Purchasing leaves of absence
College Pension Plan
Rules and costs to
purchase a leave
of absence
If you have recently taken a leave of absence, you should consider
purchasing service for that period. A leave of absence is an employerapproved 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 accumulate pensionable
or contributory service. If you purchase a leave period you will receive
the pensionable service that you would have received had you not taken
the leave, which may increase your future pension benefits.
Types of leaves
The Employment Standards Act (ESA) requires employers to pay their
portion of the cost to purchase certain leave types if the member elects
to purchase the leave. These leave types include:
• pregnancy (commonly known as maternity) leave,
• parental/adoption leave,
• family responsibility leave,
• bereavement leave,
• compassionate care leave (occurring on or after April 27, 2006), and
• leave for jury duty.
When purchasing other types of leaves, you are responsible for the
entire cost, unless your employer has an agreement to pay a portion of
the cost.
Pregnancy leaves can be only purchased by birth mothers. Parental/
adoption leaves can be purchased by birth mothers, fathers and adoptive
parents. You may be required to show your child’s birth certificate
or adoption papers to your employer.
Periods of reduced pay
If you work at less than your full assignment for a period of time, you
may be eligible to purchase the difference between your normal, full
assignment, and the amount actually worked, as a leave of absence.
Canada Revenue Agency sets out the following rules:
• You must have been employed by your employer during the
leave period for at least three years before the period of reduced
pay commenced.
• You must have worked at your full assignment at some time during
your employment with the employer prior to the leave period.
If your full assignment is less than 100 per cent of full time, you may
be able to purchase the portion needed to bring it up to the amount of
your full assignment only, not to full time.
Purchase Maximums
Income Tax Regulations under the Canadian Income Tax Act limit the
service you can purchase for leaves completed after December 31, 1991.
The maximum cumulative service you can purchase for maternity and
parental/adoption leaves is three years, with each term not to exceed one
year from your child’s birth or adoption date.
Income Tax Act rules allow you to purchase a maximum of five years
of all other types of leave completed after December 31, 1991.
Maternity and parental/adoption leaves in excess of three years may be
purchased as general leaves and will be counted toward the general-leave
maximum of five years.
Purchasing a leave and deadlines
You may be able to purchase service for a leave of absence or portion of a
leave if:
• you were an active member when you took the leave,
• you apply within five years of the end of the leave period or portion of
the leave period you are purchasing, and
• you apply while you are still employed with the same employer or
within 30 days of terminating employment with the employer with
which the leave occurred.
You must purchase service for the entire leave period if the leave is less
than one year. If the leave is greater than one year, you have two options:
a) purchase service for the entire leave, or
b) purchase service for the leave in annual portions
If you wish to purchase a leave of absence for a period during which
you contributed to a registered pension plan with any other employer,
some restrictions may apply. Contact the College Pension Plan for
more information.
college.pensionsbc.ca
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Once an application to purchase an annual portion of leave is received
by the College Pension Plan, the portion requested will be treated
permanently as a separate leave and this may affect the application
deadline. For example, if you took a leave of absence from February 2008
to May 2010:
• If you want to purchase service for the entire leave, you would have
until May 2015 to apply (five years from May 2010) as long as you
remain an active member.
• If you want to purchase service for the February 2008 to January 2009
portion of the leave, you would have until January 2014 to apply
(five years from January 2009) as long as you remain an active member.
Feb 2008
May 2010
May 2015
Entire leave of absence
Feb 2008
Jan 2009
One-year
portion
Deadline to apply
Jan 2014
Deadline to apply
If your purchase would make your pensionable service exceed
12 months in a calendar year, you can only purchase the amount of leave
up to the maximum amount.
Your employer must certify your leave by signing the Purchase
of Service Application.
Applying to purchase a leave
The first step is to 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.
You can use the Purchase Cost Estimator
Once you have calculated the estimated cost, you can
on the website to prepare an unlimited
decide if you want to apply to purchase the service, or not.
If you choose to proceed with the application, follow the
number of estimates
instructions on the Purchase of Service Application.
college.pensionsbc.ca
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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
PensionFacts is published
for the College Pension
Plan by the Pension Corp­-­
oration. This publication is
based on the relevant plan
documents (statutes, regu­
lations and rules). If there
is a discrepancy between
this publication and the
plan documents, the plan
documents apply.
College Pension Plan
PO Box 9460
Victoria, BC V8W 9V8
[email protected]
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 amount owed. You can pay by:
• cash (cheque, money order or bank draft),
• direct transfer from an existing rrsp 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.
This can affect your tax situation, including your RRSP contribution room.
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, Your pension and your
RRSP room, available on the plan’s website. You may wish to seek advice
from a qualified independent financial planner prior to making the
decision to purchase service.
Victoria: 250 953-4324
Toll-free: (Canada and U.S.)
1 888 440-0111
Fax:
250 953-0412
college.pensionsbc.ca
1997-064 CPP LOA 2015.06.05
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