Your Online Pension and Insurance Benefits Statement Guide (2015)

Division of pension benefits

If your marriage or relationship of a conjugal nature breaks down, the pension benefits you have acquired during the course of that marriage or during the period of cohabitation in a relationship of a conjugal nature may, on application, be divided according to the terms of the Pension Benefits Division Act (PBDA). If you have had a pension benefits division under the PBDA, it is indicated on your statement and the annual pension amounts shown will have been adjusted accordingly.

Part-time service

If you have periods of part-time pensionable service, your benefits are adjusted to take into account your assigned hours of part-time work compared to the full-time hours of the position. Pensionable part-time service will be reflected in the amounts shown on your statement even if you are no longer in a part-time position.

Pension options

If you leave the public service, you may choose among a number of options, depending on your age and the years of pensionable service to your credit. These options are a return of contributions, an immediate annuity, a deferred annuity, an annual allowance, or a transfer value. You may also choose to transfer your service to a new employer's pension plan if your new employer has concluded a pension transfer agreement under the PSSA or if the new employer is interested in the possibility of entering into such an agreement.

More information on pension options is available online.

Return of contributions

If you have less than two years of pensionable service to your credit, generally you are only entitled to a return of contributions. A return of contributions is a reimbursement of all pension contributions that you have made to the public service pension plan plus quarterly interest.

Immediate annuity (annual amount)

An immediate annuity is a pension benefit that is immediately payable to contributors who retire at or after age 60 with at least two years of pensionable service or between age 55 and 60 with 30 or more years of pensionable service. Generally, the formula for calculating your pension is as follows:

Lifetime pension

Your annual lifetime pension payable from the public service pension plan is based on:

• Your average salary, that is, your salary during your five consecutive years of highest paid service. It includes any salary you earned after completing 35 years of service, if that salary is the highest. Your salary is converted to equivalent full-time salary for periods during which you worked less than full time; and
• Your years of pensionable service, that is, the complete or partial years of service credited to you at retirement–including the service buyback (whether or not it has been fully paid).

The following table illustrates how your annual lifetime pension is calculated.

Figure 1 - Text version

1.375 percent^{Footnote 1} multiplied by your average salary up to the Average Maximum Pensionable Earnings^{Footnote 2} multiplied by your years of pensionable service (maximum 35 years)

plus

2 percent multiplied by your average salary in excess of the Average Maximum Pensionable Earnings multiplied by your years of pensionable service (maximum 35 years)

Bridge benefit

If you retire before age 65, you will also receive a bridge benefit payable until age 65 or until you become entitled to CPP/QPP disability pension, whichever occurs first.

The following table illustrates how your bridge benefit is calculated.

Figure 2 - Text version

0.625 percent^{Footnote 3} multiplied by your average salary up to the Average Maximum Pensionable Earnings multiplied by your years of pensionable service (maximum 35 years)

Examples of how to calculate your pension are available online.

Deferred annuity (annual amount)

A deferred annuity is a pension benefit that is payable at age 60 to contributors who are not entitled to an immediate annuity at the time of their departure from the public service. A deferred annuity is calculated using the same formula as that described for an immediate annuity. If you choose this benefit, you may request an annual allowance (reduced pension) at any time after you reach age 50. If you become disabled before age 60, please see the section entitled "Retiring on grounds of disability."

Annual allowance (annual amount)

An annual allowance is a reduced pension payable as early as age 50 to contributors who are eligible for a deferred annuity. If you leave the public service and opt for an annual allowance, the deferred annuity that would be payable to you at age 60 is reduced to take into account the early payment of benefits. If you choose an annual allowance, the reduction is permanent.

The reduction applicable to your annual allowance is calculated using one of two formulas, depending on your age when you retire or when you opt for the annual allowance and on the years of service you have to your credit.

Reduction Formula 1

The amount of your deferred annuity is reduced by five per cent for every year, to the nearest one-tenth of a year, that you are under age 60 at the time the allowance is payable.

Reduction Formula 2

If you have 25 or more years of pensionable service and are at least 50 when you leave the public service, an annual allowance is calculated by determining the amount of your deferred annuity and reducing it by the greater of the following two amounts:

• five per cent for every year, to the nearest one-tenth of a year, that you are younger than 55 when you retire or when you opt for the annual allowance, whichever is later; or
• five per cent for every year, to the nearest one-tenth of a year, that your pensionable service is less than 30 years.

If Formula 1 results in a lesser reduction than Formula 2, your pension will automatically be calculated using Formula 1. In other words, your annual allowance would be determined using the more beneficial formula.

Examples of how to calculate your pension are available online.

Transfer value

If you leave the public service before you reach age 50 and have at least two years of pensionable service, you may take your earned pension benefits as a transfer value rather than as a future monthly pension. A pension transfer value is a lump sum equal to the present 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.

In accordance with the limits specified in the Income Tax Act (ITA), a transfer value may have three components:

1. Amount within tax limits

This is the amount that will be transferred on a tax-sheltered basis to a retirement pension plan or vehicle that you choose. The limit is calculated as follows: multiply the annual pension payable at age 65 (plus applicable indexing) by nine. This portion of the transfer value is not paid to you directly. Instead, it must be transferred to one of the following:

• another registered pension plan; or
• a locked-in Registered Retirement Savings Plan (RRSP) that complies with the requirements of the Pension Benefits Standards Act, 1985 (PBSA) (Canada) and is administered in accordance with the requirements of those provisions; or
• a financial institution to buy an annuity.

2. Amount in excess of tax limits

Where a portion of the transfer value exceeds the tax limits, the payment will be made directly to you and that amount becomes part of your taxable income. However, if you have sufficient contribution room in your RRSP, no tax will be deducted on the amount that you transfer to your RRSP. A T4A will be issued to you and your financial institution will provide you with a receipt for tax-filing purposes.

3. Amount under the Retirement Compensation Arrangement ( RCA)

If your average salary exceeds the PSSA maximum contributory threshold, the transfer value calculation will include an additional amount to the two amounts described above–the amount that 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 ITA. For a more detailed explanation of the RCA and how it may affect you, see "Average salary" in Part I of this Guide.

The amount of a transfer value can vary widely, depending on prevailing interest rates. When you know your termination date, you can obtain an estimate of the transfer value of your pension through the Pension Centre.

Transfer your service

If you leave the public service to work for another employer who has entered into a pension transfer agreement under the PSSA, it may be possible for you to transfer all or part of your public service pensionable service to your new employer's pension plan.

If your new employer does not have such an agreement but would be interested in discussing the possibility of entering into one, you should ask your new employer to contact the Pension Centre at the address below:

Government of Canada Pension Centre – Mail Facility
PTA and Insurance Team, Policy and Advisory Services Division
PO Box 8000
Matane QC G4W 4T6

Coordination of benefits with the Canada Pension Plan and the Quebec Pension Plan

When the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) came into effect on January 1, 1966, the federal government, like most Canadian employers offering a pension plan for their employees, decided to coordinate the new CPP/QPP with the public service pension plan. The government did this so that its employees would not have to set aside a greater proportion of their salary for retirement savings. It means that while you are employed in the public service, you and the federal government, like all Canadian workers and employers, must also contribute to the CPP (if you work outside Quebec) or the QPP (if you work in Quebec).

The coordination of the public service pension plan with the CPP/QPP affects not only your contributions but also your benefits. You contribute less to the pension plan under the public service pension plan on earnings up to the maximum covered by the CPP/QPP ($53,600 for 2015) and your public service pension is reduced to partially recognize benefits payable from CPP/QPP. This means that the public service pension benefits are reduced automatically by a standard formula once you reach age 65, which is the normal age of eligibility for CPP/QPP benefits, or immediately if you are entitled to a CPP/QPP disability pension.

Like other plans, the public service pension plan has begun to use the terms lifetime pension and bridge benefit to explain this coordination. Your statement shows the amount of public service pension reduction at age 65; however, the reduction amount can also be referred to as a bridge benefit amount.

The amount of reduction (or bridge benefit amount) shown on your statement is calculated as if you started receiving the CPP/QPP pension benefit on the date of your statement.

Information on the coordination of your pension plan with the CPP/QPP is available online.

Survivor allowance (annual amount)

Generally, once you have two or more years of pensionable service to your credit, your eligible survivors and children become entitled to an immediate allowance in the event of your death.

The term "survivor" refers to (a) a person who was married to the contributor (plan member) at the time of the contributor's death or (b) a person who, in accordance with subsection 25(4) of the PSSA, "establishes that he or she was cohabiting in a relationship of a conjugal nature with the contributor for at least one year immediately before the death of the contributor."

The following basic benefit formula is used to calculate the survivor allowance:

1 per cent multiplied by the number of years of pensionable service (maximum 35 years) multiplied by the average salary of the plan member.

A survivor allowance can be apportioned if you are survived by both a legal spouse and another eligible survivor with whom you were living in a relationship of a conjugal nature at the time of your death.

More information about survivor benefits is available online.

Allowance for each child (annual amount)

The term "child" refers to your natural child, your stepchild, or a child that you have adopted either legally or is financially dependent on you or your survivor. To be eligible for an allowance, your child must normally be under age 18. Children between 18 and 25 may receive allowances if they are enrolled in a school or other educational institution on a full-time basis and have attended continuously since their 18th birthday or the date of your death, whichever is later.

Eligible children are entitled to allowances equal to one-fifth of the survivor benefit. The combined amount of children's allowances payable can be no more than four-fifths of the survivor benefit. If there are more than four eligible children, the maximum combined amount payable may be divided among them.

If there is no eligible survivor, orphan children receive double the amount of a regular child's allowance. Each orphan will receive two-fifths of the survivor benefit, up to a maximum of eight-fifths.

Five-year minimum benefit

The public service pension plan provides for a minimum benefit equal to the payment of your pension for a period of five years (five-year minimum benefit). If you and your eligible survivors have not received, in total, pension payments equal to five times the amount of your annual pension entitlement, the balance in the form of a lump sum becomes payable to your designated beneficiary or, if none, to your estate.

The minimum benefit is therefore payable only when there are no longer any eligible survivors or children to whom pension payments can be made.

Your designated beneficiary is the beneficiary you have named under the Supplementary Death Benefit Plan.

Supplementary Death Benefit Plan

The Supplementary Death Benefit Plan is a decreasing term life insurance designed to protect your family during the years you are building up your pension. It is provided pursuant to Part II of the PSSA.

Upon your death, the plan provides a benefit equal to twice your annual salary. If that amount is not a multiple of $1,000, the benefit amount is adjusted to the next highest multiple of $1,000. The amount of the benefit automatically goes up as your salary increases.

Beginning at age 66, your basic supplementary death benefit coverage will decline by 10 per cent of the initial amount each year until your coverage reaches the greater of 1/3 of your annual salary or $10,000 if still employed, or $10,000 if retired.

Note: Some employers who participate in the public service pension plan do not participate in the Supplementary Death Benefit Plan. Refer to Part II of your statement, under "Protection for your survivors," to see if you are a plan member.

Designated beneficiary

As a participant in the Supplementary Death Benefit Plan, you may change your designated beneficiary at any time. It is important to update the designation of your beneficiary to ensure that your selection still corresponds to your wishes. To help us serve you quickly and efficiently, please advise the Pension Centre of any changes to the address of your designated beneficiary. If you have not named a beneficiary, the benefit will be paid to your estate or succession.

For information about your beneficiary, you are asked to contact the Pension Centre by phone or email. For security reasons, a pension expert will ask you to provide additional personal information prior to disclosing the name of your beneficiary. All email inquiries will be followed up with a telephone call from a pension expert. Please do not include detailed personal information, such as your Personal Record Identifier or Social Insurance Number, in your email.

If you want to change your designated beneficiary, you must fill out a form entitled "Naming or Substitution of a Beneficiary" and forward it to:

Government of Canada Pension Centre – Mail Service
50 Dion Blvd
PO Box 8000
Matane QC G4W 4T6

Value to plan members

Your employer assumes the entire cost of the benefits provided under the Extended Health Provision as well as the cost of Level I hospital benefits. Employee contributions are not required unless you choose Level II or Level III hospital benefits coverage.

Under the Plan, you are reimbursed 80 per cent of your eligible expenses or of the stated maximums, if applicable. The exception being for emergency benefits while travelling and emergency travel assistance services, which are reimbursed at 100 per cent.

Hospital benefits are reimbursed at 100 per cent up to the specified limit.

If you and your spouse or common law partner are both members in your own right of the PSHCP and both elect family coverage, you may coordinate your benefits.

Further information is available at:

• Canada.ca/pension-benefits
• The Federal PSHCP Administration Authority's website
• Sun Life Financial website – Sun Life Member Services

Value to plan members

Your employer assumes the entire cost of the benefits provided under the PSDCP. Employee contributions are not required.

You are responsible for an annual deductible amount of $25 per person or $50 per family. After the deductible is satisfied, you are reimbursed for a percentage of the cost of the eligible expenses up to the amounts specified in the previous year dental association fee guides to a maximum of $1,700 per calendar year. Preventive (cleanings, examinations) and basic dental services (fillings, oral surgeries and scaling) are reimbursed at 90%. Major dental services such as crowns, dentures and bridges are reimbursed at 50%.

The PSDCP also reimburses eligible orthodontic services at 50% to a lifetime maximum of $2,500.

If you and your spouse or common law partner are both members in your own right of the PSDCP and both elect family coverage, you may coordinate benefits.

Further information is available at:

• Canada.ca/pension-benefits
• Great-West Life Assurance Company website

Value to plan members

Your employer pays 85 per cent of your disability insurance premiums and you pay 15 per cent.

If you become disabled and the insurer approves your claim, your monthly benefit will equal 70 per cent of your insured annual salary. Benefits continue for as long as you meet the definition of total disability under the plan or until you reach age 65. Benefits are increased annually to reflect increases in the cost of living to an annual maximum of three per cent.

Your DI benefits will be reduced if you are eligible for certain other income. For example, your benefits will be reduced if you are entitled to a public service pension, a disability pension under the CPP/QPP, benefits paid for injuries incurred at the workplace, or disability benefits under another group insurance plan.

Disability benefits are taxable.

Further information is available at:

• Canada.ca/pension-benefits

Value to plan members

Public Service Health Care Plan

As a retired member, you and your eligible dependants may be eligible for coverage under the PSHCP for extended health care benefits and three levels of hospital benefits. To be eligible for coverage as a retired member under the PSHCP, you must be in receipt of an ongoing pension benefit under one of the Acts listed in Schedule IV of the PSHCP Directive and, effective April 1, 2015, you must also have at least six years of pensionable service with the federal government. Some exceptions apply.

For coverage, you will pay contribution rates established for pensioners. Your rates will vary depending upon the level of coverage you choose (single or family). The government will continue to share in the costs of your benefits.

Once you indicate in writing to the Pension Centre that you wish to continue your coverage after retirement, contributions for PSHCP will be deducted from your pension.

Further information is available at:

• Canada.ca/pension-benefits
• The Federal PSHCP Administration Authority's website
• Sun Life Web site – Sun Life Member Services

Pensioners' Dental Services Plan

The PDSP is a voluntary and contributory plan that is separate from the Public Service Dental Care Plan (PSDCP) for employees. As an eligible retired member, you and your eligible family members can be covered for similar benefits to those provided under the PSDCP. However, you will contribute for your coverage at established rates. Your rates will vary depending upon the level of coverage you choose (Category I – Pensioner Only; Category II – Pensioner and One Eligible Dependant; Category III – Pensioner and More Than One Eligible Dependant). The government shares in the costs of the PDSP.

Retired members who meet specific criteria can apply for the PDSP. Your appropriate Pension Office will assist you with enrolment. Contributions for the PDSP are deducted from your pension.

An individual cannot be covered under the PDSP as both a member and a covered family member. Therefore, if you and your spouse or common law partner are both members in your own right of the PDSP there is no coordination of benefits between the two.

Further information is available at:

• Canada.ca/pension-benefits
• PDSP Member Service website