Frequently Asked Questions (FAQ)

1. What is an immediate annuity, a deferred annuity or an annual allowance under the Public Service Superannuation Act (PSSA)?
2. Are my contributions "locked-in" after two years?
3. How is the Public Service Pension Plan integrated with the Canada and Quebec Pension Plans?
4. What happens to my pension if I return to work after retiring?
5. Can I increase my Pensionable Service?
6. What are normal and late elections?
7. How do I make an election?
8. What is the difference between the Buyback Cost and the Lump Sum Cost?
9. What happens if I haven't finished paying for a period of prior service (Service Buyback) when I retire?
10. Does my retirement date affect the pension increases (indexing) I receive?
11. What is a transfer value?
12. What happens to my request once it is resubmitted for further review?

1.What is an immediate annuity, a deferred annuity or an annual allowance under the Public Service Superannuation Act (PSSA)?

An immediate annuity is a pension benefit that is payable immediately to contributors who retire at or after age 60 with at least two years of Pensionable Service, or to contributors who are age 55 or over with 30 years or more of Pensionable Service, or to contributors who retire from the Public Service due to a disability.

A deferred annuity is a pension benefit payable to contributors with at least two years of Pensionable Service who are not eligible for an immediate annuity when they leave the Public Service. A deferred annuity becomes payable when the contributor reaches age 60. Contributors who are entitled to a deferred annuity may request payment of an annual allowance at any time between ages 50 and 60, when they leave the Public Service.

An annual allowance is a reduced pension benefit payable as early as age 50 to contributors who retire with at least two years of Pensionable Service and are not eligible for an immediate annuity. An annual allowance is a pension that is reduced to take into account the early payment of benefits.

2.Are my contributions "locked-in" after two years?

If you leave the public service and have made contributions under the Public Service Superannuation Act (PSSA) for less than two years, you are entitled only to a return of contributions with interest. However, two years from the day on which you began to make contributions under the PSSA, your contributions will be "locked-in." You will no longer be entitled to a return of contributions and other pension options will become available to you.

3.How is the Public Service Pension Plan integrated with the Canada and Quebec Pension Plans?

The Public Service Pension Plan (PSPP) is integrated with the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP). Integration affects both contributions and benefits. This means, firstly, that you contribute to your PSPP at a reduced rate on your salary up to the maximum covered by CPP/QPP. Secondly, it means that your pension under the PSPP will also be reduced by a standard formula at age 65 (which is the normal age of eligibility for CPP/QPP benefits) or when you begin to draw CPP/QPP disability, at any age.

However, pensioners who receive CPP/QPP retirement pensions prior to age 65, in accordance with the flexible retirement provisions of the CPP/QPP, will not have their PSSA pension reduced until the month following their 65th birthday or upon entitlement to a CPP/QPP disability pension.

The formula for calculating the reduction is as follows:

reduction factor X number of years of pensionable service X the lower of:  a) average maximum pensionable earnings (AMPE) for the 5 years preceding your retirement and b) your average salary for the five consecutive years of your highest-paid service

• If your Year of Birth is 1942 or earlier - the reduction factor is .007
• If your Year of Birth is 1943 - the reduction factor is .00685
• If your Year of Birth is 1944 - the reduction factor is .0067
• If your Year of Birth is 1945 - the reduction factor is .00655
• If your Year of Birth is 1946 - the reduction factor is .0064
• If your Year of Birth is 1947 or later - the reduction factor is .00625

The AMPE is the average of the CPP earnings ceilings (year's maximum pensionable earnings) for the year of your retirement and the four preceding years.

For Example: The AMPE for the retirement year 2007 is $41,460 based on the CPP ceilings for:

2003 - $39,900
2004 - $40,500
2005 - $41,100
2006 - $42,100
2007 - $43,700

4.What happens to my pension if I return to work after retiring?

If you are re-employed in a position that does not require you to contribute to the Public Service Pension Plan, you can receive both your pension and also the salary of your new position.

If, however, you do become a contributor (this will depend on the nature and/or the length of your employment), your annuity or allowance will be stopped and, ordinarily, a new one based on the combined periods of service will be payable when you retire again.

Generally speaking, re-employment outside the public service has no effect on any of your entitlements under the Public Service Superannuation Act (PSSA), unless you retired on grounds of disability.

Re-employment as a contributor will also affect the indexing on your former entitlement. When you cease to be employed again, your indexing benefit will be based on the amount of your basic pension at that time. Your retirement date for determining the annual percentage increase will be the most recent retirement date.

The new combination of benefits - that is, the new annuity plus the increase based on the later year of retirement - could be lower than the previous total entitlement. If you are contemplating employment in a contributory position, you should consider carefully how this would affect your total pension benefits.

5.Can I increase my Pensionable Service?

Each year of continuing employment in the public service for which you make ordinary contributions is a year of Pensionable Service. In addition, if you had one or more periods of employment, either in the Public Service or with another employer, before becoming a contributor under the Public Service Superannuation Act (PSSA), you may be able to obtain credit for that service on an elective basis.

Such periods of prior service, if they can be counted under the PSSA, are known as Service Buyback (elective service). As the term implies, they are periods of service that you may choose to count as Pensionable Service. You may make an election at any time while you are employed in the Public Service and contributing to the Superannuation account. Costs and other requirements may vary, depending on when you make the election.

Your compensation advisor can provide you with an estimate of cost to purchase eligible prior Pensionable Service and any other requirements associated with electing for prior service.

6.What are normal and late elections?

If you make an election to buyback prior service within one year from the Date of Joining the Plan, this is a normal election. The salary used to calculate the cost of the election will be the salary on the Date of Joining the Plan. Any elections made more than one year from the Date of Joining the Plan is a late election. The salary used to calculate the cost of the election will be your salary on the date that you made the election.

7.How do I make an election?

If you are making a normal election, you must complete a special election form and send it to your compensation advisor before the normal election period expires. Action will be taken to start deductions, where necessary, and then the election will be forwarded to Public Service Pension Center - Mail Facility, Public Works and Government Services Canada, for verification. If you are making a late election, you must complete the election form and forward it within one month of the date on which you signed it.

8.What is the difference between the Buyback Cost and the Lump Sum Cost?

The Buyback Cost is more costly than the Lump Sum Cost because the monthly Buyback Cost includes a mortality charge to cover the cost of insurance and interest on the unpaid balance. In the event of your death, neither your estate nor your survivor have to make any more payments as the cost of this service is considered to be paid in full.

9.What happens if I haven't finished paying for a period of prior service (Service Buyback) when I retire?

If you retire on pension before paying all your instalments for prior service, your pension will be calculated to include all your Service Buyback, but the unpaid instalments will be deducted monthly from your pension benefit.

10.Does my retirement date affect the pension increases (indexing) I receive?

The Public Service Superannuation Act (PSSA) provides for annual increases, based on increases in the Consumer Price Index (CPI), on all pensions (including deferred annuities and survivor benefits). The increases are effective on January 1st of each year for those who have retired in the preceding year and all previous years.

The first indexing adjustment will be prorated to reflect the number of full months remaining in the year of termination of employment following the month in which you retired. In subsequent years, you will be entitled to the full increase.

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

Prorated Increase Table

Month of Termination	Prorated 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

11.What is a transfer value?

A transfer value is a lump sum amount representing the value of your future pension entitlement. If you leave the public service before you are age 50, then you may choose to receive your earned pension benefits as a transfer value rather than as a future monthly pension. Contributors have one year after leaving the Public Service to make such an option.

The transfer value amount is determined using an actuarial calculation based on the deferred annuity payable at age 60 and takes into account potential disability and survivor benefits, as well as indexing. The transfer value will be equivalent to the lump sum value of the earned pension based on actuarial assumptions.

The transfer value must be transferred to another registered pension plan, to a locked-in retirement savings vehicle that complies with the requirements of the federal Pension Benefits Standards Act, or, to a financial institution to purchase an annuity.

Where an individual's transfer value exceeds the limits for tax-free transfers, established by the Income Tax Act, the excess will be paid in cash to the former employee and taxed at that time.

You should direct all inquiries and requests for further information about the transfer value option to your compensation advisor, who has a comprehensive information package about this option.

12.What happens to my request once it is resubmitted for further review?

Public Service Pension Centre staff successfully field thousands of inquiries from plan members each year. There are occasions however, when a member may request to resubmit an inquiry for further review and/or clarification of an unfavourable decision. For additional information please click here.