Pension transfer agreements: Transfer in

A Pension transfer agreement (PTA) In permits you to increase your pension assets under the Public Service Superannuation Act (PSSA) by transferring the amount available for transfer from your former employer's pension plan to the PSSA.

On this page

• Making the decision to transfer in
• The administrative process
• Related link

Making the decision to transfer in

In this section

• Criteria
• Issues to consider
• Additional information

Criteria

Time limits associated with pension transfers

Usually you must begin the pension transfer process by submitting a request for estimate within one year from the date you receive written notification of your contributory status under the Public Service Superannuation Act (PSSA) or within one year from the date a Pension transfer agreement: Glossary (PTA) is signed; whichever is later. A pension transfer estimate can only be provided if a PTA exists.

Eligibility

The following criteria determine whether you are eligible for a pension transfer:

• You are employed and a contributor under the PSSA when you make the estimate and transfer request (indeterminate employment status is not a requirement);
• You were subject to your former employer's pension plan; have ceased to be employed with your former employer and have not received a return of contributions or any other benefit in respect of the service to be transferred;
• You sign and forward your request for estimate form within the prescribed time limits.

There is no age restriction applicable to the PTA provision. However, since the actuarial calculation for a pension transfer takes your age into consideration, valid proof of age is required before the funds will be transferred. If there is no documentation on file, Government of Canada Pension Centre will request a copy of your birth or baptismal certificate.

Issues to consider

You should not assume that the amount of funds available from your former employer will be sufficient to credit you, under the Public Service Superannuation Act (PSSA), with all of the pensionable service accumulated with your former employer. There may be differences between the pension benefits provided by each plan and also differences in the actuarial assumptions each plan uses in the pension transfer calculation.

If this option exists for you, contact the pension centre for federal employees and they will provide you with an estimate of cost for prior service (PWGSC-TPSGC 2057) for the same period of service you are considering transferring under a pension transfer agreement. Consideration must also be given to factors such as inflation protection (pension indexing: Glossaries), age and service thresholds for benefit entitlement, survivor benefit provisions, health and dental care plans, and projected career and retirement date expectations. There may also be costs and medical requirements associated with the purchase of any service not credited by the transfer.

A pension transfer agreement (PTA) is not always the most cost effective way to have your pensionable service credits from your former employer's pension plan recognized under the PSSA. You may be eligible through Service buyback package to purchase the pensionable service with your former employer through the elective service provision of the PSSA. If this option exists for you, pension centre for federal employees will provide you with an Estimate of Cost for Prior Service (PWGSC-TPSGC 2057) for the same period of service you are considering transferring under a PTA. Once you receive your pension transfer estimate, you should take the opportunity to compare the relevant issues surrounding both portability options in order to determine which one best suits your personal needs.

You may also want to consider how long you intend to remain in the public service. If you choose to transfer your service under the terms of a PTA, those funds are locked-in regardless of how long you remain in the federal public service. If you choose to purchase the service under the elective service provision and voluntarily leave the public service before reaching two years of continuous service, your only entitlement will be a return of your contributions. If you would like more information on this issue, contact pension centre for federal employees.

Additional information

Limits on the service to be transferred

Under the Public Service Superannuation Act (PSSA), the maximum pensionable service credit allowed is 35 years. This includes pensionable service that remains to your credit under the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act. We cannot accept service from an outside pension plan if the addition of such service will exceed the 35-year limit under the PSSA.

Excess amounts

When the amount available for transfer from your former employer's pension plan is greater than the federal transfer amount, only the federal transfer amount will be transferred. Since each pension plan deals with excesses differently, you must contact your former employer's pension plan administrator for information on how excess amounts are handled.

Service not credited by the pension transfer agreement

After the funds have been received, the Government of Canada pension centre will issue an Elective Service Notice, confirming the amount received and the service purchased by the transfer. If the amount transferred was insufficient to purchase all of the pensionable service credit you had with your former employer's pension plan, the Pension Centre will also provide you with an estimate of cost for Elective Pensionable Service form. This form will identify the pensionable service credit not purchased by the transfer, as well as the cash cost and monthly installments payment associated with purchasing this. These figures are valid for six months from the date the estimate of cost for Elective Pensionable Service form is issued.

Note: You may opt to buy back all or part of the period of pensionable service credit not purchased by the transfer. A detailed estimate for a portion of this period can be provided to you, by the pension centre for federal employees, upon request.

The cash cost to purchase the remaining pensionable service credit is the difference between the federal transfer amount (defined benefit: Glossary or defined contribution: Glossary) required to purchase all the service and the amount the employer transferred. In the case of service buyback for part of the service, the cost is proportionate to the amount of service you are buying back. You can pay this amount in a lump sum, by installments or a combination. The installments payment method includes a life insurance/mortality charge as well as interest on the unpaid balance. Therefore, its total cost over the repayment period is greater than paying in full with a lump sum amount. Both methods of payment and their total costs should be compared before selecting a payment option.

If you decide to buy back your service by making a lump sum payment for the whole amount, or a portion of the amount (with monthly salary deductions for the balance), your cheque or money order should be made payable to the "Receiver General for Canada" and sent along with your Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only) to the pension centre for federal employees.

If you transfer funds from a Registered Retirement Savings Plan (RRSP) to buy back service, you must complete Area 1 of the Canada Revenue Agency T2033 form titled Direct transfer under subsection 146.3(14.1) or paragraph 146(16)(a) or 146.3(2)(e) and forward it along with the Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only) to the pension centre for federal employees at the address indicated on the form. When completing the T2033 form, please provide your current address, the RRSP account number and select "in cash".

You can refer to Tax implications for information on the tax deductibility of service buyback payments.

If you do not purchase the remaining service within the six-month period, you will be able to do so at a later date as long as you are an active contributor under the PSSA. However, the cost to purchase this service will be determined using the same methodology as was used to calculate your pension transfer and it will be recalculated as of the date you sign your Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only). Therefore the cost will likely be higher.

Medical requirements associated with a pension transfer agreement

A medical examination is not required for a lump sum transfer of funds to the PSSA under a Pension Transfer Agreement (PTA). If you buy back the balance of service, which was not purchased by the transfer, and pay in full for this service with a lump sum, a medical is not required.

However, if you choose to pay for this balance of service credit by monthly installments, you will be required to undergo and pass a medical examination. You are responsible for any medical expenses incurred as a result of this requirement. The Pension Centre will provide you with the necessary forms to complete your medical examination. Detailed instructions can be found in the Completing and forwarding the medical forms page. It is your responsibility to undergo the medical examination and the Pension Centre will not issue any reminders of this requirement.

The medical examination must take place no earlier than six months before or one year after the date of forwarding the Service buyback form (PWGSC-TPSGC 3006) (available on Government of Canada network only). If your medical examination is undergone outside these parameters your service buyback will be declared invalid. If you undergo your medical examination but do not pass, you will be provided with three options. They are as follows:

• You may remit payment for the entire outstanding balance within 30 days of being notified of the amount. Any service not paid for prior to this deadline will not be credited to you under the PSSA.
• You may request, within 30 days of being notified of the outstanding balance, that any amounts already remitted (lump sums and/or monthly installments) be applied against the cost of the service buyback. You will receive credit for the portion of service purchased by all amounts received prior to this 30-day deadline.
• Otherwise, any payments made in respect of the service buyback will be returned without interest. Only the service purchased by the transfer of funds from your former employer will remain to your credit and your service buyback for the remaining balance will be declared invalid.

You may receive a conditional Service Buyback Notice (PWGSC-TPSGC 2097) which will confirm the cost and the amount of service to be credited before we receive the interpretation of the medical examination from Health Canada. This Service Buyback Notice does not mean that a medical examination is no longer required. Until we receive confirmation from Health Canada that the medical requirement has been met, the service purchased will not show to your credit on the Compensation Web Applications or on your Pension and Insurance Benefits Statement, and a benefit cannot be paid in respect of this service.

Tax implications surrounding a pension transfer agreement

In order to comply with the provisions of the Income Tax Act (ITA), when you opt for a pension transfer of service, which occurred after December 31, 1989, a past service pension adjustment (PSPA) must be calculated and must be reported to the Canada Revenue Agency (CRA). This PSPA must be approved by the CRA before the transfer can be finalized. The PSPA approval applies to the entire period of pensionable service, under your former employer's plan.

PSPA approval depends on the RRSP room you have available. If you've made maximum RRSP contributions over the years, you may be short of room. The CRA will allow a maximum of $8,000 in excess contributions to an RRSP as a result of a PSPA. In this case, you would be unable to make additional RRSP contributions until earned RRSP room balances out the negative $8,000.

The CRA will allow you to withdraw RRSP assets to make room for this PSPA amount. The CRA will contact you if this applies to your situation. For additional information regarding your situation please contact your local Canada Revenue Agency office. You may also consult their Tax Information Phone Service (T.I.P.S.) at 1-800-267-6999.

If you decide to buy back prior service, either in lieu of transferring service credits under the terms of a PTA or in addition to service credited by the PTA, it is important to refer to the Service buyback package.

The administrative process

In this section

• Estimates
• The transfer process
• Roles and responsibilities
• Process overview timelines
• Possible reasons your request may be delayed

Estimates

Why is an estimate important

The estimate stage is critical because it provides you with information to assist in making the decision whether to proceed with a pension transfer. The existence of an agreement between employers does not necessarily mean that a transfer of your pension credits will be advantageous to you. Therefore, along with your pension transfer estimate, Government of Canada Pension Centre will provide you with an estimate of your Public Service Superannuation Act (PSSA) pension based on various scenarios. You should contact your former employer for information regarding your pension benefits under their plan.

How do I request an estimate

Contact the pension centre for federal employees in order to obtain the Appendix A/A1—Request for transfer estimate - depending on the terms of the agreement.

When you receive the appropriate appendix, complete and sign the required part of the form and send it to your former employer. If your former plan administrator was the "Commission administrative des régimes de retraite et d'assurances" (CARRA) or "l'Université du Québec", complete and sign the personal information data in the middle section of the appendix and send the original copy to your former plan administrator and a copy to the pension centre for federal employees. This "Employee's authorization" will give the employer permission to provide the Government of Canada Pension Centre with the information required to calculate your pension transfer estimate. The form must be received by your former employer within one year from the date you were notified in writing of your contributory status under the PSSA or within one year from the date a PTA is signed, whichever is later. Your former employer will complete Part III and return the form to the Government of Canada Pension Centre. It is recommended that you keep a photocopy of the appendix for your records.

The estimate

Based upon the information received from your former employer, the Government of Canada Pension Centre will prepare and send you the Appendix B/B1—Request for transfer of service credits - along with a letter, which will provide additional information. This appendix represents your pension transfer estimate and is to be considered an estimate only.

The purpose of a pension transfer estimate is to provide individuals with a sense of what monies are required and are available as of a certain point in time and how much service those funds will purchase under the PSSA. However, these are only estimates. Should you choose to continue with the transfer, you must complete the relevant portions of the Appendix B/B1 and return it to the pension centre for federal employees prior to the deadline indicated at the bottom of the form. Doing so constitutes your formal request for transfer. Once a formal request for transfer is made, the provisions of the PTA stipulate that the pension value must be recalculated as of the date of receipt of the formal request for transfer, that is, the Appendix B/B1. In most cases, if not all, it is expected that the final amounts will change as time passes because the calculation of the pension valuation takes into account, among other factors, the actual age of the employee and interest.

Pension transfer amounts are determined on an actuarial basis. The amount to be transferred will be the lesser of:

1. the amount of pension funds available for transfer as calculated by the former employer (employer transfer amount: Glossary)

   or

2. the amount required to establish the accrued period(s) of pensionable service with the former employer as pensionable service under the Public Service Pension Plan. (federal transfer amount - defined benefit: Glossary or defined contribution: Glossary)

The amount available for transfer from your former employer (employer transfer amount) is compared to the federal transfer amount required and the equivalent ratio is applied to your pensionable service credits with your former employer. In other words, if the employer transfer amount is two thirds of the federal transfer amount, the transfer process will purchase 2/3 of your pensionable service credits. For more detailed information on the contents of the estimate, refer to How the transfer amounts are determined.

Transfer process

After you have reviewed the Appendix B/B1 - Request for transfer of service credits form - and carefully considered all the relevant issues surrounding your pension portability option(s), you must return the form to the pension centre for federal employees clearly indicating your decision by checking off the appropriate section. If you proceed with the transfer, you will cease to be entitled to any benefits under your former employer's pension plan.

It is important to note that there is a time limit to make your decision and return the Appendix B/B1—Request for transfer of service credits form - to the pension centre for federal employees. If you do not return this appendix within the deadlines indicated on the form, you risk losing the opportunity to transfer. Delays may result in significant changes to the federal and/or employer transfer amounts. These changes are a direct result of variations in actuarial calculation factors and the accumulation of interest.

If you proceed with the transfer, the pension centre for federal employees will advise your former employer of your decision, provide an updated federal transfer amount and make a request for payment. Your former employer will then forward the lesser of the employer transfer amount or the federal transfer amount.

Upon receipt of the payment, the pension centre for federal employees will provide you with formal notification of the service purchased by the transfer.

Roles and responsibilities

The process of transferring your pension from your former employer's pension plan to the public service pension plan is a team effort. The team consists of you, the Government of Canada Pension Centre, your current Public Service employer, your compensation advisor, your former pension plan administrator and the Canada Revenue Agency (CRA).

The length of time required to process your request will vary according to your circumstances and the time associated with the receipt of information required to process your request. This document provides you with an overview of the steps involved during this process as well as the estimated time required.