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Are “casual” employees and “term” employees eligible for
participation in the Plan?
Whether the employer classifies an employee as “casual” or
“term” has no impact on determining an employee’s eligibility for participation
in the NSAHO Pension Plan. What does determine this is whether the employee
meets the eligibility requirements that are specified in the rules of the Plan.
The eligibility rules of the Plan incorporate the requirements of pension plan
law in Nova Scotia (the Pension Benefits Act and its regulations). All Plan
rules have been approved by the Superintendent of Pensions, who operates under
Nova Scotia pension law.
The Plan rules require that all employees must join
the Plan once they meet the compulsory eligibility
requirements. If they do not meet the compulsory eligibility requirements, then
they may join the Plan if they meet the optional eligibility
requirements. Note that a person who is paid on a “fee-for-service” basis
(i.e., is not a direct employee of a participating employer), is not eligible
for participation in the Plan.
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What happens when a person who is receiving an NSAHO Pension
Plan pension returns to work with a Health Association Nova Scotia employer?
It will depend on the basis on which the employee is
returning to work. For example:
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If the employee returns to work and is regularly scheduled to
work 50% or more of the full-time equivalent hours for his or her
position, the employee must rejoin the Plan. They may rejoin
immediately, but must rejoin within three months. As soon as the
employee rejoins the Plan,
their pension will be suspended immediately and will not resume until they
terminate employment. (The Income Tax Act does not permit a member to
contribute to, and collect a pension from, the same pension plan at the same
time.) There is one exception... a contributing member must end their
participation in the Plan and start to receive their monthly pension from the
Plan not later than December 1 of the year in which she reaches age 71.
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If the employee returns and is NOT regularly scheduled
to work 50% or more of the full-time equivalent hours for his or her
position, the employee will not be required to rejoin the Plan... and his or
her pension from the NSAHO Pension Plan will continue, uninterrupted, provided
he or she does not rejoin the Plan.
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Who is responsible for calculating pension adjustments (PAs)
and how are they calculated?
Employers are responsible for calculating PAs and reporting
them on the annual T4 slips of members. In a nutshell, the formula used to
calculate PAs is:
[(Annualized Benefit Accrual x Credited Service) x 9] –
$600 x Credited Service
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Which earnings are pensionable and, therefore, should have
pension contributions deducted?
Pensionable earnings include:
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sick pay, vacation pay (when the pay is for vacation actually taken), acting
pay, and temporary assignment pay; and
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one-time lump-sum cash bonuses resulting from a collective bargaining
agreement, settlement or negotiation (or modification of any other employment
contract with a group of members, provided all members in that group are
eligible to earn a bonus).
Pensionable earnings exclude certain types of pay,
such as stand-by pay, call-back pay, premium pay for holidays and shifts,
overtime pay, lump-sum payments in lieu of vacation, retirement allowances, and
any individual bonuses (bonuses not paid to all members of a group) that an
employee receives from the employer. Please refer to our December 10, 2003 memo
2003-10 (An online version of this
memo is available in the Memos section).
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Is overtime pay pensionable?
No, pensionable earnings exclude overtime pay.
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Is the “11% pay in lieu of benefits” that is paid to casual
employees (under some collective agreements) pensionable?
No, the “11% pay in lieu of benefits” paid to casual
employees under some collective agreements is not pensionable.
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Do employers contribute for members’ past service purchases?
The employee is responsible for
100% of the cost for almost all categories of past service purchases.
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Who can purchase past service?
Only active Plan members can purchase past service and only if it is an eligible
period of past service under the rules of the Plan. For details on which
periods of past service are eligible, refer to the Past Service Purchases section of this website.
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Why does NSAHO Pension Plan need historical PAs for employees
who have terminated and are no longer members of the Plan?
Canada Revenue Agency (CRA) requires that we calculate and
file a Pension Adjustment Reversal (PAR) for members who have terminated and
received a pay-out of their benefit from the Plan. A PAR is an amount that may
restore RRSP contribution room to an individual. In order to calculate this
PAR, we need to know the PA amount for each year the person was in the Plan.
Although we now gather and maintain PA’s each year since 1999, we need to know
PAs that were reported to CRA for the years prior to 1999, as applicable.
Therefore, we require the historical PA amounts for terminated members.
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When are employers required to send contribution remittances to
Royal Trust?
Contributions must be remitted to Royal Trust (the Plan’s
custodian) by the 20th calendar day following the ending date of each
contribution period. A contribution period may not exceed 31 days.
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What types of pensionable earnings and contributions must be
identified separately on an employer’s remittance forms?
Any “prior year adjustments” must be identified separately
on the remittance form. In addition, the remittance form includes a Schedule of
Remittances that the employer must use to identify any additional contributions
deducted from members for service purchases.
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What paperwork is required to process a retirement and when
should employers notify the NSAHO Pension Plan of an upcoming retirement?
The Plan requires the following paperwork in order to
process a retirement:
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A “Notice of Retirement” – to be completed by both the employer and employee;
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An “Authorization for direct deposit” – to be completed by the employee
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A void cheque – to be provided by the employee;
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A TD1 form – to be completed by the employee
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Proof of Age (for example, a copy of a birth certificate, baptismal certificate
or citizenship certificate) –must be provided for both the employee and the
employee’s spouse/common-law partner (if applicable); and
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Copy of the employee’s marriage certificate, if applicable.
The employer should forward this paperwork to the Plan two
to three months before the employee’s planned retirement date.
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What paperwork is required to process a termination and when
should employers notify the NSAHO Pension Plan of a termination?
The Plan requires the form called “Notice of Termination”
in order to process the employee’s termination benefit entitlements. Both the
employee and employer are required to complete sections on the form. The
employer must send the completed Notice of Termination form to the Plan
immediately following the employee’s termination.
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What paperwork is required when the employer is notified of the
death of an active employee?
The Plan requires the following paperwork in order to
process an active member death:
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The form called “Notice of Death” – to be completed by both the employee and
the employee’s surviving spouse, next of kin, or Executor (as applicable);
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Proof of Death (usually provided by the funeral director)
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Copy of the deceased employee’s marriage certificate, if applicable.
The employer must send the above information to the Plan
immediately after being advised of the employee’s death.
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When should employees who do not meet the Plan’s definition of
“full-time” (“full time” means employees who are regularly scheduled to work at
least 50% of the full-time equivalent hours for their position) be offered
enrollment in the Plan?
An employee who does not meet the Plan’s definition
of a full-time employee should be offered
participation in the Plan once he or she has:
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completed 24 months of continuous employment, and
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either worked 700 hours or earned at least 35% of the Year’s Maximum
Pensionable Earnings (YMPE) in each of the two calendar years immediately prior
to enrolling.
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Are retro payments pensionable and, if yes, how should they be
treated on the year-end report?
A retroactive salary or wage adjustment (a ”retro” payment)
is an adjustment to earnings made in the current calendar year, but in respect
of employment in a previous calendar year(s).
“Retros” are pensionable earnings and contributions must be
deducted and remitted on them (but only if the retro applies to a prior period
when the employee was actually a participant in the Plan).
Retros must be included in pensionable earnings in the
calendar year the retro payment was made to the employee. Retros must be
reported on the employer’s year-end report along with the regular pensionable
earnings for the employee for that calendar year. In addition to reporting the
total lump sum retro payment paid to an employee, the employer must also
provide a breakdown of that retro payment, showing what portion of the total
retro payment applies to a calendar year other than the calendar year in which
the retro was actually paid.
By following this reporting process for retro payments, the
employee’s pension benefits will be calculated accurately.
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What should employers do when they learn that a newly-hired
employee was a member of the NSAHO Pension Plan with his or her previous “Health Association Nova Scotia
employer”?
The first step is to determine when the employee left the
previous “Health Association Nova Scotia employer”.
If the employee left the previous “Health Association Nova Scotia employer” less than 6
months ago:
The employee can choose to rejoin the Plan immediately
(even if they do not satisfy the usual eligibility rules for a new employee)
provided the employee did not withdraw benefits from the Plan upon terminating
from the previous employer. If the employee chooses to rejoin, employee and
employer required contributions must start immediately.
When an employee chooses to rejoin under this Plan rule,
the employee’s pension credits from the two periods of employment will be
combined to determine the employee’s early retirement eligibility date, and,
for calculating the amount of the employee’s pension.
If the employee chooses not to rejoin the Plan
immediately under this Plan rule, then the employee must rejoin the
Plan as soon as the compulsory enrolment criteria is met (i.e., within 3 months
of meeting the Plan’s definition of a full-time
employee.)
If the employee left the previous “Health Association Nova Scotia employer” more than 6
months ago:
The employee must be treated as a new employee for Plan
enrolment purposes. This means the employee must satisfy the Plan’s eligibility
rules in order to rejoin the Plan.
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What does the “date of registration” mean on the employee’s
Application for Enrollment/Re-Enrollment?
The employee’s date of registration is the date when the
first contributions were deducted from the employee’s pay. Please note:
it is not the start date of the pay period or the end date of the pay period -
first deducted from the employee.
Example: If the pay period started on
February 16, but the employee didn’t start work until February 20 (and thereby
started to get paid and started contributions on February 20) the date of
registration on the enrollment application must be February 20.
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Is the employee required to stop working and start to receive their
retirement pension when they reach age 65?
There are really two separate questions here:
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can the employee continue to work with their Employer beyond age 65? and
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if the answer to (1) is “yes”, can the employee continue to participate in the Pension
Plan?
Please note the following:
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Whether the employee continues to work with the Employer after they reach age 65 is a
matter to be decided between the employee and their Employer. The NSAHO Pension Plan has
a Normal Retirement Date (the first day of the month coincident with,
or next following, the employee's attainment of age 65), but it allows Members who
continue to be employed with their employer beyond age 65 to postpone their
pension start date and continue participation in the Plan, within certain
limits — see (2) below.
The employee will need to finalize this matter with their Employer before they reach age
65.
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If they continue their employment with their Employer beyond age 65, they will also
continue normal participation in the Plan. However, the laws that govern our Pension Plan impose strict limits. The
Income Tax Act of Canada requires that the employee end their participation in our Plan
and begin to receive their monthly pension from the Plan not later than December
1 of the year in which they become age 71.
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