Update Feb. 2, 2018
Service Payout letter
Letters will be mailed on Monday, February 5, 2018 to addresses in the SAP/HR Payroll system. Please note you will only receive a letter if you are eligible for a Service Payout. Please allow a week or more to receive your letter, depending on mail delivery in your area.
Your letter will include:
- Letter of offer (sample) and election form
- Payment Options Summary
- Canada Revenue Agency (CRA) Declaration of Intent (Reduction to Tax Withholding on Amount in Respect of the Service Payout)
Below is how your Service Payout offer will be presented in your letter of offer:
The table below outlines the Service Payout being offered to you. It is based on the formula of one week of salary per each year of service, pro-rated, up to a maximum of 26 weeks.
|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|
The Years of Eligible Service is presented in decimal points so you can see the precise number we used in your calculation. For your information, the conversion to months of service is below:
Returning your election form and other documentation
The deadline to return your election form and required documents to the PSC is Friday, March 16, 2018 at 4 pm. You can mail or deliver a hard copy, or scan as an Adobe .pdf file and email to the following addresses:
Public Service Commission
Attention: Service Payout
World Trade and Convention Centre, 5th Floor
1800 Argyle Street
PO Box 943
Service Payout Returns
If you have questions about your eligible service, payment or the process in general, please send them to the Service Payout Inquiries email at email@example.com
Staff will review your question and respond by email or by phone based on the nature of your inquiry. Please include your employee identification number and a phone number in your email in case staff need to access your file or discuss your payment or service with you in more detail by phone.
Note that if PSC staff are contacting 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.
Update Jan. 26, 2018
In 2015, government announced it would 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.
Discontinuance date: The date when service stopped accruing for the Public Service Award:
- April 1, 2015 - for NSGEU bargaining unit employees and Crown attorneys
(the date set in new collective agreement)
- August 11, 2015 - for management/non-bargaining unit employees
(the date set in regulations on Aug. 11, 2015)
To qualify for the Service Payout option, you must meet all four of the following:
- have started work with or rejoined the Province before the discontinuance date
- have eligible service before the discontinuance date
- been an active employee with the Province on December 7, 2017
- 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)
- seasonal employees
- term and temporary employees
- part-time employees
- relief employees
- employees on approved leave (e.g., pregnancy/parental/adoption leave)
- employees on Long-Term Disability (LTD) – Note that you stop accruing eligible years of service while on LTD. The Service Payout will be calculated based on years of eligible service up to the beginning of your LTD and the salary that applies to your position on March 31, 2018.
- retired but returned employees – Note if you received a PSA for the maximum 26 years of service when you retired, you are not eligible for a Service Payout. If your PSA was for less than 26 years, and you returned to the Province before the discontinuance date (see General Eligibility), you are eligible for a Service Payout. It will cover the period from when you rejoined the Province to the relevant discontinuance date. Your combined eligible service will be capped at 26 years.
Not eligibleYou are not eligible for the Service Payout if you:
- do not meet the General Eligibility criteria (see above)
- 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 General 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
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 that is prior to 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 are being applied in the service validation process that is underway. Generally, these agreements often provide for continuity of employment and recognition of service; however, it will depend on the specific terms and conditions.
Calculation of Service Payout amount
The Service Payout calculation is based on one week of salary for each year of eligible service to a maximum of 26 weeks. It is calculated using eligible service up to your relevant discontinuance date (see General Eligibility) and salary on March 31, 2018.
Payment for any partial year of eligible service will be prorated based of the number of months of eligible service you have in that year.
If you are not receiving salary on March 31, 2018 because you are on a leave or are no longer employed with the Province, the salary for your position on March 31, 2018 will be used to calculate the Service Payment. You must meet all other eligibility criteria.
The 1% pay plan increase effective April 1, 2017 will be included in the salary as of March 31, 2018 that is used for the calculation of your Service Payout.
Note: That 1% increase will be paid to you on one of your bi-weekly pays before March 31, 2018. We will communicate in advance of that being paid.
Taxes and deductions
Since it is not being paid on retirement, the Service Payout cannot be treated as a retirement allowance.
The Service Payout 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 one-time Service Payout.
EI premiums and CPP contributions are deducted from employment income, up to the annual maximums. Employee EI premiums stop at $858.22 (salary level of $51,700) and employee CPP contributions stop at $2,593.80 (salary level of $55,900). There will be no EI/CPP deductions taken beyond the annual maximums. For employees that have already reached the annual maximums before the Service Payout occurs, no EI/CPP will be deducted.
Deductions will also include any amounts owing to the Province including Public Service Award advances, salary overpayments, and any previously unpaid benefit premiums (e.g., life, LTD, medical, pension).
Any wage garnishment orders in effect at the time of payment will be deducted.
Union dues will not be deducted from the Service Payout unless you are in arrears.
Putting the 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 without tax withholdings, if you have the personal RRSP contribution room to do so and have provided all the required forms and information. Your options for Service Payouts up to and over $15,000 are described below.
Your payment will be included as income, in box 14 of your T4 for 2018.
When you receive your payment, you must then make the RRSP contribution through your financial institution. This can be any institution, provided funds are contributed to a registered RSP. The contribution must be made for the 2018 tax year.
Your financial institution will issue an official income tax receipt.
When you file your annual tax return, there will be an income inclusion on your T4 for the Service Payout amount, and you will have an offsetting tax deduction (the tax receipt from your financial institution) for the contributed amount. These will essentially cancel each other.
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 being withheld, if you have the personal RRSP contribution room. You need to complete a CRA Declaration of Intent, which will be provided in your February letter.
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 expect a payout over $15,000 and want to put more than $15,000 of your payment into an RRSP without taxes deducted, you must apply to Canada Revenue Agency (CRA) for a personal tax waiver for the desired amount.
This is done by completing a T1213 form.
In the Employer/Payer section, you should enter Name: Province of Nova Scotia. CRA has confirmed that you may leave the "Contact person" and "Telephone and fax numbers" fields blank.
Once you receive approval waiver from CRA (this can take up to 60 days to process), you must forward it to the Public Service Commission.
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.
If the personal tax waiver is insufficient
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 into an RRSP, you must indicate the amount in the documents that you return to the PSC. If you're covered by the corporate or personal tax waiver, no income tax will be deducted from your payment; however, it is still subject to EI and CPP deductions if you have not already paid the maximum for the year. Therefore, the net (after-tax) amount you receive may be less than the amount you indicated, but you must contribute the full amount you indicated 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 specified on the waiver to your RRSP then 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 exemption 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 of approximately $9,339 to you. Although the net payment you receive is $9,339, you are still required to contribute $10,000 to your RRSP.
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 by calling 1-800-959-8281.
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.
Electing to take the Service Payout option
You will receive a letter stating your total years of eligible service and amount of Service Payout that you can receive before any deductions that apply. On the back of your letter, there will be an election form for you to indicate that you want to take the Service Payout and to choose your preferred payment option.
Letters will be mailed out the week of February 5, 2018.
Your election form and all necessary documentation (with the exception of the personal tax waiver from CRA), must be returned to the Public Service Commission by March 16, 2018.
Letters will be sent in the mail to the address that we have for you in the SAP/HR Payroll system.
If you will not be able to receive your letter at your mailing address, please send an email to firstname.lastname@example.org and someone will contact you about an alternate arrangement.
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.
Choosing to Receive the Public Service Award (PSA) at retirement
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.
Tax Treatment if PSA Taken at Retirement
If 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
The income tax deducted from the PSA 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.
Timing of Service Payout payment
Service Payout payments will be processed when all necessary forms and information are received. Payments will begin in mid-April, 2018 and are expected to be completed by summer 2018.
You will be paid in the same manner as your regular pay (e.g., direct deposit), on a regularly scheduled pay date.
There have been questions about why this payout is not happening immediately, as stated in the NSGEU Civil Service arbitration award on December 7, 2017. There are many reasons. The award directed that March 31, 2018 be used as salary, which means no payments could be made before that date. There is also a great deal of work required in a short time to implement the Service Payout option, including:
- determining precise terms and conditions of the Service Payout program to be fair to all employees and reflect the principles of the Public Service Award,
- consulting with relevant stakeholders, including Canada Revenue Agency, NSGEU, Crown attorney's and others,
- validating service calculations, many of them complex, for over 9,000 employees
- implementing the April 1, 2017 one per cent (1%) wage increase for NSGEU pay plans
- building in time for employees to seek professional advice on the options once they receive the information
After the March 16, 2018 deadline, there is also time needed to ensure accurate processing of thousands of election forms and necessary CRA documentation. The goal is to implement the Service Payout as quickly as possible while ensuring the systems are in place for accuracy and accountability.
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 include a service freeze for the Public Service Award
- the Service Payout will address service to your discontinuance date (April 1 or August 11, 2015) and you will waive all future rights to a Public Service Award related to that service
This website will be updated regularly as more detail is available.