Retiring from the public service of Canada

A B C D
Reason for termination Age Pensionable service Entitlement service options
Any reason Any age Less than 2 years Return of contributions with interest
Retirement 60 or over At least 2 years Immediate annuity
Retirement 55 or over At least 30 years Immediate annuity
Retirement-disability Under 60 At least 2 years Immediate annuity
Retirement 50 to 59 At least 2 years Options : ï‚· Deferred annuity payable at 60 ï‚· Annual allowance payable from the later of the date of option or the date of ceasing to be employed.
Resignation Under 50 At least 2 years

Options :

  • Deferred annuity payable at 60
  • Annual allowance payable at any time from age 50 to 60
  • Transfer Value
Lay-off Under 60 At least 2 years

Options:

  • Deferred annuity payable at 60
  • Annual allowance (at any time between age 50 and 60)
  • Transfer value (if less than 50)

 

The PSSA also lays out what happens to your pension if you are laid off under the work force adjustment appendices of your collective agreement.

Treasury board can waive the reduction factor for employees at least 55 years old who have been employed in the Federal Public Service for at least 10 years and who are not otherwise entitled to an immediate annuity.

In practice, departmental deputy heads and other designated officers are responsible granting waivers.

This provision also applies to employees laid-off or resigning during an involuntary work force adjustment program from non-Treasury Board departments or agencies of the federal public service.

35 Years Pensionable Service

Employees cannot accumulate more than 35 years of pensionable service.

After 35 years of pensionable service, the employee's contribution rate drops to 1% of pensionable earnings. Her or his salary is still included in the calculation of the 5 consecutive years of highest average earnings to determine the superannuation benefit entitlement.

Age 71

Employees cease contributions and accumulation of pensionable service starting January 1st of the year following their 71st birthday.

Any additional salary earned by an employee who works after age 71 is not considered in calculating the 5 consecutive years of highest average earnings.

Employees cannot receive their superannuation benefit until they terminate employment.

 

Basic superannuation benefit entitlements are increased each January to compensate for increases in the Consumer Price Index (CPI).

As illustrated in Table 2, the indexation adjustments since 1970, when the SRBA first came into force, have served to protect the value of superannuation benefit payments against inflation.

Indexation starts on the first of January of the year after someone retires.The first indexation adjustment is prorated to the number of full months of the previous year after the person retired.

If an employee's last day of remuneration is September 29th, he or she will be deemed to have ceased to be employed on September 30th and will therefore be entitled to indexation for the three remaining months of that year (i.e. October, November and December). If he or she worked an extra day, the retiree would only be entitled to November and December's indexation payments because he or she would be deemed to cease employment on October 1 and her first retirement benefit day would be October 2nd, because retirees only get indexation payments for complete months.

If that employee's immediate annuity was worth $31,500, with a scheduled 2% annual indexation adjustment, an additional day of employment could cost them $52.50  per year (indexed).

In every other year the indexation adjustment applies to the entire year's benefits. Table 3 below provides the schedule of the pro-rated portion of the indexation adjustment by month of termination.

Table 3

Month of Termination Pro-Rated Increase For the following year
January 11/12
February 10/12
March 9/12
April 8/12
May 7/12
June 6/12
July 5/12
August 4/12
September 3/12
October 2/12
November 1/12
December 0/12

Table 2: Indexation increases

Year of Payment Percentage Increase
1970 2.0
1971 2.0
1972 2.0
1973 2.0
1974 6.7
1975 10.1
1976 11.3
1977 8.6
1978 7.2
1979 9.1
1980 8.9
1981 9.7
1982 12.2
1983 6.5
1984 5.5
1985 4.6
1986 3.9
1987 4.1
1988 4.3
1989 4.1
1990 4.7
1991 4.8
1992 5.8
1993 2.1
1994 1.9
1995 0.6
1996 1.6
1997 1.6
1998 1.9
1999 0.9
2000 1.5
2001 2.5
2002 3.0
2003 1.6
2004 3.3
2005 1.7
2006 2.2
2007 2.3
2008 1.8
2009 2.5
2010 0.5
2011 1.4
2012 2.8
2013 1.9

Treasury Board policy says all leaves without pay due to injury, illness or disability have to be 'resolved' within two years. The employer policy does allow for leaves to be extended in exceptional circumstances. But at two years, the employer notifies the employee that their leave without pay will end either by:

  • going back to work
  • resignation or medical retirement;
  • termination for reasons other than breaches of discipline or misconduct, pursuant to Section 11(2)(g) of the Financial Administration Act.

PSAC considers this practice discriminatory and contrary to the employer’s obligations under the collective agreement and the Canadian Human Rights Act.

If your employer contacts you to push one of these options on you, contact your local PSAC representative.

PSAC argues that leave without pay should be extended for as long as reasonably possible to protect the interests of the disabled employee.

For more about disability insurance in the federal public service see Termination of Employment with Treasury Board Due to Disability.

Employees receiving disability insurance benefits from Sun Life or Long-Term Disability benefits from Industrial Alliance under the Public Service Management Insurance Plan (PSMIP) can continue receiving them after their employment ends for as long as they remain “totally disabled.”

If an employee on either DI or LTD start to receive a medical retirement under the PSSA annuity or CPP/QPP disability benefits, their insurance payments will be ‘offset’ - meaning reduced.

It is your responsibility to avoid overpayment situations if you are receiving an immediate annuity or annual allowance and you start receiving CPP/QPP disabilty benefits. You must advise the Superannuation, Pension Transition and Client Services Sector or risk being made to repay what the government deems excess benefits.

 

The employee contribution rates and benefit entitlements of the PSSA are integrated with the Canada/Québec Pension Plans (C/QPP).

Background

Effective January 1, 1966, the C/QPP were introduced by the Federal Government and the Province of Québec to provide virtually all working Canadians and their families with a degree of earnings-replacement protection in the event of the retirement, disability or death of the wage earner. Initially, employees and employers were each required to contribute 1.8% of earnings up to a level reflective of average wages in Canada and benefits were designed to represent 25% of earnings up to this level.

As C/QPP participation was compulsory, pension plans already in existence at the time (such as the PSSA) required a decision as to whether or not their plans would be amended to account for the new mandatory public pension scheme. There were basically two choices available: a private plan could ignore the introduction of the C/QPP and simply “stack” benefit and contributions rates on top of the C/QPP or coordinate the plan provisions to recognize the contributions required and coverage provided under the C/QPP. In general, this decision was, for the most part, determined in accordance with the level of protection afforded by the private plan.

For example, if the private plan in question provided a very basic level of pension protection, or was a defined contribution (money purchase) plan, then the decision was likely not to amend or coordinate with the features of the C/QPP. On the other hand, more generous pension arrangements that already provided a significant level of replacement income were most likely to opt for integration with the C/QPP.

In 1966, the existing Federal Government decided that the terms of the PSSA would be integrated with the provisions of the C/QPP. This decision was based primarily on the fact that the PSSA was providing an appropriate level retirement income for employees earning below the average industrial wage and these individuals were already diverting a significant portion of their income to retirement savings in the form of superannuation contributions. In other words, for Federal Government employees, the retirement income system, composed of Old Age Security (OAS), C/QPP, and employer-sponsored pensions, would replace approximately 85% of the pre-retirement income of a PSSA participant earning at or below the average wage. To require such employees to provide themselves with an even higher replacement rate, by increasing contributions above what was already required under the PSSA, was considered to be too great a diversion of earnings from current consumption needs.

As a result, the Federal Government, in consultation with the Advisory Committee on the PSSA, adopted the following integration method:

  1. The combined contributions under the superannuation plan and the C/QPP would equal the existing contribution rates under the PSSA.
  2. The superannuation benefit earned before the inception of the C/QPP would remain the same. In other words, for years prior to 1966, there would be no integration in the benefit calculation. Furthermore, as a result of “full” C/QPP benefits not being payable prior to age 65, there would be no benefit reduction between ages 60 and 65.
  3. At the time the C/QPP retirement benefit became payable: a) the portion of the superannuation benefit based on the salaries on which “split” contributions applied would be reduced from 2% to effectively 1.3% of average salary for each year of service after C/QPP commenced and; b) The balance of the superannuation pension benefit based on the salaries above the Yearly Maximum Pensionable Earnings (YMPE) on which only the PSSA contributions had been paid would be 2%;
  4. The reduction described in 3a) above would be applied immediately in the case of a disability retirement, where the disabled employee was entitled to disability benefits both under C/QPP and the PSSA.
  5. There would be no reduction in survivor and children’s benefits under the PSSA, despite the provision of these benefits under C/QPP. This decision was based both on the recommendation of the Department of Insurance which had advised against integration given the number of very small survivor and children benefits payable under the PSSA, as well as the administrative difficulties which would result because of the various criteria which had to be met to qualify for a survivor’s benefit under the C/QPP and the varying formula that existed to determine the amount of the benefit that would be payable under that plan.

As a federal statute, the PSSA is not subject to “negotiations” with federal public service bargaining agents.

Therefore, the input of the PSAC to the CPP/QPP integration discussions in 1965-66 was restricted to the limited legislated mandate provided to representatives on the Advisory Committee of the PSSA. The current C/QPP integration formula represents the extent of the protections the PSAC was capable of attaining in this forum to protect the interests of the membership and their families.

The entire issue of the coordination of the PSSA with the C/QPP is further complicated by the revisions introduced to the public pension system by the Federal Government in agreement with the majority of the provinces. Since 1987, the required contribution rates to the C/QPP have increased considerably. The resulting implications for the PSSA are illustrated in Table 4. As of January 1, 2003, employee contribution rates to C/QPP have risen to 4.95%. As a result, had a decision been made in 1966 to “stack” the contribution rates and benefit formulae of the C/QPP and the PSSA, as of 2003, 12.45% of salary (below the YMPE) of federal public service employees would be deducted for purposes of pension contributions. C-QPP Reduction Formula At present, upon attaining the age of 65 (or upon entitlement to C/QPP disability benefits), a retiree in receipt of a PSSA benefit will have his/her superannuation benefits reduced by the following pre-determined formula as specified in legislation:

“.007 x number of years of contributory service since January 1, 1966 x average maximum pensionable earnings (AMPE), or average salary, whichever is lower.”

As a result of legislated amendments incorporated in Bill C-13 (Budget Implementation Act) and which received Royal Assent on June 22nd, 2006, the C/QPP offset reduction factor will be revised in accordance with the following schedule:

2008 .00685
2009 .00670
2010 .00655
2011 .00640
2012 .00625

The AMPE refers to the average of the C/QPP earnings ceilings (YMPE) for the year of retirement (or for the year of entitlement to C/QPP, if this occurs before retirement) and the four preceding years. The C/QPP ceilings for 2004 through to 2008 are $40,500, $41,100, $42,100, $43,700 and $44,900 respectively. The AMPE for 2008, therefore, is $42,460. If an employee’s average salary is lower than the AMPE, the actual average salary would be used in the calculation.

By way of example, an employee with 35 years of service and an average salary in excess of the AMPE who retires on December 30, 2008, would have his/her PSSA benefit reduced at age 65 (or upon receipt of C/QPP disability benefits) by $10,179.79 per annum (.00685 x 35 x $42,460) or $848.32 per month. This amount could vary according to years of contributory service and/or average salary. Please note that in 2008, the maximum C/QPP retirement benefit payable from age 65 is $884.58. Departmental pay and benefits specialists provide terminating employees with a projected estimate of the C/QPP reduction which would apply at either age 65 or the commencement of receipt of C/QPP disability benefits.

In the event of the death of a PSSA contributor, the survivor and children become entitled to an immediate allowance.

Definition of « Survivor » 

The PSSA defines survivor as: 
  1. A person who is the lawful spouse of the contributor, providing the marriage occurred prior to retirement (i.e. ceasing to be employed in the Public Service). In cases where a relationship of a conjugal nature existed prior to the date of marriage, the President of the Treasury Board may direct that the marriage be deemed to have occurred at an earlier date.
  2. A person with whom the contributor was cohabiting in a relationship of a conjugal nature for at least one year prior to the death of the contributor. The relationship must have existed prior to the contributor’s retirement.
In the event of death within one year of marriage, no survivor benefit is payable unless the President of the Treasury Board is provided with satisfactory proof that the contributor’s health at the time of the marriage was such that he/she was expected to live for at least one year.
 
In the case of cohabitation in a relationship of a conjugal nature, documentary evidence must be provided that such a relationship remained continuously in effect at least one year prior to and including the date of the contributor’s death. In this instance, the survivor must submit proof to the Superannuation Directorate of the existence of cohabitation in a relationship of a conjugal nature. Such evidence normally takes the form of statutory declarations from disinterested persons who know the circumstances of the relationship, along with copies of bills, receipts, mortgage papers, leases, joint bank accounts credit accounts and any other relevant documentation.
 
In the event a contributor has both a legal spouse and an eligible survivor with whom he/she has lived in a relationship of a conjugal nature, the survivor benefit will be apportioned between the two claimants. Each survivor’s share of the benefit will be based on the length of cohabitation with the contributor.
 
Within 3 months from the date of notice of entitlement to survivor benefit, the survivor has the option of waiving entitlement to the survivor benefit if such a waiver results in the payment of a minimum benefit or a double rate child’s allowance. The two preceding benefit entitlement options are discussed in further detail below.

« Survivor » Benefit Entitlement 

The PSSA provides a survivor benefit equal to one-half the basic accrued superannuation entitlement of the deceased contributor with at least two years of pensionable service. In other words, the survivor benefit is calculated without regard to C/QPP integration or any reduction which would apply to an annual allowance option.
 
For example, the calculation of a survivor benefit payable in the event of the death of a PSSA contributor at age 45 with 25 years of pensionable service and highest average earnings of $45,000 would be: 1 p.100 X 25 X 45 000 $ = 11 250 $ per annum In this particular instance, the calculation of the survivor benefit foregoes any actuarial reduction regarding the fact that the deceased PSSA contributor had not satisfied the age or service requirements for an immediate annuity as of the date of death. The survivor benefit allowance formula also does not include provision for the C/QPP “reduction factor”. The survivor can receive survivor benefits under C/QPP and will also receive the “full” survivor benefit in accordance with the formula above as prescribed in the PSSA.

Definition of « Child »

The term “child” in accordance with the PSSA, includes a natural child, stepchild or adopted child and means a child of a contributor who is: a) less than 18 years of age, or b) over 18 but less than 25 years of age and in full-time attendance at a school or university, having been in such attendance substantially without interruption since reaching age 18 or since the contributor died, whichever is later.
 
Surviving « Child » Allowance Each eligible surviving “child” is entitled to an immediate allowance equal to one-tenth of the basic accrued superannuation entitlement of the deceased PSSA contributor. If there is no “survivor”, then each eligible surviving “child” is entitled to an immediate allowance equal to one-fifth of the basic accrued superannuation entitlement of the deceased PSSA contributor.
 
The maximum combined amount of “child” allowances payable with respect to one contributor is four fifths of the “survivor” benefit. If there is no “survivor” the maximum combined amount payable would be four fifths of the basic accrued superannuation entitlement of the deceased PSSA contributor. If there are more than 4 surviving “children”, the maximum combined amount payable may be divided among the “children”.
 
Benefits are payable to the survivor and children immediately and are normally paid directly to the survivor. If there the children are not residing with the survivor, the children’s allowances are paid to the person designated as responsible for their custody and control. Also, allowances are normally paid directly to children who are over the age of 18.
 
Minimum Benefit (e.g. PSSA contributor with no survivor or « children ») In the event of the death of a PSSA contributor with a minimum of two years of pensionable service where there is no eligible or no longer any eligible survivor or “children” the greater of the two following amounts is payable to the beneficiary named under the Supplementary Death Benefit (SDB) Plan: 
  • Return of Contributions (ROC) plus interest or 
  • Five years of basic accrued superannuation entitlement (i.e. immediate annuity) payments.
Any benefits already paid to a survivor or “children” (excluding indexing benefits) are subtracted from the foregoing amounts.
 
If the PSSA participant has not named a beneficiary, or the designated beneficiary has not survived the PSSA participant, or the PSSA participant has declined coverage under the SDB Plan, then amount is payable to the estate of the deceased PSSA participant. If the amount is less than $1,000, the President of the Treasury Board will designate the person or persons entitled to payment.
 
Concerns have been raised in regards to the adequacy and fairness of the minimum benefit provisions of the PSSA particularly by PSAC members who are “single” and without “children”.

Verification of length of full-time and part-time pensionable service

The majority of federal departments and agencies provide employees with annual pension and benefit statements. In order avoid any unforeseen surprises or disappointments at the date of retirement, members should verify their length of full-time and part-time pensionable service with their departmental pay and benefits officer well in advance of a pending retirement date. Members are also encouraged to maintain their own employment records and documentation in the eventuality of a dispute or disagreement over superannuation benefit entitlements based on pensionable service.

Elective pensionable service and pension transfer agreements

The amount of a PSSA benefit entitlement is directly dependent on the PSSA participant’s length of pensionable service. The PSSA provides contributors with opportunities to increase pensionable service through elective service provisions and Pension Transfer Agreements.

Elective Service

The types of elective service for which a PSSA contributor could obtain credit include:

  • Prior Federal Public Service Not Included as Pensionable Service
  • Service with the Canadian Forces
  • Service with the Royal Canadian Mounted Police
  • War Service
  • Civilian War Service
  • Service as a Locally-Engaged Employee
  • Service with an International Organization
  • Service as a Member of Parliament
  • Outside Pensionable Employment which is “immediately prior” to employment with the Federal Public Service
  • Previous Periods of Leave without Pay Not Included as Pensionable Service

PSAC members are encouraged to consult with their designated departmental pay and benefits specialist if any of the foregoing represents an opportunity for elective service. A cost estimate can be obtained in advance to assist with assessing whether pursuing a past service election is a viable option. The Treasury Board Secretariat website also includes an elective service buyback estimator.

The cost of electing prior pensionable service is dependent on a number of factors including the type of elective service, the timing of the actual election and the method of payment for the elective service. In all cases involving a “late” election (i.e. more than one year subsequent to commencing contributions to the PSSA) the contributor is also required to pass a medical examination administered by Health Canada in order to validate an election.

Pension Transfer Agreements

Pension Transfer Agreements (PTAs) provide for portability of accrued pension benefits and service between the PSSA and other pension arrangements.

Treasury Board Secretariat website has a list of PTAs in force between the Government of Canada and other pension plan sponsors.

This list is updated frequently. Ordinarily the option to transfer pensionable service via an existing PTA expires after one year of contributor status under the PSSA. However, members retaining pensionable service entitlements with another pension arrangement where no PTA currently exists are encouraged to continue to monitor the Treasury Board Secretariat listing in the eventuality that a PTA is eventually concluded between the Government of Canada and the sponsor of the other pension arrangement. This would then provide the opportunity to transfer the prior pensionable service to the PSSA in an administratively efficient and cost effective manner.

Personal Documentation

Missing and inaccurate personal documentation will result in errors and delays in the processing of superannuation benefit entitlements.

PSSA Regulations identify the documentary evidence required to substantiate entitlement to various superannuation options and benefits.

To avoid any unnecessary hardship and inconvenience, PSAC members are encouraged to ensure that their personal file with the employing department or agency contains current personal documentation and information including:

  1. proof of age of contributor;
  2. accurate designation of beneficiary for Supplementary Death Benefit (Form PWGSC-TPSGC 2196 – “Naming or Substitution of Beneficiary”)
  3. names and detailed contact information of any survivor(s) and children;
  4. proof of age of any survivor(s) and children;
  5. documentation related to marital and family status:
    1. marriage certificate or evidentiary documentation to substantiate cohabitation in a relationship of a conjugal nature;
    2. divorce decree, separation papers, or death certificate of survivor;
    3. where there was a previous marriage, the marriage certificate of that marriage and the death certificate or divorce decree in respect of the former survivor;
    4. where the contributor is living apart from his/her survivor, written record of contributor's view relating to the circumstances;
    5. relevant documentation relating to children (e.g. proof of age, adoption papers, evidence of guardianship, evidence of continuous attendance at qualified educational institution, etc.);
    6. declaration of evidence relating to a change of name (other than by marriage) or reconciling any difference between name on personal documents and name on the appointing certificate.

Pre-retirement Transition Leave

Policy For interested employees within two years of eligibility for an immediate annuity, a Treasury Board of Canada policy exists which provides the opportunity for a gradual transition to retirement.

The Pre-retirement Transition Leave Policy allows employees in these situations to reduce the length of their workweek up to 40 per cent and maintain pension and benefit coverages (as well as required contributions/premiums) at pre-arrangement levels. However, please note that pre-retirement transition leave is subject to managerial approval and discretion, based on operational feasibility.

For more see: Preretirement Transition Leave Policy (Treasury Board)

What happens to benefits and insurance plan coverage in retirement