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Public Service Pension Plan
Less Than Two Years of Pensionable Service
Terminating Employment with the Federal Public Service
Explore these links to see what pension benefits may be available to you upon termination:
- Pension Benefits
- Supplementary Death Benefit
- General Information
- Forms
- Client Concern Escalation Process
The Administrative Process
Upon leaving the federal public service, the Government of Canada Pension Centre (Pension Centre) will require certain documents and forms from you to start the termination process to determine your pension entitlement.
You must also remember to notify your employer of your intention of leaving as there may be other termination payments payable to you.
Pension Benefits
The public service pension plan offers different pension benefit options:
More information on these pension benefit options can be found on the Pensions section of the Treasury Board of Canada Secretariat Web site.
Description of Pension Benefits
Return of Contributions
If you terminate your employment with less than two years of pensionable service, a Return of Contributions is your only pension 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 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 an established pension entitlement under the public service pension plan 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 this last period of employment.
You have the option of having your Return of Contributions paid directly to you or transferring it to a Registered Retirement Savings Plan (RRSP) or a Registered Pension Plan (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 1: 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 pension plan, with the remainder being paid from the Retirement Compensation Arrangement (RCA). The RCA is a plan, which provides benefits that exceed the allowable limits for a registered pension plan. Any RCA contributions that form part of the Return of Contributions entitlement cannot be transferred to a RRSP or a RPP. This portion is payable in cash and tax is deducted at source.
Note 2: If you are entitled to a pension benefit based on 33 or more years of pensionable service under the Canadian Forces or Royal Canadian Mounted Police, please contact the Pension Centre as this may change your pension benefit option.
Important: If you leave the public service with less than two years of pensionable service and you receive a return of contributions, but you are later re-employed in the federal public service and you become a plan member again on or after January 1, 2013, you will be covered under the current pension plan terms. This means that if you are re-employed, you could be eligible to receive an unreduced pension at age 65 with at least two years of pensionable service, or at age 60 with 30 years of pensionable service.
Additional Options
Pension Transfer Agreement
If you have accepted, or are planning to accept a position with an employer outside the federal public service following your termination of employment, you may wish to consider transferring your pension credits to your new employer instead of receiving a Return of Contributions. This can be done if a Pension Transfer Agreement exists between the new employer and the Government of Canada (certain deadlines and restrictions apply). Further information can be found in the Pension Transfer Out section of the Pension Portability Package or by contacting the Pension Centre.
Important: If you transfer your public service pension credits to a new employer’s pension plan under the general portability rules or a Pension Transfer Agreement, but you are later re-employed in the public service and you become a plan member again on or after January 1, 2013, you will be covered under the current pension plan terms. This means that if you are re-employed, you could be eligible to receive an unreduced pension at age 65 with at least two years of pensionable service, or at age 60 with 30 years of pensionable service.
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. Further information can be obtained from the Service Buyback Package or by contacting the Pension Centre.
Important: If you transfer the pension accumulated under the public service pension plan to the Canadian Forces or the Royal Canadian Mounted Police pension plan but you are later re-employed in the public service and you become a plan member again on or after January 1, 2013, you will be covered under the current pension plan terms. This means that if you are re-employed, you could be eligible to receive an unreduced pension at age 65 with at least two years of pensionable service, or at age 60 with 30 years of pensionable service.
Note: If you terminate employment with more than two years of pensionable service, you may have more pension benefit options available. For more information, consult the Pension Entitlement Information Package – Plan Members with Two or More Years of Pensionable Service or contact the Pension Centre.
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.
Generally, your SDB coverage ceases at termination of employment. However, you could be eligible to continue coverage at the commercial rate if:
- You have two years of substantially continuous employment in the public service (without a break of more than three months);
- You have been a SDB participant for at least two years, including coverage as a member of the Canadian Forces (without a break of more than three months); or
- You were a SDB participant at the commercial rate immediately prior to your employment in the public service.
If you meet one of the above conditions and you are interested in the Supplementary Death Benefit coverage at the commercial rate, contact the Pension Centre for your coverage and rate information.
To apply for coverage under the SDB plan at commercial rates, you must complete the form Election to Continue as a Participant under the Supplementary Death Benefit Plan (SDBP) (PWGSC-TPSGC 2017) and return it with your annual contributions to the Government of Canada Pension Centre within one year before or within 30 days after ceasing to be employed.
If you make a valid choice to continue participation in the SDB plan, your coverage and contributions will be reduced by 10% per year effective the earlier of April 1st or October 1st following your 66th birthday. Your coverage will cease at age 75.
Note: Certain agencies and public service corporations do not participate in the Supplementary Death Benefit plan. Former employees of those agencies or corporations cannot participate in this plan. If you are unsure as to whether your employer participates in the Supplementary Death Benefit plan, please contact the Pension Centre.
General Information
Debts Due to the Crown
If your employer informs the Pension Centre that you owe a debt to the Crown, such as overpaid salaries and allowances, these amounts will be recovered from your Return of Contributions. You will be advised of such recovery in writing.
Deficiencies in Supplementary Death Benefit contributions
If you have any Supplementary Death Benefit contributions owing due to a period of leave without pay or for any other reason, they will be recovered from your Return of Contributions. You will be advised of such recovery in writing.
Re-employment in the Federal Public Service
Should you become re-employed as a plan member in the public service before your Return of Contributions is issued, you would no longer be entitled to the payment. If the Return of Contributions is issued after your re-employment date as a plan member, you would be required to repay it to the public service pension fund. The period of service for which the return was paid would remain to your credit as pensionable service.
Potential Service Buyback
If you have any prior pensionable service that may be purchased 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 pensionable 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.
Forms
Once you have reviewed the Pension Benefit Options Statement (PWGSC-TPSGC 2011E-PF) received from the Pension Centre and have made your pension choice, the Pension Benefit Options Statement must be returned to the Pension Centre as soon as possible for processing.