Pension Buy Back (Leaves)

Recent amendments to the Teachers’ Superannuation Act (TSA) and changes in the new Memorandum of Agreement have had an impact on leaves of absences. In this article I will discuss how these amendments and changes may affect you.

The TSA was amended to allow the purchase of approved leaves of absence up to the number of years allowed by the Income Tax Act. Presently, the Income Tax Act permits the purchase of five years of leave. Previously, the TSA only allowed the purchase of two years of leave. This amendment will provide more flexibility for teachers who leave the profession for a period of time be it for maternity/adoption leaves, deferred salary leaves, study leaves or any other approved leaves.

The TSA was further amended to allow for the purchase of maternity/adoption/ parental leaves at actual cost instead of actuarial value. However, certain conditions apply. The decision to purchase the leave must be made within an election period of 180 days after the termination of the leave. If the decision to purchase is not made within that time, then the leave can only be purchased at actuarial value. If the decision to purchase is made within the time frame allotted, then the teacher may pay back the amount due in a lump sum or in installments over a period not exceeding two times the period of the leave.

This amendment will provide savings for teachers who elect to purchase early. As well, it will probably ensure that more leaves of that type are bought back. Many teachers have a tendency to postpone buying back leaves then very often find out that the cost has become prohibitive.

Changes in the maternity/adoption leaves clauses of the agreement were also made to bring these clauses in line with the Employment Insurance Act. A teacher can now access up to 52 weeks of leave for this purpose, up from 27 weeks in the previous agreement.

Finally, where a teacher elects to continue insurance coverage during such a leave, the teacher’s share for the cost-sharing premiums can be paid before going on leave by providing the employer with a series of monthly post-dated cheques to cover the period of the leave or upon returning to work, in equal bi-weekly installments over a period not to exceed eight pay periods.

Several amendments have been introduced to the Workers Compensation Act. These amendments are scheduled to become effective April 1, 2002. The most controversial one is the three-fifth's rule which states that the Workers Compensation Board will not pay compensation until a time period after the accident has passed in which the injured worker would have received remuneration from employment equivalent to three-fifth's of the weekly wage loss. In essence, the Board has established a waiting period before benefits are payable. For full time teachers, it means a waiting period of three days. If a teacher has to miss time because of an injury sustained on the job, he/she will have to use sick days to cover the waiting period. These sick days will be recoverable if the time missed continues for more than four consecutive weeks.

Up to five years of approved leaves of absence may be purchased for pension purposes. Generally, leaves of absence are purchased at actuarial value which means the longer you delay buying the leave, the more expensive it will be to buy. However, maternity leaves and deferred salary leaves may be purchased at cost if certain conditions are met. The decision to buy a maternity leave must be made within an election period of 180 days after the termination of the leave and a deferred salary leave must be purchased at the time of the leave.

Finally, I will outline the options available to a couple who are both teachers in relation to the health plan coverage.

In the case of a couple where one spouse will be retiring and one spouse will continue teaching, the spouse who will keep on teaching should carry the health insurance because the employer cost shares the premiums for active teachers but does not cost share the premiums for retired teachers. As well, premiums for retired teachers are higher. Presently, an active teacher pays $85.68 a month for family health insurance while a retired teacher pays $210.42 for the same coverage. By having the active teacher carry the coverage, $124.74 a month is saved.

When the active teacher retires, he/she will be able to keep the health insurance coverage. Should that teacher predecease his/her spouse, the surviving spouse can then pick up the health coverage.

It is also possible for a couple who are both teachers to each have single coverage instead of family coverage. This option could only be used if the couple have no dependents. The chart below outlines this situation.

Active Teachers Monthly Payment

Family Coverage $85.68

2 Single Coverages at $30.91 each $61.82

Savings $23.86

Retired Teachers

Family Coverage $210.42

2 Single Coverages at $103.40 each $206.80

Savings $3.62

In the case of retired teachers, this option would have to be selected before retirement because coverage cannot be changed after retirement.