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Unionized Service Payout Option Update: October 2018
Frequently Asked Questions (Additional FAQs located NSHA Intranet)
All the service calculations have been completed and the last batch of letters will be mailed no later than October 30th. We are aware of the rotating strike plans with Canada Post and are planning an alternate mailout if this process is impacted.
Letters mailed October 12th :
- Central Zone – NSGEU Healthcare, NSGEU Nursing
- Western Zone – All bargaining units in the South Shore and South West areas
- Eastern Zone – All bargaining units in the Guysborough, Antigonish and Strait areas as well as NSNU, Unifor and CUPE in Cape Breton.
Letters to be mailed October 30th:
- Central Zone – NSGEU Office and Clerical, NSGEU Support and NSNU
- Western Zone – All bargaining units in the Annapolis Valley area
- Eastern Zone – NSGEU Public Health/Addictions/Continuing Care in Cape Breton
- Northern Zone – All bargaining units.
Q1 –I received my letter offering a Service Payout. What are my options?
- If you elect to receive the Service Payout, you’ll be paid the full amount as calculated, less applicable taxes and deductions.
- If you choose not to take this one-time option for the Service Payout, you’ll receive your Retirement Allowance, if eligible, as per the Collective Agreement language in place at the time of your retirement.
- This is a one-time, lump-sum payment. There is no option to receive some now and the rest at retirement.
If you choose option 2 or 4 on the form, you must also return the Declaration of Intent form.
If you choose option 4, the amount in the space to complete is the same amount to match the Declaration of Intent form (your RRSP contribution amount).
IMPORTANT: You have one month from the date of your letter to respond and provide completed documentation if you are taking the service payout. If you are not taking the service payout, you do not need to respond.
Q2 - I did not receive a letter and I think I am eligible. Who do I call?
You can email @email, or phone (902) 473-5221 or toll free 1-833-576-9356 no later than November 5th, 2018.
Q3 - Can I roll this payment right into my Registered Retirement Savings Plan (RRSP)?
The Service Payout is not retirement income. It is a payment in lieu of your Retirement Allowance. As employment income, it is subject to all applicable taxes and deductions.
• The Government of Nova Scotia has obtained a tax waiver from Canada Revenue Agency (CRA), so if you have sufficient eligible personal contribution room in your RRSP, you may be able to transfer up to $15,000 to your RRSP without income tax being withheld.
• To put an amount more than $15,000 into an RRSP without taxes deducted, you must apply to CRA for a personal tax waiver. This is done by completing a T1213 form (available at https://www.canada.ca/en/revenue-agency/services/forms-publications/form...). Once you receive your personal tax waiver from CRA, you must forward it to the Benefits office to process your Service Payout. There will be more details in your letter in October.
Q4 - What if the $15,000 tax waiver from CRA is not enough to cover my full payout? What are my options?
If you expect your Service Payout to be more than the $15,000 covered by the waiver, you have two options:
- If you have sufficient personal RRSP room, you can receive up to $15,000 of your payout without taxes deducted to be put into an RRSP. The rest will be paid to you after appropriate income taxes, CPP, and EI are deducted.
- To put an amount more than $15,000 into an RRSP without taxes deducted, you must apply to CRA for a personal tax waiver. This is done by completing a T1213 form (available at https://www.canada.ca/en/revenue-agency/services/forms-publications/form...). Once you receive your personal tax waiver from CRA, you must forward it to the Benefits office to process your Service Payout. There will be more details in your letter in October.
IMPORTANT: You cannot combine the $15,000 waiver obtained by the Government with the one you personally receive from CRA. It is either one waiver amount or the other.
The form also asks for Employer/Payer. Under employer, put Nova Scotia Health Authority (Province of Nova Scotia). You do not need to complete the contact person and telephone section.
Q5 –I am transferring the entire amount to my RRSP, How will I know what my net deposit will be?
It is important to note, if you Choose option 2 or 3, the entire payout amount indicated in your letter, must be transferred to your RRSP. This is the amount before CPP and EI deductions. If you have not reached the CPP and EI maximums by the date it is paid, you will have to transfer the amount deducted for CPP and/or EI.
Q6 - How do I know if I have enough room in my RRSPs to cover the whole payment? You will find the amount of RRSP room you have in your most recent Notice of Assessment issued by CRA. Questions about your personal RRSP contribution room should be directed to CRA by calling 1-800-959-8281.
Q7 - What if I do not have any room in my RRSPs for this payout or want it all as a direct financial payment?
If you choose to take the payout, but do not have the room for the amount to roll it into your RRSPs, or you wish to take the payout as a direct financial payment, you will be required to pay the appropriate tax, EI and CPP deductions. Those deductions will happen automatically when the payout is processed through payroll.
Q8 - How will you calculate the Service Payout amount?
The one-time Service Payout option will be based on one week of salary for each year of eligible service to a maximum of 26 weeks. It will be calculated using eligible service up to April 1, 2015 and your salary on October 31, 2017.
Since this payout is not being paid on retirement, the Service Payout cannot be treated as a Retirement Allowance. It is treated as income and is subject to all statutory deductions that apply, which may include deductions for income tax, Employment Insurance (EI) premiums and Canada Pension Plan premiums (CPP).
Q9 - What counts as eligible service?
Eligible service will be determined as outlined in the Collective Agreements. The Collective Agreements are based on the former District Health Authorities and there may be differences among the agreements and past practices, such as portability of service from one employer to another for the purposes of retirement allowance/service payout and breaks in service may negate previous service.
Pensionable service is not the same as service towards your retirement allowance or service payout.
Q10 - When will I receive my payment?
Employees are working to process large volumes of forms and questions.
We are planning to have all payments completed before the end of the calendar year 2018. They will be paid on December 6th and December 20th paydays.
It is important that you return the appropriate forms in the one month time frame provided in your letter in order to be paid in 2018. If documentation is not received within the timeframe outlined in your letter, payment will not be made this calendar year and a new CRA exemption will need be requested to be able to put more than 15000 into an RRSP in the 2019 calendar year.
We ask that employees be patient as we work through this process as quickly as possible.
Important: Ensure your document is completed in full. Did I elect to take the payout? Did I choose the payment option? Is my form signed and dated and witnessed at the same time? Did I complete any additional forms required based on my payment choice?
Q11 - Will the Service Payout be taxed?
The Service Payout will be taxed as employment income, and subject to all statutory deductions that apply, which may include deductions for income tax, Employment Insurance (EI) premiums and Canada Pension Plan premiums (CPP). Since it is not being paid on retirement, it cannot be treated as retirement allowance.
Q12 - Will garnishments be deducted from my Service Payout?
Yes, any garnishments will be deducted from the Service Payout amount.
Q13 - Will the payout be included on my T4?
Yes, it will be included and identified as employment income. The payment will be included on your T4 in the calendar year that the payment is made.
Q14 - I received a pay alignment years ago, and was told it would be deducted from my Retirement Allowance or time of termination. Does this apply to the Service Payout?
Pay alignment will be included as an option to deduct from your Service Payout amount. These deductions will need to be considered in your total amount when choosing to transfer to a RRSP.
Q15 - I’m not sure what I should do. How can I get financial advice?
If you need help making your decision about the Service Payout, you’re encouraged to seek professional advice based on your personal situation and goals.
Q16 - Who can I call if I have more questions or need help with the forms? If you have a question that is not answered on NSHA intranet or is related to your personal service statement, you can email @email, or phone (902) 473-5221 or toll free 1-833-576-9356.