Factor 80 Surplus and Pension Bridging Programs

No. 80

Effective May 7, 2003

Order in Council 992/2003 (the OIC), dated May 7, 2003, amends the current Factor 80 Surplus and Pension Bridging programs of the Public Service Pension Plan (PSPP). Under the OIC:

1. PSPP members no longer have to qualify for Factor 80 Surplus by March 31, 2004; and
2. employers can extend the Factor 80 Surplus and Pension Bridging programs to March 31, 2006.

Background - Current Programs

The Factor 80 Surplus and Pension Bridging programs were revised in February 2002. Under the revision:

Factor 80 Surplus is in effect from April 1, 2002 to March 31, 2004; and

Pension Bridging is in effect from January 1, 2002 to December 31, 2003.

Also, for the first time, each employer (the Province and the individual Agencies, Boards and Commissions) had the option of participating in these programs.

• The Province, as employer for the Ministries, could provide the programs to a specific bargaining agent (e.g., AMAPCEO, PEGO). The programs would then apply to all PSPP members who are represented by that bargaining agent. The programs automatically applied to management/excluded employees, Senior Management Group and Deputy Ministers.
• An Agency, Board or Commission could provide the programs to its employees who are PSPP members.

Employers could 'opt into' either or both programs, at any time, by notifying us in writing.

Changes to Current Programs (summarized)

1. PSPP members must qualify for Factor 80 when they terminate employment

Previously, to qualify for a Factor 80 Surplus pension, a member had to reach Factor 80 (age + pension credit = 80) by March 31, 2004. The OIC removes this deadline, giving members more time in which to qualify for this unreduced pension.

Now, members must reach Factor 80 before the last day of their employment (for Factor 80 Surplus) or on the last day of their leave (for Pension Bridging).

2. Employers can extend the programs to March 31, 2006

Employers who are participating in the current programs have the option of extending their participation to March 31, 2006. If an employer wants to extend the programs, they must notify us in writing. Otherwise, Factor 80 Surplus will be in effect to March 31, 2004 and Pension Bridging will be in effect to December 31, 2003.

Employers who are not currently participating may opt to provide Factor 80 Surplus and/or Pension Bridging to March 31, 2006. If an employer wants to participate, they must notify us in writing.

Refer to the attached chart for more information on the eligibility rules for the current and extended programs.

Administering the programs is a team effort

Employee service records are not always consistent with the pension records we maintain. Buybacks, leaves of absence and transferred pension credit can all affect the amount of pension credit a member has in the PSPP. On lay off, an eligible member must review his/her entitlements and decide whether to receive other surplus rights instead of an unreduced pension. To provide accurate information to members regarding Factor 80 Surplus and Pension Bridging eligibility within the surplus notice period, it's critical that the employer use eligibility information from the Board. The following procedures should help you to provide accurate information and eliminate any delays in setting up the pension:

Surplus Notice: Before advising a member that he/she is surplussed, please contact us to confirm the date when he/she will qualify for an unreduced pension (Factor 80 Surplus or otherwise). Direct the member to contact us if he/she wants a pension estimate. If the member elects Factor 80 Surplus, please also forward his/her written request for the pension to us as soon as you receive it (may be in the form of a surplus election document). Remember, the PSPP requires that the request be submitted within 30 days (see attached chart for description of time limits).

If member is `bridging' with an unpaid leave: If the member takes an unpaid leave, the employer must pay PSPP contributions, on the member's behalf, during this period. The employer is required to contribute the amount the member would have paid, had he/she not taken this leave.

At termination: Along with all regular termination documents, we need a letter from the employer confirming:

1. the date the member received the surplus notice;
2. that the member has waived the applicable surplus rights; and
3. that the member will cease employment on the date shown in the surplus notice (for Factor 80 Surplus) or on the last day of his/her leave (for Pension Bridging).

We would appreciate receiving everything at least 2 months before the member terminates.

We will be sending to eligible employers a description of the new plan provisionsand an invitation to opt into the extended programs.

Factor 80 Surplus - eligibility rules for Current and Extended Programs

Factor 80 Surplus (s. 41.2, Public Service Pension Act)

Members who divested out of the PSPP cannot qualify for Factor 80 Surplus.

*Members must waive their right to benefits, payments, opportunities for assignments to other positions or other considerations resulting from the surplus notice, including any applicable bumping, direct assignment, pay-in-lieu and recall rights they may have. If applicable, they must also waive their right to enhanced severance pay, except for payments under the Public Service Act (sections 79 to 87 of Regulation 977, Revised Regulations of Ontario, 1990, as amended) or similar severance payments that may be available to members who aren't covered by those provisions.

Employers who are not covered by the Public Service Act (e.g. Agencies, Boards and Commissions) will need to review their practices to determine whether comparable entitlements exist for the purpose of satisfying this eligibility condition.

As noted in the last paragraph of this Update, employers must confirm in writing that members have waived their right to the appropriate benefits. A letter from the employer is sufficient; we do not need a copy of the Waiver of Surplus Rights.

Pension Bridging - eligibility rules for Current and Extended Programs

Pension Bridging (s. 46, Public Service Pension Act)

Members who divested out of the PSPP cannot qualify for Factor 80 Surplus.

*Member must waive their right to benefits, payments, opportunities for assignments to other positions or other considerations resulting from the surplus notice, including any applicable bumping, direct assignment, pay-in-lieu and recall rights that he or she might have. They do not have to waive their right to enhanced severance or to paid or unpaid leaves that are needed to bridge them to the unreduced pension.

Employers who are not covered by the Public Service Act (e.g. Agencies, Boards and Commissions) will need to review their practices to determine whether comparable entitlements exist for the purpose of satisfying this eligibility condition.

As noted in the last paragraph of this Update, employers must confirm in writing that members have waived their right to the appropriate benefits. A letter from the employer is sufficient; we do not need a copy of the Waiver of Surplus Rights.