverage, you are responsible for 100% of the additional expense for this coverage.

Information on contributions for retired members and the cost-sharing ratio with the employer can be found in Schedule V of the PSHCP Directive.

Retired Member Monthly Contribution Cost Sharing Model for Extended Health Provision Cost Sharing for Retired Members
Eligible Date	Retired Member	Government of Canada
April 1, 2015	31.25%	68.75%
April 1, 2016	37.5%	62.5%
April 1, 2017	43.75%	56.25%
April 1, 2018	50%	50%

• Does my Public Service Dental Care Plan coverage continue as a retired member?

No. If you retire from the public service, coverage under your Public Service Dental Care Plan (PSDCP) stops on your last day of employment. However, if you retire with an immediate public service pension, you may have the option to enrol in the Pensioners’ Dental Services Plan (PDSP).

• How do I apply for the Pensioners’ Dental Services Plan on retirement?

To apply for the Pensioners’ Dental Services Plan you must complete and submit the Pensioners’ Dental Services Plan Enrolment Form to the Pension Centre. This form is part of the documentation provided to you by the Pension Centre in your retirement package. If your completed Enrolment form is received within 60 days of when your pension becomes payable, coverage will begin on the date of your retirement.

If your completed Enrolment form is received later than 60 days from the date your pension becomes payable, coverage will begin on the first day of the second month following the date of receipt.

For additional information on enrolment and benefits, please refer to the PDSP Enrolment Information and Plan Summary Booklet.

Pensioners’ Dental Services Plan Contribution Rates

The Pensioners’ Dental Services Plan (PDSP) costs are equally shared between the plan member and the Government of Canada.

The contribution rates depend on the “category of coverage” selected. Only one category of coverage can be chosen. Amendments to coverage can increase or decrease the monthly contribution (e.g., enrolling a new spouse, a covered child reaching the age of 21 and no longer in school, etc.).

The Pensioners’ Dental Services Plan contribution rates as of October 1, 2017 are as follows:

Category of Coverage	Member’s Monthly Contribution Rates
Category I – Pensioner only	$17.46
Category II – Pensioner and one eligible family member	$36.85
Category III – Pensioner and more than one eligible family member	$44.38

Notes:  Contributions are subject to change. Contribution rates for dependents of veterans with coverage under the Veterans Affairs Canada Dental Services Program will also change. Please contact your Pension Office for additional information.

• Does my Disability Insurance Plan coverage continue as a retired member?

No. Your Disability Insurance (DI) Plan coverage stops on your last day of employment.

If you are in receipt of benefits under the Long-Term Disability plan when you retire, benefits will continue to age 65 as long as you remain totally disabled.

Note: It is important to report your public service pension income to Sun Life as soon as possible to avoid disability insurance benefit overpayments.

• Does my Public Service Management Insurance Plan (PSMIP) coverage continue as a retired member?

Under the Public Service Management Insurance Plan, Basic Life, Supplementary Life and Dependants’ Life coverage continues for 31 days following the date when you retire. During this period, you will have the opportunity to convert your coverage to a private life insurance policy without being required to provide evidence of insurability (i.e., no medical requirements regardless of the state of your health). You must make your own arrangements directly with Industrial Alliance.

Accidental Death and Dismemberment and Long-Term Disability (LTD) insurance under the PSMIP cannot be converted to private policies, and coverage stops on your last day of employment.

If you are in receipt of benefits under the PSMIP-LTD Plan when you retire, benefits will continue to age 65 as long as you remain totally disabled.

Note: It is important to report your public service pension income to Industrial Alliance as soon as possible to avoid disability insurance benefit overpayments.

Post-Retirement Life Insurance under the Public Service Management Insurance Plan

If you become re-employed in the federal public service and become eligible as an active employee for insurance under the Public Service Management Insurance Plan and/or again become a contributor under the Public Service Pension Plan, your Post-Retirement Life Insurance will be suspended until you retire a second time. When your coverage resumes, it will do so at the level of benefits (100%, 75%, 50% or 25% of adjusted final salary) in effect when it was suspended, however, it will be based on the higher of your first and your second final salaries.

If you become a member of the Canadian Armed Forces or the Royal Canadian Mounted Police, ask your compensation service provider to explain how your re-employment will affect your life insurance.

Cancelling Post-Retirement Life Insurance under the Public Service Management Insurance Plan

You may cancel your Post-Retirement Life Insurance coverage at any time by notifying the Pension Centre in writing. Your coverage stops on the first day of the month following the month in which your written request was received.

Note: If you cancel this insurance, you will never be able to reinstate it – cancellation is irrevocable.

Additional information regarding post-retirement life insurance can be found at Becoming an Executive. Information regarding pension can be found at Public Service Pension Plan.

 

Survivor Benefits*

If you opt to receive a monthly pension benefit, now or in the future, your eligible survivor and children will be entitled to an allowance in the event of your death.

A survivor’s allowance is payable to a legal spouse or to a common-law partner with whom you have lived in a relationship of a conjugal nature for at least one year, as long as that relationship began prior to your retirement from the public service and continued without interruption until your death. For children to be eligible for an allowance, they must be under age 18 or a full-time student between 18 and 25 years or age. To be eligible, the child must have been born before retirement.

If you marry after retirement, your survivor would not normally be entitled to an allowance. However, you may choose to provide your survivor with a benefit by taking a reduction in your own pension. You must apply for this coverage within one year from the date of your marriage or one year from the date your pension commences, whichever is later.

Here are some examples to illustrate:

• You retire on June 10, 2019 and marry on October 23, 2019. You were not in a common-law relationship before the marriage therefore your surviving partner is not automatically entitled to a benefit. You can, however, opt at a cost, to provide your spouse with a survivors benefit.
• You retire on June 10, 2019 and you commence living in a common-law relationship on September 27, 2019. Your surviving partner would not be entitled to a benefit.
• You have been living in a common-law relationship since February 7, 2019 and you retire on June 10, 2019. On October 23, 2019 you marry. In this situation, your spouse may be entitled to a survivor benefit.
• You have been living in a common-law relationship since December 14, 2018 and you retire on June 10, 2019. On October 23, 2019 you marry. If your death is on or before December 14, 2019, (one year from the start of your common-law relationship), your surviving spouse would not be entitled to a benefit.

Should you choose a lump sum benefit payment, your survivors will not be entitled to survivor benefits.

Additional information on survivor benefits may be obtained from the When death occurs – Retired members – pension web page.

 

Other Sources of Retirement Income*

 

Canada Pension Plan or Quebec Pension Plan

If you opt for a monthly pension benefit under the Public Service Pension Plan, your pension will consist of 2 parts:

• a lifetime pension, which is payable from the date you terminate employment until your death, and;
• a temporary bridge benefit payable from the date you terminate employment until the first of the month following your 65^thbirthday or earlier if you become entitled to Canada or Quebec Pension Plan (CPP or QPP) disability benefits. Receipt of CPP or QPP early retirement benefits (ages 60 to 65) has no impact on this temporary bridge.

The bridge benefit is only payable for a specified period because the public service pension formula has been adjusted to reflect the requirement to participate under CPP or QPP.

It is important that you complete a Pension information release (PWGSC-TPSGC 2265) form to confirm whether or not you are entitled to a disability benefit from the Canada or Quebec Pension Plan (CPP or QPP) prior to age 65.

Until the Government of Canada Pension Centre receives the form indicating that you are not entitled to disability benefits from the CPP or QPP, the Pension Centre will assume that you are entitled to such benefits and the bridge benefit amount will not be paid to you from your date of entitlement or date of termination, whichever is later.

For information on the CPP or QPP, please contact their office. Information about the CPP may be obtained from the Service Canada website. Information about the QPP may be obtained from the Québec Pension Plan website.

Old Age Security Pension

This Government of Canada monthly benefit is payable to all persons aged 65 or more who satisfy certain conditions of residency.

Information about the old age security may be obtained from the Service Canada Old age security—Overview web page.

General Information*

 

National Association of Federal Retirees

The National Association of Federal Retirees is a non-profit organization bringing together pensioners from the public service, the Canadian Forces and the Royal Canadian Mounted Police as well as spouses and surviving spouses of these pensioners. The association promotes measures beneficial to its members and ensures that pensioners are kept informed with regard to their rights. More information can be found on their website National Association of Federal Retirees.

Retirement Courses

As a member of the Public Service Pension Plan, your plan specific retirement planning information is delivered to you by way of either half-day session or as a component of a comprehensive two or three-day retirement planning information session (formerly referred to as pre-retirement seminar). It is recommended that you attend such an information session at least five to ten years prior to retirement. Depending on the department, agency or Crown Corporation with whom you are employed, several types of retirement planning information sessions may be available to you. Consult your manager for additional information or to register.

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Post-Retirement Obligations*

 

Designated Public Office Holders

Under the Lobbying Act, “designated public office holders” (DPOHs) are senior decision-makers in the federal government.

In accordance with the Lobbying Act, former DPOHs are prohibited from engaging in any lobbying activities as consultant lobbyists or in-house lobbyists for organizations for five years after they cease exercising their duties as a DPOH. Additionally, former DPOHs may not engage in lobbying activities as in-house lobbyists for corporations if those activities constitute a significant part of their work.

Essentially, all Assistant Deputy Ministers (ADMs) and Deputy Ministers (DMs) and equivalents are DPOHs. The Commissioner of Lobbying has published an Interpretation of “Comparable Rank” for Designated Public Offices) which lists what positions are considered of comparable rank to a designated public office holder.

For a position to be considered of comparable rank to an associate or assistant deputy minister, it must meet the following criteria:

• The position must be classified at the EX-04 level or higher; OR
• The position’s salary must be at the EX-04 minimum or higher, exclusive of performance pay. This excludes EX-03s whose salaries have crossed into the EX-04 salary band through duration in the position; and
• The position must report directly to a DPOH.

Additional information regarding the definition and obligations of a Designated Public Office Holder (DPOH) can be found at:  https://apex.gc.ca/resources/designated-public-office-holders/

Conflict of Interest

In general, Deputy heads are responsible for designating positions of risk for post-employment conflict of interest situations as per section 6.1.2.(f)(i) of the Policy on Conflict of Interest and Post-Employment.

Public servants in these designated positions are subject to a one-year limitation period after leaving office. Before leaving office and during this one-year limitation period, these public servants are to report to their deputy head all firm offers of employment or proposed activity outside the public service that could place them in a real, apparent or potential conflict of interest with their public service employment. They are also to disclose immediately the acceptance of any such offer. In addition, these public servants may not, during this one-year period, without their deputy head’s authorization:

• accept appointment to a board of directors of, or employment with, private entities with which they had significant official dealings during the period of one year immediately prior to the termination of their service. The official dealings in question may either be directly on the part of the public servant or through their subordinates;
• make representations on behalf of persons or entities outside of the public service to any government organization with which they had significant official dealings, during the period of one year immediately prior to the termination of their service. The official dealings in question may either be directly on the part of the public servant or through their subordinates; or
• give advice to their clients or employer using information that is not publicly available concerning the programs or policies of the departments or organizations with which they were employed or with which they had a direct and substantial relationship.

Section 3.3 of the policy allows a public servant or former public servant to apply to the Deputy head for a written waiver or reduction of this limitation period.

Additional information regarding conflict of interest and post-employment is available at the following links:

• Values and Ethics Code for the Public Sector: https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=25049&section=html
• Treasury Board instructions on conflict of interest and post-employment: https://www.canada.ca/en/treasury-board-secretariat/topics/values-ethics/code/conflict-interest-post-employment.html
• Policy on Conflict of Interest and Post-Employment: https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=25178#appB

Additional Retirement Resources that May Be of Interest*

 

• You and Your Pension Plan – A series of Videos on retirement questions.
• Canadian Retirement Income Calculator: The Canadian Retirement Income Calculator will provide you with retirement income information, including the Old Age Security (OAS) pension and Canada Pension Plan (CPP) retirement benefits. You will need to work through a series of modules in order to estimate your retirement incomes from various sources and compare them to your goal income. It also allows you to see the impact of changes in savings behaviour.