PensionFacts
Purchasing leaves of absence
I
purchase a leave
f you took an approved leave of absence from a Public Service Pension
Plan employer, you may be able to increase your pensionable service by
purchasing the leave time for which you did not receive pay.
A leave of absence is an employer-approved absence from work. A
leave can be with full pay, partial pay or without pay. For pension purposes, a leave with full pay is treated as if you were not on leave at all.
During a leave of absence with partial pay, your contributions and
pensionable service are reduced in proportion to your salary. For example, if you receive half your regular pay during a leave, you accumulate
half the pensionable service.
During a leave without pay, you do not receive pensionable or contributory service. If you purchase a leave period you will receive full pensionable service, which will increase your future pension benefits.
of absence
Types of leave
Public Service
Pension Plan
Rules and costs to
Pregnancy (commonly known as maternity) leaves can only be purchased
by the birth mother. Parental/adoption leaves can be purchased by birth
mothers, fathers and adoptive parents.
Income Tax Regulations under the Canadian Income Tax Act limit the
maximum cumulative service you can purchase for pregnancy/maternity
and parental/adoption leaves completed after December 31, 1991 to three
years, with each term not to exceed one year from your child’s birth or
adoption date. You may be required to show your child’s birth certificate
or adoption papers to your employer.
There is an employer requirement to pay the employer portion of any
leave covered under the Employment Standards Act (ESA) if the member elects to purchase these leave types. These leave types include family
responsibility leave, bereavement leave, compassionate care leave (occurring on or after April 27, 2006), jury duty leave, pregnancy/maternity
leave and parental/adoption leave. Employers are not obligated to pay
their portion of a general leave other than those covered under the ESA if
the leave exceeds 30 days in length.
Income Tax Act rules allow you to purchase a maximum of five cumulative years for general leaves completed after December 31, 1991.
Periods of reduced pay
If you worked at less than your full assignment, you may be eligible to
purchase the difference between your normal, full assignment, and the
amount actually worked, as a period of reduced pay. Canada Revenue
Agency sets out the following rules:
• You must have been employed with the
employer for three years before the leave
Reduced pay periods longer than 12 months will
period and continue working for the employer
during the period of reduced pay.
be deemed to consist of a consecutive series of
• Only periods of reduced pay that begin after
12-month periods.
the three-year requirement is met are eligible.
• You must have worked at your full assignment at some time during
your employment with the employer before the leave period and have
not given up your rights to a full assignment.
Periods of reduced pay after March 31, 2008 are eligible. Periods will
be structured in one-year increments in order to have a clear deadline for
the member to purchase the service. Reduced pay periods longer than
12 months will be deemed to consist of a consecutive series of 12-month
periods. If you think this applies to you, contact your employer.
Purchasing a leave and deadlines
You may be able to purchase a leave of absence if you meet all of these
qualifications:
• You were an active member when you took the leave.
• You apply to purchase before you end your employment.
• The leave ended on or after April 1, 2002.
• You apply to purchase your leave within five years of the end of
the leave.
• You must purchase the entire leave period, unless the purchase makes
your service exceed 35 years in total or 12 months in a calendar year. In
such cases, you may be able to purchase a portion of the leave.
If you do not plan to return to work after the leave, you can purchase
the time providing you apply while still on the leave. Your employer must
certify your leave by signing the Purchase of Service Application.
Applying to purchase a leave
Get a Purchase of Service Application package, available from the plan’s
website, or from your employer.
You can also use the Purchase Cost Estimator on the website to prepare an unlimited number of estimates. This can help you to determine
how much it will cost to purchase the service and how long it will take
for your purchase to pay back.
pspp.pensionsbc.ca
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Once you have calculated the estimated cost, you can decide if you
want to apply to purchase the service, or not. If you choose to proceed with the application, follow the instructions on the Purchase of
Service Application.
Calculating the cost
The cost of a leave of absence is based on your current full-time equivalent salary, multiplied by the length of the leave period, multiplied by:
• the current employee contribution rate—this applies to pregnancy/
maternity, parental/adoption, compassionate care leaves, family
responsibility leave, bereavement leave and jury duty leave, or
• the current employee and employer contribution rates—this applies to
all leaves, other than those listed above.
When purchasing general leaves, you are responsible for the entire
cost, unless your employer is required to pay their portion under the
Employment Standards Act or has an agreement to pay a portion of
the cost.
Once we receive your Purchase of Service Application we will send you
a statement quoting the exact cost of the leave.
Paying for your purchase
When we have processed your Purchase of Service Application, we will
send you a Statement of Cost. You must pay for your purchase of service
with a single payment totaling the exact
If you transfer an RRSP from a financial institution,
amount owed. You can pay by:
• cash (cheque, money order or bank
confirm that the exact amount owed is transferred
draft),
• direct transfer from an existing rrsp
to the plan by the due date.
in your name, or
• a combination of cash and rrsp transfer.
It is your responsibility to ensure the correct amount reaches the plan
on time. If you transfer an rrsp from a financial institution, confirm that
the exact amount owed is transferred to the plan by the due date. Ensure
that service fees are not deducted from your purchase of service payment
as this will result in incomplete payment.
Tax implications
When you purchase service, the value of your pension increases, which
can affect your tax situation. For information on the tax implications
of purchasing service, please contact Canada Revenue Agency by phone
or visit their website at www.cra-arc.gc.ca. Also, read the PensionFacts
entitled Your pension and your RRSP room, available on the plan’s website.
You may wish to seek advice from a qualified financial planner prior to
making the decision to purchase service.
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PensionFacts is published for
the Public Service Pension
Plan by the Pension Corp­
oration. This publication is
based on the relevant plan
documents (statutes, regulations and rules). If there is
a discrepancy between this
publication and the plan
documents, the plan documents apply.
Public Service Pension Plan
PO Box 9460
Victoria, BC V8W 9V8
PSPP@pensionsbc.ca
Victoria: 250 953-3033
Vancouver: 604 660-5299
Toll-free: (BC) 1 800 665-3554
Fax: 250 953-0425
pspp.pensionsbc.ca
PSPP LOA 97-064 2010.06.10
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