Purchasing Periods of Part-Time Service for Child or Family Care Reasons

In late 2020, the Supreme Court of Canada ruled in Fraser v. Canada (Attorney General) that federal government pension plan members could buy back full-time pension credit for periods of employment where they temporarily reduced their working hours to care for their children. With that ruling, SFPP Corporation has taken proactive steps to ensure that SFPP follows suit with this decision and that our approach benefits impacted members.

There are several benefits to increasing pensionable service, but the two biggest benefits are:

1. Increasing the amount of pensionable service means a member can retire earlier; and,
2. Adding in service will increase the value of a member’s retirement benefit.

Plus, this is a unique window of time where active SFPP members with eligible periods from prior to January 1, 2022 will have access to a contribution-based purchase, so it is even more valuable (see question #4 to learn about this type of purchase).

The following is a list of requirements for eligibility:

• A member must have been in a job-sharing or part-time capacity for family caring reasons. This includes but is not limited to reasons such as child, parental, and general family care;
• A member must have been employed with their current or a previous SFPP employer for at least 36 months (as referenced in the Income Tax Act) before the part-time or job-sharing period. If a member does not meet this criteria, they will only be eligible to purchase the part-time service once they have completed the minimum required 36 months; and,
• To purchase this service, the period worked must be an associated leave with partial salary and have been temporary in nature. The amount of pensionable service eligible to purchase during the leave or reduced work hours is subject to a maximum of five years with an additional three years for parental leave, inclusive of prior buyback leaves.

SFPP relies on the data and information reported from participating employers. If a member’s employer reported their previous job-sharing or part-time work arrangement due to child care or family care, then SFPP will have these applicable members noted in the list of eligible members.

If a member is uncertain that they are eligible to purchase service, they contact Ms. Tennille Willis, Chief Financial Officer with SFPP Corporation at tennille.willis@sfpp.ca to confirm their eligibility. Ms. Willis can confirm if a member is on the list receiving a letter but cannot confirm any information relating to specific eligible dates. A member must provide this information in the Child or Family Care Pension Purchase Application form.

If a member is not on the list of identified potentially eligible members, SFPP Corporation will work directly with that member and their employer to determine eligibility.

In simple terms, the member will pay the outstanding balance of SFPP contributions that they would have paid during the applicable period of employment, had they been employed on a full-time basis. The employer will also pay their share of the SFPP contributions. In addition, there will be no interest applied historically to the member’s share of the contributions.

If a member is eligible but does not apply or make an election within the specified deadlines to purchase the service on a contributions cost basis, they may be eligible to purchase it at a later date, but the cost would be determined on an actuarial reserve basis. In general, an actuarial reserve-based cost will be higher because the cost is calculated by determining the amount of money required today to pay for a member’s future pension on the period of service they are purchasing.

If a member reduced their hours temporarily to care for their child(ren) or family member(s), the difference between the reduced schedule and a full-time schedule is considered a leave of absence. The amount of leave service eligible to purchase under SFPP is subject to a maximum of five years with an additional three years for periods of parenting as defined in the Income Tax Act, inclusive of any prior leave buybacks.

A period of parenting under the Income Tax Act is the 12-month period immediately following the date of birth or adoption of your child.

If a member has periods of eligible service that exceed the five-year and three-year limits, as applicable, they may still be eligible to buy back that service on an actuarial reserve cost basis.

A member’s hours of work are considered to have been temporarily reduced if they returned to work/anticipate returning to work on a full-time basis following their employment in a job-sharing arrangement or on a part-time basis.

In September 2022, SFPP will distribute a letter to all identified potentially eligible members. This letter includes the Child or Family Care Pension Purchase Application form that each eligible member can complete and return to SFPP to request a Buyback Proposal. Please remember that the deadline to apply to purchase this service on a contributions cost basis is December 31, 2022.

The Child or Family Care Pension Purchase Application form is also located on the SFPP website here.

The Buyback Proposal will outline the cost and payment options available to a member and provide an estimate of their monthly pension benefit should they purchase the associated pensionable service.

SFPP Corporation is working on a method to allow purchases of service for eligible retired members and for members who left their deferred pension with SFPP. At this time, only active members with a period of eligible employment in a job-sharing arrangement or on a part-time basis from prior to January 1, 2022 are eligible to apply. A future solution to address retired and deferred vested members will be shared soon.

Similar to retired and deferred members, SFPP Corporation is working on a method to allow for eligible active members to increase their pensionable service in 2022. Once a future solution to address active members with a period of eligible service in 2022 (and beyond) is confirmed, it will be shared with members.

A member will need to confirm that they meet the stated eligibility conditions and provide the start and end dates associated with any eligible period(s) where they were employed in a job-sharing arrangement or on a part-time basis. A member will also need to indicate if the temporary reduction in hours was linked to child or family care. If it is linked to child care, the member will need to provide the date of birth or adoption of their child to allow for an assessment of whether the period qualifies as a period of parenting under the Income Tax Act. If the dates provided align with the information on a member’s SFPP file, they will be sent a Buyback Proposal within 30 days.

In the event the dates provided by the member do not align with the dates on file, SFPP Corporation will follow up with each applicable individual member to outline the remedy actions needing to be taken.

The Buyback Proposal will outline the available payment options. The options may include:

• Regular payroll deductions arranged with your employer (according to the number of installments you choose on your Buyback Election);
• Payment via cheque to your employer for either the total buyback amount or a portion of it; or
• A lump-sum transfer of funds from your registered retirement savings vehicle, such as a Registered Retirement Savings Plan (RRSP) or Locked-in Retirement Account (LIRA).

The deadline to apply to purchase any eligible periods on a contributions cost basis is December 31, 2022. Once a member gets their Buyback Proposal, it will state an election and first payment deadline that is 180 days from the date of the Buyback Proposal. It is important to note that if a member misses either of these deadlines, they will no longer have the opportunity to purchase the service on a contributions cost basis. However, a member may still have the opportunity to buy this service on an actuarial reserve basis, subject to the normal eligibility criteria and deadlines associated with such purchases.

A member will be sent a Buyback Proposal within 30 days of submitting their completed form and they will have 180 days from the date of the Buyback Proposal to make an election and payment(s). The election and payment deadlines will be clearly stated in the Buyback Proposal. Please note that if the total cost is more than $500, the first payment must be made by the stated deadline. If the total cost is $500 or less, all payments must be made by this deadline.

Once completed, please return your application to SFPP by one of the following methods:

For any queries related to any eligible period(s) of employment, a member should contact their employer’s pay and benefits department.

For any questions about completing the Child or Family Care Pension Purchase Application form, please contact the SFPP Member Services Centre at 1-877-809-7377 (SFPP).

All other inquiries on this matter can be directed to Ms. Tennille Willis, Chief Financial Officer with SFPP Corporation at tennille.willis@sfpp.ca. Please provide a contact phone number in your email if further discussion is needed. Upon receipt of your email, we will ensure a response within two business days.

Example 1: A member enrolls with SFPP on January 1, 2015, and is employed on a full-time basis. The member moves into a part-time capacity at a 50% full-time equivalency (FTE) on January 1, 2017 in order to allow for them to take care of their young child. The member then returns to a full-time position on January 1, 2021. Subject to prescribed limits, this member would be eligible to purchase the balance of eligible service for the period from January 1, 2018, to December 31, 2020 (i.e., 1.5 years of eligible service), as the 36-month prior employment requirement was not met until January 1, 2018.

Example 2: A member was in a full-time position and changed to a part-time role on January 1, 2017. Their hours were temporarily reduced to a 50% FTE to allow for them to care for their elderly parent. The member then returned to a full-time position on January 1, 2020. Subject to prescribed limits, this member would be eligible to purchase additional service during the period of part-time employment.

Based on the above example, this member would be eligible to purchase the balance of eligible service for the period from January 1, 2017, to December 31, 2019 (i.e., 1.5 years of eligible service).

The following is an example of a contribution-based buyback cost calculation. Of note, this information is provided purely as an example and is not to be taken as an exact calculation:

Job-Sharing Period: January 1, 2012 - December 31, 2014
Work Percentage while Job-Sharing: 50% full-time equivalent
Annualized Pensionable Salary (on a full-time basis): $120,000/year
Pensionable Salary (in a job-sharing capacity): $60,000/year

Pensionable service earned in 2012: 0.5000 years
Pensionable service earned in 2013: 0.5000 years
Pensionable service earned in 2014: 0.5000 years
Total service earned in 2012 – 29014: 1.5000 years

Service eligible for purchase in 2012: 0.5000 years
Service eligible for purchase in 2013: 0.5000 years
Service eligible for purchase in 2014: 0.5000 years
Total service eligible for purchase: 1.5000 years

Member buyback cost: 1.5000 years X $120,000 x 13.45% (SFPP member contribution rate in 2012 - 2014) = $24,210
Employer buyback cost: 1.5000 years X $120,000 x 14.55% (SFPP employer contribution rate in 2012 - 2014) = $26,190