Retirement allowance

Long-serving BC Public Service employees are eligible for a retirement allowance that can be taken as pre-retirement leave, a cash payout or directed into a Registered Retirement Savings Plan (RRSP).

On this page

• Eligibility of employees
• Eligibility of service
• Entitlement
• Pro-rated entitlement
• Calculating entitlement value
• Disbursement options
• Paid leave prior to retirement
• Lump sum payment at retirement
• Cash payment to employee
• Retiring allowance RRSP contribution
• Retiring allowance RRSP eligible transfer

Eligibility of employees

The retirement allowance is payable upon retirement to:

• An employee who has completed 20 or more years of BC Public Service and is scheduled to receive an immediate pension under the provisions of the Public Service Pension Plan Rules
• A salaried physician who has completed 10 or more years of BC Public Service and is scheduled to receive an immediate pension under the provisions of the Public Service Pension Plan Rules
• An employee retiring from long term disability who had completed 20 years of BC Public Service before being accepted under the provisions of the Long-Term Disability Plan

Eligibility of service

The retirement allowance is based on the total accumulation of all periods of BC Public Service, regardless of whether the service was regular, auxiliary, full-time, part-time, contributory, or non‑contributory.

There may be breaks in service; however, 'service with the Employer' refers solely to the Public Service of British Columbia and does not include service with Crown Corporations, etc.

An approved leave of absence, with or without pay, is not considered to be a break in service. The period of approved leave of absence is a period of less than full-time service. Review pro-rated entitlement.

Periods of time an employee is in receipt of LTD are not included. The provisions of the main agreement, or terms and conditions of employment do not apply during periods of LTD.

Service with Agencies, Corporations or Entities prior to a merger or transfer will count as service time with the BC Public Service for recognition purposes where seniority or length of service was officially recognized at that time. Service with other governments or corporations, such as Federal or Municipal and Crown Corporations not involving a merger with the BC Public Service will not count.

Employment other than BC Public Service, including service transferred under a reciprocal pension transfer agreement, will not count towards eligibility for a retirement allowance. This service is recognized by the pension plan for pension purposes only.

Entitlement

An employee who is eligible for a retirement allowance, will receive a payment equal to one month’s salary after 20 full years of service. An additional amount of 1/5 of one month’s salary is payable for each subsequent full year of service to a maximum benefit of 3 month’s salary upon completion of 30 or more full years of service.

For the purposes of calculating the following entitlements, one month equals 21.75 days.

Pro-rated entitlement

When an employee is employed at less than full-time, each year of service, whether full‑time or part‑time, is counted toward the 20-year threshold. However, the allowance or leave entitlement is pro-rated based upon the percentage of full-time hours worked by the employee over that period.

Example

An employee who had worked full‑time for 10 years and then worked half‑time for 10 years would be entitled to an allowance based upon the 20-year entitlement threshold, but pro‑rated based upon the Full‑Time Equivalent (FTE) hours worked, as follows:

Elapsed time = 20 years

FTE = (10 years x 100%) + (10 years x 50%) = 15 years

FTE / elapsed time = 15 / 20 = 75%

Pro-rated entitlement = 21.75 days (a 20-year entitlement) x 75% = 16.31 days

Calculating entitlement value

The value of the retirement allowance entitlement is based on the employee’s base salary that is in effect on their last day of pay. Base salary consists of the following:

• Full-time salary rate for the employee's position classification
• Any add-to-pay for salary protection purposes
• Allowances considered to form part of the basic pay for individual components
• If an employee is retiring while on a temporary appointment and have been in that temporary appointment for over a year, the retirement allowance will be based on the temporary appointment rate

The full‑time salary rate is used in calculating the value of the pro-rated entitlement. The entitlement amount has been pro‑rated, therefore the salary is not.

For employees retiring from LTD, the employee’s basic salary rate in effect at the commencement date of the long-term disability benefit is used.

Sample calculation

A bi-weekly salary of $3,642.63 and an entitlement of 65.25 days

$3,642.63 biweekly / 10 days = $364.263 daily x 65.25 days = $23,768.16

Disbursement options

The retirement allowance may be taken either as paid leave immediately prior to retirement, or as a lump sum payment at retirement.

There is no option to split the retirement allowance between paid leave and lump sum payment. 

Employees retiring from long term disability can receive a lump sum payment only. There is no option for paid leave prior to retirement.

Paid leave prior to retirement

Where the retirement allowance is taken as paid leave, it will be the last leave taken after all other leaves have been concluded in accordance with the paid absence prior to retirement policy.

The number of paid days off when the retirement allowance is taken as paid leave is inclusive of Statutory holidays (it is not extended by intervening Statutory holidays therefore 20 days entitlement equals 20 paid days).

Regular salary, benefit and payroll deductions continue and pensionable service continues to accrue.

Paid leave is reported as regular income on a standard payroll T4 for the tax year in which it is earned.

Lump sum payment at retirement

Where the retirement allowance is taken as a lump sum payment, it is issued as a cheque directed to the employee and/or their RRSP financial institution, in the month following retirement. This is a non-payroll disbursement.

A T4 will be issued by the employer in February of the year following the year in which the payment was made. The retirement allowance will be reported in box '66 Eligible retiring allowances' and/or box '67 Non-eligible retiring allowances' as appropriate. Any tax withheld will be reported in box '22 Income tax deducted'.

Cash payment to employee

If the retirement allowance is paid to the employee, it is subject to CRA mandated 'withholding rates for lump‑sum payments' as follows:

10% on payments up to $5,000

20% on payments up to $15,000

30% on payments exceeding $15,000

Note: the employee’s actual tax liability is based on all income for the tax year.

Retiring allowance RRSP contribution

All or part of a retiring allowance may be contributed to an employee’s own RRSP, or a spousal RRSP, and must be within the unused portion of the employee’s RRSP deduction limit from latest notice of assessment.

The financial institution will issue the employee a receipt for this contribution.

NOTE: The retirement allowance is included in income for the tax year it is issued.  No tax is withheld at source on the amount directly contributed.  To defer any tax owing, you may want to claim the deduction for the RRSP contribution amount in the same tax year the retirement allowance is issued.

When the employee receives their retirement allowance entitlement confirmation response, a personalized Retiring Allowance RRSP Contribution form will be included.

Complete the Retiring Allowance RRSP Contribution form and submit it to AskMyHR (IDIR restricted) in a service request using the categories Myself (or) My Team/Organization > Leaving the Public Service > Retirement.

Retiring allowance RRSP eligible transfer

An Eligible Transfer applies only to employees who have BC Public service and/or Public Service Pension Plan contributory service prior to 1996.

All or part of the eligible amount of a retiring allowance may be directly transferred to the employee’s own RRSP. 

The direct transfer of the eligible amount of the retiring allowance has no impact on one’s RRSP deduction limit.

The financial institution will issue the employee a receipt for this transfer.

NOTE: The retirement allowance is included in income for the tax year it is issued.  No tax is withheld at source on the amount directly transferred.  To defer any tax owing, you may want to claim the deduction for the RRSP transfer amount in the same tax year the retirement allowance is issued.

The amount eligible for transfer to an individual’s own RRSP is limited to:

• $2,000 for each year or part of a year before 1996 that the person worked for the employer.

PLUS

• $1,500 for each year or part of a year before 1989 of that employment in which none of the employer’s contributions to the Registered Pension Plan had vested in the employee’s name when the employer pays the retiring allowance, such as non‑pensionable service. (This is time that you worked for the employer but did not contribute to the Public Service Pension Plan and do not intend to purchase as pensionable service.)

When the employee receives their retirement allowance entitlement confirmation response, a personalized Retiring Allowance RRSP Eligible Transfer form will be included. 

Complete the Retiring Allowance RRSP Eligible Transfer form and submit it to AskMyHR (IDIR restricted) in a service request using the categories Myself (or) My Team/Organization > Leaving the Public Service > Retirement.