Vol. 141, No. 11 — May 30, 2007

Registration
SOR/2007-106 May 18, 2007

PUBLIC SERVICE SUPERANNUATION ACT
FINANCIAL ADMINISTRATION ACT

Regulations Amending the Public Service Superannuation Regulations

T.B. 833591 May 17, 2007

The Treasury Board, on the recommendation of the President of the Treasury Board, pursuant to paragraphs 42(1)(d) (see footnote a) and (xx) and 42.1(1)(m) to (s) (see footnote b) and subsection 42.1(2) (see footnote c) of the Public Service Superannuation Act and paragraph 7(2)(a) of the Financial Administration Act, hereby makes the annexed Regulations Amending the Public Service Superannuation Regulations.

REGULATIONS AMENDING THE PUBLIC SERVICE SUPERANNUATION REGULATIONS

AMENDMENTS

1. Section 53 of the Public Service Superannuation Regulations (see footnote 1) is replaced by the following:

53. The following are designated as operational service for the purposes of the definition "operational service" in section 24.1 of the Act and of sections 54, 57 and 58:

(a) any service by a person who is employed by the Correctional Service of Canada and whose principal place of work is other than

(b) any period of temporary absence of less than six months during which the person is employed in the public service other than in the Correctional Service of Canada, at the end of which the person returns to the service referred to in paragraph (a); and

(c) any period of temporary absence of two years or less during which the person is not employed in the service referred to in paragraph (a) but remains employed by the Correctional Service of Canada.

2. Section 54 of the Regulations is replaced by the following:

54. (1) A person is deemed to be employed in operational service while employed by the Correctional Service of Canada if the person

(a) was less than 35 years of age when the person first became employed in operational service on the condition that, if at that time the person was at least 30 years of age, the person had less than five years of pensionable service that is not operational service;

(b) was employed in operational service that is pensionable service for one or more periods totalling at least 10 years;

(c) has ceased to be employed in operational service; and

(d) has made an election to be so deemed before the 90th day after the later of

(2) Any period referred to in paragraph 53(b), and any portion of a period referred to in paragraph 53(c) that is in excess of six months, is not counted as operational service under paragraph (1)(b).

(3) The election takes effect on the day following the day on which the person ceases to be employed in operational service.

(4) The election is irrevocable and remains in effect until the day before the day on which the person again becomes employed in operational service or until the day on which the person ceases to be employed by the Correctional Service of Canada.

3. Subsection 55(1) of the Regulations is replaced by the following:

55. (1) Subject to subsection (2), the amount required to be contributed under subsection 24.4(1) of the Act is 0.62 per cent of the person's salary.

(1.1) The persons to whom subsection 24.4(1) of the Act does not apply are those who do not meet the conditions set out in subsection 54(1).

4. Section 55 of the Regulations is replaced by the following:

55. (1) Subject to subsection (3), the amount required to be contributed under subsection 24.4(1) of the Act is 0.62 per cent of the person's salary.

(2) The persons to whom subsection 24.4(1) of the Act does not apply are those who do not meet the conditions set out in subsection 54(1).

(3) The contribution that a person on leave without pay who does meet those conditions shall pay, in addition to any amount payable under section 7, is the following:

(a) in respect of the first three months of the leave, the amount referred to in subsection (1) that the person would have had to pay if the person had not been on leave; and

(b) in respect of the remainder of the leave, if the person has not made an election under subsection 5.3(1) of the Act,

5. Section 56 of the Regulations is repealed.

6. Section 57 of the Regulations is replaced by the following:

57. (1) In this section and in section 58, "actual operational service" means the service and the periods of absence designated as operational service under section 53 and "deemed operational service" means any period during which a person is deemed to be employed in operational service under section 54.

(2) Actual and deemed operational service that occurred on or after March 18, 1994 and in respect of which a person has made an election under subparagraph 6(1)(b)(iii) of the Act is pensionable service to the credit of the person, for the purposes of sections 24.2 and 24.3 of the Act, only if the person further elects, while employed in operational service, to contribute an additional amount determined in accordance with subsection (3), together with interest within the meaning of subsection 7(2) of the Act.

(3) The additional amount shall be equal to the amount that the person would have been required to contribute in respect of that service under section 55 as it read at the time the service occurred, based on the salary authorized to be paid to the person

(a) on the day on which the person most recently became employed in actual operational service, if the person makes the election within one year after that day; or

(b) in any other case, on the day on which the person makes the election.

(4) The additional amount and the interest shall be paid, at the person's option,

(a) in a lump sum, at the time the election is made; or

(b) by deduction from the person's salary or from any benefits payable to the person under the Act, in approximately equal instalments.

7. Section 58 of the Regulations is replaced by the following:

58. (1) In this section "actual operational service" means the service and the periods of absence designated as operational service under section 53 and "deemed operational service" means any period during which a person is deemed to be employed in operational service under section 54.

(2) The years of service referred to in subsection (3) shall only include service that is pensionable service to the person's credit.

(3) The benefit to which a person who exercises the option under section 24.2 of the Act is entitled, in respect of service referred to in each of the following paragraphs, is the following:

(a) if the person has at least 25 years of actual operational service, an immediate annuity;

(b) if the person has at least 20, but less than 25, years of actual operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is 25 minus the number of years of actual operational service, rounded to the nearest 1/10 of a year;

(c) if the person is at least 50 years of age when the person ceases to be employed in operational service and has at least 25 years of actual and deemed operational service, an immediate annuity;

(d) if the person is at least 50 years of age when the person ceases to be employed in operational service and has at least 20, but less than 25, years of actual and deemed operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is 25 minus the number of years of actual and deemed operational service, rounded to the nearest 1/10 of a year;

(e) if the person is at least 45, but less than 50, years of age when the person ceases to be employed in operational service and has at least 20 years of such service including at least 10, but less than 20, years of actual operational service, in addition to some deemed operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is the greater of

(f) if the person is at least 45, but less than 50, years of age when the person ceases to be employed in operational service and has at least 20, but less than 25, years of actual operational service, in addition to some deemed operational service, an annual allowance equal to an amount equal to the greater of

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of the deemed operational service under subsection 13(1) of the Act, and

B is the greater of

(g) if the person is at least 45, but less than 50, years of age when the person ceases to be employed in operational service, is entitled to an immediate annuity under paragraph (a) and has some deemed operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is 50 minus their age in years, rounded to the nearest 1/10 of a year, at the time the person exercises the option.

(4) A person who would be entitled to an immediate annuity under paragraph (3)(a) or (c) and who does not exercise the option referred to in subparagraph 13(1)(c)(ii) or section 13.01 or 24.2 of the Act within one year after ceasing to be employed in the public service is deemed to have exercised the option under the latter section.

8. Section 58 of the Regulations, as enacted by section 7 of these Regulations, is replaced by the following:

58. (1) The years of service referred to in subsection (2) shall only include service that is pensionable service to the person's credit.

(2) The benefit to which a person who exercises the option under section 24.2 of the Act is entitled, in respect of service referred to in each of the following paragraphs, is the following:

(a) if the person has at least 25 years of actual operational service, an immediate annuity;

(b) if the person has at least 20, but less than 25, years of actual operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is 25 minus the number of years of actual operational service, rounded to the nearest 1/10 of a year;

(c) if the person is at least 50 years of age when the person ceases to be employed in operational service and has at least 25 years of actual and deemed operational service, an immediate annuity;

(d) if the person is at least 50 years of age when the person ceases to be employed in operational service and has at least 20, but less than 25, years of actual and deemed operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is 25 minus the number of years of actual and deemed operational service, rounded to the nearest 1/10 of a year;

(e) if the person is at least 45, but less than 50, years of age when the person ceases to be employed in operational service and has at least 20 years of such service including at least 10, but less than 20, years of actual operational service, in addition to some deemed operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is the greater of

(f) if the person is at least 45, but less than 50, years of age when the person ceases to be employed in operational service and has at least 20, but less than 25, years of actual operational service, in addition to some deemed operational service, an annual allowance equal to an amount equal to the greater of

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of the deemed operational service under subsection 13(1) of the Act, and

B is the greater of

(g) if the person is at least 45, but less than 50, years of age when the person ceases to be employed in operational service, is entitled to an immediate annuity under paragraph (a) and has some deemed operational service, an annual allowance equal to an amount determined by the formula

A - (A × 5% × B)

where

A is the amount of the deferred annuity to which the person would be entitled in respect of that service under subsection 13(1) of the Act, and

B is 50 minus their age in years, rounded to the nearest 1/10 of a year, at the time the person exercises the option.

(3) A person who would be entitled to an immediate annuity under paragraph (2)(a) or (c) and who does not exercise the option referred to in subparagraph 13(1)(c)(ii) or section 13.01 or 24.2 of the Act within one year after ceasing to be employed in the public service is deemed to have exercised the option under the latter section.

COMING INTO FORCE

9. (1) These Regulations, except sections 2, 4 to 6 and 8, are deemed to have come into force on May 30, 2006.

(2) Sections 2, 4 to 6 and 8, come into force on the day on which these Regulations are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

This early retirement program for members of the public service who are employed in operational service was created in 1992 by amending provisions of the Public Service Superannuation Act. The program in question was enacted by the federal government since it recognized the unique needs of these employees, who often have shorter careers due to the more dangerous and physically demanding nature of their jobs. Regulations followed in March 1994 to provide the details of this early retirement scheme.

At the request of Correctional Service Canada (CSC), the Treasury Board Secretariat has undertaken a review of these provisions since they have been in existence since 1994. In light of the continuing stressful demands of their jobs, it is timely to address certain key elements of the early retirement scheme for members with operational service, namely the requirement of additional contributions and the access to certain benefit provisions.

Since the operating details of the early retirement scheme are provided in the Public Service Superannuation Regulations, there is no need to change the statutory authorities of this scheme. However, extensive changes are required to sections 53 to 58 of the Regulations.

Alternatives

Since its inception, the provisions of the pension plan for public servants have been specified in statute or regulations. Without a change in the enabling legislation, there is no alternative to the regulatory route.

Benefits and costs

Benefit improvements to this early retirement scheme will result in a one-time increase in past service liabilities of $1.38 million along with an increase in annual ongoing current service costs of $0.33 million. The change in employee contribution rates will result in an annual ongoing additional cost to the government of $6.0 million.

This proposal will continue to provide an important aid to human resources management for an employee group vital to public security.

Consultation

Amendments to the early retirement scheme for CSC employees with operational service were discussed at length with the employing department (CSC), who in turn consulted with the affected unions.

Compliance and enforcement

The normal legislative, regulatory and administrative compliance structures will apply, including internal audits, and responses to inquiries received from Members of Parliament, affected plan members and their representatives.

Contact

Joan M. Arnold
Director
Pension Legislation Development
Pensions and Benefits Sector
Treasury Board Secretariat
Ottawa, Ontario
K1A 0R5
Telephone: 613-952-3119

Footnote a

S.C. 2003, c. 22, subpar. 225(z.19)(xxxiii)

Footnote b

S.C. 1999, c. 34, s. 92(2)

Footnote c

S.C. 1992, c. 46, s. 22

Footnote 1

C.R.C., c. 1358; SOR/93-450

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