Regulations Amending the Public Service Superannuation Regulations: SOR/2021-136
Canada Gazette, Part II, Volume 155, Number 13
SOR/2021-136 June 10, 2021
PUBLIC SERVICE SUPERANNUATION ACT
P.C. 2021-533 June 10, 2021
His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the President of the Treasury Board, pursuant to subsections 42(1) footnote a and 42.1(1) footnote b of the Public Service Superannuation Act footnote c, makes the annexed Regulations Amending the Public Service Superannuation Regulations.
Regulations Amending the Public Service Superannuation Regulations
1 (1) Subsection 7(1) of the Public Service Superannuation Regulations footnote 1 is replaced by the following:
7 (1) Subject to subsection 5.3(2) of the Act and subsections (2) and (3), a contributor who is absent from the public service on leave without pay is required to contribute to the Public Service Pension Fund
- (a) in respect of the first three consecutive months of their period of absence, the amount that they would have been required to contribute under section 5 of the Act had they not been absent; and
- (b) in respect of the remainder of their period of absence, twice the amount that they would have been required to contribute under section 5 of the Act had they not been absent.
(2) The portion of subsection 7(2) of the Regulations before paragraph (a) is replaced by the following:
(2) Subject to subsection 5.3(2) of the Act, a contributor who is absent from the public service on leave without pay, is required in the following cases, to contribute to the Public Service Pension Fund, in respect of the period of that absence, the amount that they would have been required to contribute under section 5 of the Act had they not been absent
(3) Subparagraph 7(2)(a)(iii) of the Regulations is replaced by the following:
- (iii) for the purpose of providing care or support to a person, if the leave is taken during a period for which an unemployment benefit is payable to the contributor under section 23.1, 23.2 or 23.3 of the Employment Insurance Act,
(4) Paragraph 7(2)(b) of the English version of the Regulations is replaced by the following:
- (b) is during that absence, an employee engaged locally outside Canada by Her Majesty in right of Canada,
(5) Subsection 7(2) of the Regulations is amended by striking out “or” at the end of paragraph (a) and by replacing the portion after paragraph (b) with the following:
- (c) the leave that is a leave provided for under Division VII of Part III of the Canada Labour Code — if the contributor is entitled to that leave under that Act — and the deputy head of the employing department certifies to the Minister that the leave is one provided for under that Division; or
- (d) the leave is taken because of a pregnancy — including any leave without pay taken during a period for which an unemployment benefit may be payable to the contributor under section 22 of the Employment Insurance Act — and the deputy head of the employing department certifies to the Minister that the leave is taken for that reason.
(6) Subsection 7(3) of the Regulations is replaced by the following:
(3) Subject to subsection 5.3(2) of the Act, when a contributor is absent from the public service, on leave without pay, in order to care for their newborn child or a child placed with them for the purpose of adoption, the deputy head of the employing department certifies to the Minister that the contributor is on leave without pay for that reason and the leave is taken during a period for which an unemployment benefit may be payable to them under section 23 of the Employment Insurance Act or a benefit may be payable to them under a provincial law for the same reasons as those for which an unemployment benefit might be payable to them under that section, the contributor is required to contribute to the Public Service Pension Fund in respect of any portion of the period of absence that falls within the 78-week period following the birth or the adoption of the child the amount that the contributor would have had to contribute under section 5 of the Act had they not been absent.
2 Paragraph 7.2(1)(a) of the Regulations is replaced by the following:
- (a) in a lump sum, within 30 days after the contributor's return to duty in a position in respect of which the contributor is required under section 5 of the Act to contribute to the Public Service Pension Fund and in a capacity other than on leave without pay from another position in the public service; or
3 Paragraph 27(10)(d) of the Regulations is replaced by the following:
- (d) ceases to contribute to the Public Service Pension Fund under section 5 of the Act.
4 (1) A contributor may revoke an election made under subsection 5.3(1) of the Public Service Superannuation Act if the election was made before the day on which these Regulations come into force and the leave without pay for which the election was made began before that day and ends on or after that day.
(2) The revocation must be made in writing and the document evidencing it must be sent to the Minister.
(3) The revocation must be made within six months after the day on which these Regulations come into force and applies to the entire period in respect of which the election was made.
Coming into Force
5 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Public Service Superannuation Act permits plan members to accrue pension credits during periods of employer-approved leave without pay. Pension contributions for the leave period are either calculated at a single or double rate. A single rate requires an employee to pay their share of the contributions. A double rate requires the employee to pay their share and the employer's share. Generally, a double rate is required after the first three months of leave without pay. However, the Public Service Superannuation Regulations (the Regulations) allow for certain exemptions to this rule based on the purpose for the leave.
In 2017, the Employment Insurance Act and the Canada Labour Code expanded leave without pay for caregiving purposes by offering parental leave of up to 63 weeks and leave for care of critically ill family members ranging between 15 to 35 weeks. These changes sought to encourage further female participation in the economy by acknowledging that responsibility for caregiving limits participation rates.
While the Regulations exempted parental leave from the double rate requirement, they only exempted the 52-week period following the birth or adoption of the child. Further, the Regulations did not yet have specific exemptions for caregiving leave associated with Employment Insurance compassionate care benefits, family caregiver benefits for children and/or family caregiver benefits. The misalignment between the new types and durations of leave introduced in 2017 and the Regulations created conditions wherein federal public servants were not afforded the same treatment as their counterparts in federally regulated industries. Collective agreements and terms of conditions of employment for federal public servants have now begun to recognize and reflect the 2017 leave provisions. Lastly, recent academic analyses (YWCA Canada and the Institute for Gender and the Economy at the University of Toronto's Rotman School of Management [PDF] and University of British Columbia) have highlighted the gendered impact of the COVID-19 pandemic, and suggested that future policy approaches should better facilitate caregiving leave. The pandemic has brought to light the historic devaluation of caregiving and is demonstrating the economic necessity of progressive leave policies.
In view of these issues, Budget 2021 committed to modernize the pension treatment for periods of leave without pay taken by employees covered by the Public Service Superannuation Act beginning in fiscal year 2021–2022.
- Align the Regulations with the Canada Labour Code and the Employment Insurance Act;
- Keep pace with the recognition of new types and durations of leave in terms and conditions of employment and collective agreements; and
- Alleviate the gendered impact of the present policy.
The amendments to the Regulations extend a single rate pension contribution for Public Service Superannuation Act contributors on leave for caregiving purposes.
For contributors covered under the Canada Labour Code, the amendments incorporate Division VII of Part III of the Canada Labour Code by reference. This incorporation by reference has the effect of aligning the leave without pay provisions in the Regulations with relevant sections of the Canada Labour Code that concern maternity-related leave and other types of leave as they relate to the employee and employer pension contributions that are required to cover the leave period.
For contributors to whom the Canada Labour Code does not apply, the amendments extend the single contribution rate for the purposes of
- fulfilling parental responsibilities within a 78-week period following the birth or adoption of a child of the contributor;
- providing compassionate care or support to a family member who has a serious medical condition with a significant risk of death;
- caring or supporting a critically ill child; and
- caring or supporting a critically ill adult.
The Regulations are also amended to allow contributors who had previously chosen not to count their leave period in the transition period as pensionable service the opportunity to revoke that choice. Lastly, the amendments incorporate gender-neutral language, replace references to the Superannuation Account with the Public Service Pension Fund, as well as omit obsolete references to section 65 of the Public Service Superannuation Act, which has since been repealed.
The Public Service Pension Advisory Committee, comprised of employer, employee and retiree representatives was consulted on this initiative. The Committee unanimously supported revisions to the Regulations to align them with the Canada Labour Code and extend the circumstances under which members of the public service pension plan repay pension contributions at a single rate.
An exemption from publication in Canada Gazette, Part I, was granted because the amendments are administrative and relieving in nature.
Modern treaty obligations and Indigenous engagement and consultation
Under the Public Service Superannuation Act, employees of the Government of Nunavut, the Government of Yukon, and the Government of the Northwest Territories are considered part of the federal public administration, and therefore part of its public service. In this limited sense, the amendments to the Regulations apply or take effect in one or more modern treaty areas. However, the initiative has no impact on land and resource management, it is not in conflict with Indigenous self-governments located in the implicated geographic area, nor does it require the additional employment of federal officials in a geographic area subject to a modern treaty. Also, it does not involve the procurement of goods, services, real property, or construction in a geographic area subject to a modern treaty. Land claim organizations or Indigenous self-governments are not eligible recipients for any program and service funding, or other resources associated with the implementation of the amendments to the Regulations. Accordingly, the amendments do not require Canada to fulfill any consultation/engagement requirements described in a modern treaty, nor does it create other federal modern treaty responsibilities.
There is no alternate instrument to address the issue. The matter is explicitly within the purview of the Regulations.
The incorporation-by-reference approach for contributors entitled to leave under the Canada Labour Code recognizes the potential for leave policies to further evolve, and the desirability for the pension treatment of those leave periods to align with any obligations set by the federal labour standard. This approach is not feasible for the core public administration because of the different manner by which the employees are entitled to the leave.
Benefits and costs
The Office of the Chief Actuary (OCA) was consulted to assess the financial impact of the proposed changes. The amendments produce a neutral impact because employee contributions are forecast on the basis that all employees are “active contributors.” In other words, employees always pay their share of the pension contribution. This means that when an employee returns from a period of leave without pay that requires them to pay a double rate, that additional portion becomes a gain on the Public Service Pension Fund. The cost associated with the regulatory amendment is the result of a loss of some of these gains.
Estimates of these costs are the difference between the amount paid by the employee and the amount that would have been paid under single rate contributions using 2019 rates. The costs associated with the 18-month parental leave were prepared as a range to acknowledge that this change might incentivize more contributors to take the longer leave option. For compassionate caregiving, it was assumed that there would be no change in length of leave because this type of leave is determined by events (e.g. length of illness) rather than personal choice.
The expected range of cost is estimated at between $5 million and $15 million per year for extended parental leave. For this analysis, the upper range of $15 million per year was used. With approximately 3 700 participants in a year, this is an equivalent average transfer in contribution of about $4,000 per year per participant. Given the lag time between a participant taking their leave and paying their contributions, no costs are anticipated in the first year, and only half of this cost is expected in year two.
Similarly, approximately $1 million per year for compassionate caregiving and its related leaves has been estimated. Given around 515 participants in a year, there is an equivalent average contribution transfer of around $1,900 per year per participant. These costs would occur immediately within year one of the analysis.
The benefits of the amendments are threefold: they create equity in pension treatment between the federal public service and federally regulated sectors; they keep the Regulations current for federally regulated employees through the incorporation-by-reference approach; and they alleviate the gendered impact of the present policy.
- Number of years: 10 (from 2021–2022 to 2030–2031 inclusively)
- Base year for costing: 2019
- Present value base year: 2021–2022
- Discount rate: 7%
|Impacted stakeholder||Description of cost||Base year||Other relevant years||Final year||Total (present value)||Annualized value|
|Government||Loss of the gain associated with leave without pay contributions||$0||$8.5M||$16M||$92M||$13.07M|
|All stakeholders||Total costs||$1||$8.5M||$16M||$92M||$13.07M|
|Impacted stakeholder||Description of benefit||2021–2022||2022–2023||2030–2031||Total (present value)||Annualized value|
|Members of the public service pension plan — Extended parental leave||Gain equity of treatment with federally regulated workplaces for leave without pay pension contribution repayments||$0M||$7.5M||$15M||$85M||$12.07M|
|Members of the public service pension plan — Compassionate caregiving and associated leave types||Gain equity of treatment with federally regulated workplaces for leave without pay pension contribution repayments||$1M||$1M||$1M||$7M||$1M|
|All stakeholders||Total benefits||$1M||$8.5M||$16M||$92M||$13.07M|
|Impacts||2021–2022||2022–2023||2030–2031||Total (present value)||Annualized value|
Quantified (non-$) and qualitative impacts
- Equity achieved with federally regulated sectors for leave without pay pension treatment; and
- Gendered impact of taking leave without pay diminished.
Small business lens
The small business lens does not apply, as there are no associated impacts on businesses.
The one-for-one rule does not apply, as there is no impact on businesses.
Regulatory cooperation and alignment
The amendments to the Regulations have not been developed as part of a coordinated regulatory cooperation arrangement. However, it does align with other domestic regulatory jurisdictions like those managed by the Ontario Pension Board and the British Columbia Pension Corporation. They both have amended their repayment provisions to permit the single rate for the new types and durations of leave. Both plans also incorporate by reference their respective provincial employment standards legislation.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
The amendments to the Regulations have been developed to address potential differential or adverse outcomes to Canadians based on the distributional factor of gender. The gender-based analysis plus (GBA+) analysis for the amendments revealed that 70% of caregiving-related leave was taken by female public servants. As in the broader public, the additional work of caregiving tends to be assumed by females. The amendments to the Canada Labour Code were made in the context of a strategy intending to increase female economic participation, but also in response to a number of significant socioeconomic and demographic changes including the increase of dual income earners and single-parent families, and greater demands for caregiving arrangements as Canada's population ages. The amendments to the Regulations seek to support a more equal gender distribution in the taking of caregiving related leave, and reduce the financial burden disproportionately borne by females when taking this leave.
Implementation, compliance and enforcement, and service standards
The Regulations enter into force upon registration. On and after that date, the amount owed by a contributor for their parental or caregiving leave without pay period will be calculated at a single rate. The previous Regulations will determine the amount for any leave that took place prior to this date. The calculations will occur in this way because the Regulations can only be applied on a going-forward basis.
Consultations with Public Services and Procurement Canada (PSPC), as the public service pension plan and pay administrator have taken place concerning the design and implementation strategy of the regulatory changes. PSPC is prepared to apply the amendments to the Regulations.
Measures are in place to ensure that the amendments are administered consistently and that contributors have the information and time they need to factor in the conditions of the amendments into their decision-making. More specifically, those implicated by the changes will receive targeted communication, and the Pension Centre will continue to manually verify the contribution amount for members returning from a leave of absence to ensure ongoing accuracy.
The systems administrators of the implicated pay and pension IT systems (e.g. MyGCHR, Phoenix and Penfax) have been regularly consulted and engaged in the development of the amendments to the Regulations and will coordinate IT changes. There will be a delay between the coming into force of the amendments to the Regulations and the completion of the required systems changes. However, this delay will not impact employees' pay or pension. The manual verification process used by the Pension Centre will continue to ensure the accuracy of member contributions.
Pensions and Benefits Sector
Office of the Chief Human Resources Officer