In 2015, government announced it will phase out the Public Service Award, an allowance given on retirement, but that it would honour service amounts accumulated up to that point. The Service Payout is a one-time option to receive a lump-sum payment in place of the Public Service Award (PSA).
For bargaining unit employees, this payout was directed by the December 7, 2017 interest arbitration decision. The Province determined that it is appropriate to extend the option to eligible civil servants outside the bargaining unit.
The election period for the Service Payout for eligible civil servants closed on Friday, March 16th. Read about timing of Service Payout payments.
The Service Payout is available to NSGEU bargaining unit, Crown attorneys and management/non-bargaining unit employees in the civil service who meet all 4 of the following eligibility requirements:
- they have started work with or rejoined the Province before the discontinuance date (April 1, 2015 for NSGEU and Crown attorneys, and August 11, 2015 for management/non-bargaining unit employees)
- they have eligible service before the discontinuance date
- they were an active employee with the Province on December 7, 2017
- they belong to one of the following employee groups within the civil service:
Union/Association Employees, including:
- NSGEU Civil Service Bargaining Unit
- Crown attorneys
- Excluded Classification (EC)
- Senior Officials (SO)
- Medical Services (MS)
- Public Prosecution Service Management (PPS)
- Legal Services (MCL)
- Liability Management (LM)
Employees who are not eligibleYou are not eligible for the Service Payout if you:
- do not meet the eligibility criteria (see eligibility)
- belong to a bargaining unit that does not have a settled or ratified collective agreement in place
- do not have a Public Service Award in your contract
- started working for or rejoined the Province after the relevant discontinuance date (see eligibility). Note if you started work or rejoined the Province after the relevant date you are also not eligible to receive a Public Service Award on retirement.
- previously retired from government and received a PSA recognizing the maximum 26 years of service
- Detailed instructions for completing your form
- Timing of Service Payout payments
- CRA Declaration of Intent form
- Service payout important reminders and Q&A - Mar 2, 2018 (PDF)
Email questions to email@example.com, and include your employee identification number and phone number.
Calculating your Service Payout
Eligible service for the Service Payout is a month in which you receive more than 10 days of salary, regardless of whether you were paying into pension at the time. Service for the purposes of the Service Payout (or Public Service Award) and pensionable service are different.
Leave such as Long-Term Disability (LTD), Workers' Compensation (WCB), or unpaid leave of absence (LWOP) may reduce eligible service. If you are on such a leave and do not receive salary for more than 10 days in a calendar month, that month does not count toward your eligible service.
Casual time will be included in the service calculation if it is continuous to permanent employment and otherwise meets the definition of eligible service.
Pregnancy/parental/adoption leave is considered eligible service for the period during which you were receiving a salary top up. Maternity leave taken before September 1, 1989 is not eligible service.
For civil servants who transferred from other public-sector entities, the impact on your service depends on the specific agreements formalized at the time of transfer. These agreements were applied in the service validation process. Generally, these agreements provide for continuity of employment and recognition of service; however, it depends on the specific terms and conditions.
Your letter of offer includes your total years of eligible service, presented in decimal points so you can see the precise number used in your payment calculation. The conversion to months of service follows:
The Service Payout calculation is based on the formula of one week of salary per each year of service, pro-rated, up to a maximum of 26 weeks. This table includes examples of Service Payout calculations:
|Discontinuance Date||Years of Eligible Service (A)||March 31, 2018 Basic Bi-weekly Salary (B)||Gross Service Payout (A) x 1/2 (B)|
|April 1, 2015||1.667||$3,098.23||$1,807.35|
|August 11, 2015||4.0833||$3,593.67||$7,337.02|
|August 11, 2015||9.000||$4,348.34||$19,567.33|
|April 1, 2015||6.5000||$2,465.97||$8,014.40|
|August 11, 2015||6.8333||$1,891.42||$6,462.32|
|April 1, 2015||26.0000||$2,532.88||$32,927.44|
Taxes and deductions
Since it is not being paid on retirement, the Service Payout cannot be treated as a retirement allowance. It will be treated as income and subject to all statutory deductions that apply, which may include income tax, Employment Insurance (EI) and Canada Pension Plan (CPP). The payment will be made through the SAP HR/Payroll system by direct deposit. The payroll system will calculate the appropriate amount of income tax to be deducted by taking into consideration your annual salary, plus the amount of the one-time Service Payout.
Deductions will also include any amounts owing to the Province including Public Service Award advances, salary overpayments, previously unpaid benefit premiums (e.g., life, LTD, medical, pension), and any wage garnishment orders in effect at the time of payment.
Union dues will not be deducted from the Service Payout unless you are in arrears.
Estimating your deductions
The payment amount in your letter of offer is your gross (before deductions) amount.
You may want to estimate the amount that will be deducted from your payment.
We cannot tell you the exact amount of income tax that will be deducted from the payment because it depends on many factors that are specific to your personal tax situation, such as your annual salary, your year-to-date earnings, whether you will reach your maximum EI and CPP contributions, what personal tax credits you claim, etc.
Generally, the income tax should compare to what you're paying on your regular salary, unless the Service Payout moves you into a higher tax bracket. Learn about Federal and Nova Scotia Provincial Tax brackets and rates .
Income tax will not be deducted from any amounts that you will contribute to an RRSP, provided you have the personal RRSP contribution room to do so and are covered by the appropriate tax waiver (see Putting your payment into an RRSP).
You can estimate the amount of EI and CPP that will be deducted using the following:
EI and/or CPP will not be deducted if you have reached your annual maximum contributions when your payment is processed.
You are encouraged to seek professional financial advice if you have questions about planning or need help to make your decision.
Putting payment into a Registered Retirement Savings Plan (RRSP)
If you choose to put some or all of your Service Payout into an RRSP, it will be paid directly to you with no income tax deducted, if you have the personal RRSP contribution room to do so and have provided all the required forms and information. See How the process works for additional information.
If you want to put some or all of your Service Payout into an RRSP, your options are described here:
For Service Payout amounts $15,000 or less
The Province has obtained a corporate tax waiver from Canada Revenue Agency (CRA) so that you may contribute all or some of your payment up to $15,000 to your RRSP without income tax deducted if you have the personal RRSP contribution room. You need to complete the CRA Declaration of Intent form, which was included with your letter of offer.
For Service Payout amounts over $15,000 - options
$15,000 or less into RRSP, remainder paid out
You can use the corporate tax waiver to receive up to $15,000 of your payout without taxes deducted to be put into an RRSP, if you have the personal RRSP contribution room to do so. The rest will be paid out to you, less any statutory deductions (e.g. income tax, EI, CPP) or other deductions that apply to you.
Over $15,000 into RRSP - personal tax waiver
If you are putting more than $15,000 of your payment into an RRSP without income tax deducted, you must apply to Canada Revenue Agency (CRA) for a personal tax waiver for the desired amount. This is done by completing a CRA T1213 form .
The remainder of your payout amount, if any, will be subject to all statutory deductions (e.g., income tax, EI, CPP) that apply to you.
It may take some time (up to 60 days) to obtain your personal tax waiver from Canada Revenue Agency (CRA). You must still return your election form to the Province by March 16, 2018 to qualify for the Service Payout if you want to take it.
Once you have received CRA's decision on your personal tax waiver request, if it does not meet your needs you have several options. You may:
- cancel your decision to take the Service Payout,
- take the Service Payout subject to the $15,000 corporate tax waiver for the Province
- take the Service Payout subject to income tax withholdings on any portion not covered by the personal tax waiver issued by CRA.
Amount contributed to RRSP (gross or net)
If you decide to contribute some or all of your Service Payout to an RRSP, you must indicate the amount in the documents that you return to the PSC and/or CRA.
If you're covered by the corporate or personal tax waiver, no income tax will be deducted from your payment, but EI and CPP will be deducted, unless you have already paid the maximum for the year (see Estimating your deductions). Therefore, the net (after-tax) amount that is deposited into your account may be less than the amount you committed to contribute to an RRSP on your forms. However, you must contribute the full amount committed to receive the tax exemption for that amount.
This could mean that you have to contribute more to your RRSP than you receive in net payment.
If you do not contribute the full amount to your RRSP that is specified on your waiver, you may owe income tax when you file your annual tax return. In addition, CRA may assess penalties and interest for not complying with the terms of the waiver.
You receive a Service Payout of $10,000. You indicate that you intend to contribute the full amount to an RRSP. No income tax needs to be withheld if you have the appropriate CRA waiver and have the personal RRSP room to make the contribution. EI of $166 and CPP of $495 must be deducted resulting in a net payment to you of approximately $9,339. Although the net payment you receive is $9,339, you are still required to contribute $10,000 to your RRSP. You will be responsible to make up this difference.
Personal RRSP contribution room
You must have enough personal RRSP contribution room to receive your payment without tax withholdings.
You will find the amount of personal RRSP contribution room you have in your most recent Notice of Assessment issued by Canada Revenue Agency (CRA). Questions about your personal RRSP contribution room should be directed to CRA .
The Service Payout can be directed to a spousal RRSP provided you have sufficient personal RRSP room to do so. The following examples will help clarify:
You have personal RRSP contribution room of $12,000 and will receive a Service Payout of $10,000. Your spouse has $0 personal RRSP contribution room. You can elect to have your Service Payout paid without tax withholdings and then contribute the funds to the spousal RRSP.
You have no personal RRSP contribution room. Your spouse has $12,000 of personal RRSP contribution room. You are receiving a Service Payout of $10,000. Since you have no personal RRSP contribution room, the funds cannot be paid out without tax withholdings and the funds cannot be contributed to a spousal RRSP.
Note: Other accounts, such as a Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP), Registered Education Savings Plan (RESP), and Registered Disability Savings Plan (RDSP) are not tax- deductible like an RRSP. Therefore, the tax break would not apply to the Service Payout if the funds are being contributed to a TFSA, RESP, or RDSP. The tax break at source only applies if the funds are being directed to an RRSP.
Please read the detailed instructions for completing the election form and appropriate tax waiver form, if needed.
Taking the Service Payout vs. taking the Public Service Award (PSA) at retirement
The Service Payout is a one-time option. If you don't elect to take it by March 16, 2018, your only option is to wait until retirement to receive your Public Service Award (PSA), if eligible.
Your PSA will be subject to the terms of collective agreements and civil service regulations in place at that time.
If you are waiting for the PSA at retirement, you do not need to return the Service Payout form. You will simply follow the same process as you normally would for retirement.
If you're taking the one-time Service Payout option:
The Service Payout will be treated as employment income and subject to all applicable statutory deductions (income tax, EI, CPP). The payment will be made through the SAP HR/Payroll system by direct deposit and added to one of your bi-weekly pays. The payroll system will calculate the appropriate amount of income tax to be deducted by taking into consideration your annual salary, plus the amount of your one-time Service Payout.
EI premiums and CPP contributions are deducted from employment income. For EI, 1.66% will be deducted (up to the annual maximum of $858.22) and for CPP, 4.95% will be deducted (up to the annual maximum of $2,593.80). If you have already reached these maximums at the time the payment is made, no EI and/or CPP will be deducted.
If you are putting the Service Payout amount into an RRSP, there are options for a tax waiver so that no income tax will be deducted. These options are outlined in detail in your Service Payout letter of offer and on the Choosing to take the Service Payout page.
If you're waiting to take the PSA at retirement:
When paid at retirement, Canada Revenue Agency (CRA) classifies the Public Service Award (PSA) as a retiring allowance. It is subject to income tax only; no EI or CPP will be deducted.
If taken in cash, the PSA payment will be subject to a withholdings tax as follows:
- 10% on amounts up to $5,000
- 20% on amounts between $5,000 and $15,000
- 30% on amounts over $15,000
This income tax deducted from the PSA at retirement is simply a withholdings tax. The amount of income tax you pay will be calculated based on your total income from all sources and determined when you file your personal income tax return.
As a retiring allowance, your PSA can also be transferred directly to an RRSP with no income tax deducted. No tax waiver is required for this when you take the PSA at retirement. You just need sufficient personal RRSP contribution room to make the transfer.
In addition to your personal RRSP contribution room, another $2,000 per year for each year worked prior to 1996 (and that you were a part of our pension plan and had contributions that are vested), is eligible for transfer to RRSP.
Note: The Service Payout is not a retiring allowance so the rules surrounding retiring allowances, such as the pre-1996 eligible room, do not apply. Government also cannot transfer the Service Payout to an RRSP for you as with a retiring allowance. You will receive the payout, and you must make the contribution to an RRSP yourself. See How the process works for additional information.
Salary for PSA at retirement
If you choose to wait to receive the Public Service Award at retirement, it will be subject to any collective agreements and civil service regulations in place when you retire. Currently, these refer to salary at retirement (or best of 5 years, if higher, as per pension calculation) and both include a service freeze for the Public Service Award (either April 1 or August 11, 2015).
Unions' court challenge to Public Services Sustainability Act (Bill 148)
There are court processes underway by unions to challenge the legislation that froze service for the Public Service Award (PSA). Government can't predict what will happen with the outcome of any court proceedings, but remains confident in the legislation. If there is a change in the future, decisions about the PSA rules and process will be made and communicated at that time.
Your decision about the Service Payout can only be made based on what is known today, which is:
- The new NSGEU collective agreement and current civil service regulations both include a service freeze for the Public Service Award up to the discontinuance date (April 1, 2015 for NSGEU bargaining unit and Crown attorneys, and August 11, 2015 for management/non-bargaining unit employees).
- Choosing to take the Service Payout now only means you are waiving rights to amounts for service up to the discontinuance date (April 1 or August 11, 2015).
If you still have questions
Send your questions about your eligible service, payment or the process in general to the Service Payout Inquiries email at firstname.lastname@example.org. Include your employee identification number and phone number in your email.
If Public Service Commission staff contact you by phone, they will ask for your employee identification number and the last three digits of your Social Insurance Number (SIN) to confirm your identity.