Deferred Salary Leave Program for B.C. Government Employees

Introduction

The Deferred Salary Leave Program allows you to defer a portion of your salary to fund a future leave of absence of up to one year. The key advantage of the program is the ability to defer paying income tax on the money contributed to the program until you take your leave. 

Once your application form is approved, the deferral period begins. The deferral period is the time period during which your contributions are taken from your pay and deposited into a trust account in your name. You can contribute between 10 and 33.33 percent of your gross earnings and your deferral period may be from one to six years. You will contribute to the program until your leave begins. During your leave period, you will withdraw the funds from your trust account to self-fund your leave. Your leave may be from six months to 12 months.

You can pursue any activity while on leave as long as you comply with the Standards of Conduct. You are required to return to work at the end of the leave for a period of no less than your leave of absence.

The leave is subject to approval by your ministry and the terms and conditions of the program. You should carefully consider all aspects of the program along with your future life plans before enrolling.

You can participate in the program multiple times in your career:

Eligibility

To participate, you must

  • Be a regular BC Public Service employee appointed under Sections 8, 12 or 15 of the Public Service Act or an employee of a public sector employer participating in this program. This includes unionized employees, excluded employees, Order-in-Council appointees in categories A and B and employees of other participating employers. Salaried physicians are not eligible to participate in this program
  • Have completed a minimum of 24 months of continuous service as a regular employee
  • Have approval from your ministry. If you are participating in the program and apply for a position in another ministry, your continuation in the program must be approved by your new ministry

Program Requirements

  Minimum Maximum

 Amount of gross earnings* you can defer

10%

33.33%

 Duration of Deferral Period

1 year

6 year

 Duration of Leave Period

6 months

12 months

 Maximum Duration of Program (periods combined)

18 months

7 years

*Gross earnings include biweekly salary and all adds to pay, such as (but not limited to) salary protection, classification adjustment, temporary market adjustment, overtime paid, vacation payout and any allowances and premiums.

To participate in the program, you are required to

  • Meet the program requirements above. The program must comply with the federal income tax regulations which means that you cannot customize your leave outside of these rules. (See Section 248 of the Income Tax Act; Income Tax Regulations 6801 and 8508 contain guidelines under which this program operates)
  • Return to work at the end of the leave period for a period of no less than that of your leave of absence. This program is not meant to fund early retirement or any other permanent separation from the BC Public Service

Your Deferral Period

Your deferral period is the period of time in which you are contributing funds towards your future leave of absence. It’s the time between the first salary deferral and the date that you begin your leave of absence. You may defer a minimum of 10 percent to a maximum of 33.33 percent of your gross earning for a minimum of one year to a maximum of six years. 

Your salary during the deferral period will be your regular earnings less the percentage you have chosen to contribute to your leave period. About deductions:

  • Federal income tax and Canada Pension Plan contributions will be deducted based on your reduced biweekly earnings
  • No changes are made to how the provincial pension plan, benefits plans and employment insurance contributions are calculated; these will be based on your gross earnings

The funds are placed in a trust account in your name. You can invest all of your funds in a Guaranteed Investment Certificate or in a savings account. You can also split your investment of funds between the two options

Deferred salary contributions must be continuous while you are actively at work. Any interruption in contributions while you are actively at work will result in your cancellation from the program. Where you are unable to continue deferral of your salary on a temporary basis, such as during a maternity or parental leave, contributions to the program may be suspended. Any previously deferred amounts will remain in your trust account (for your leave). 

Please note that program requirements, such as that the deferral period be completed within six years, or that the leave period start immediately after the end of the deferral period, are not altered by suspensions of contributions.

Leave Period

The leave period begins immediately following the deferral period, and is the period of time that you are temporarily absent from work to pursue the interests and/or activities you have planned, and during which you withdraw your funds from your trust account.

The leave period can be a minimum of six and a maximum of 12 consecutive full-calendar months. Your leave period must begin no later than the sixth year and be completed by the end of the seventh year of your participation in the program. You are required to confirm your leave period with your supervisor at least three months before your leave begins. 

You will receive funds by cheque or electronic transfer according to the instructions you provide on your notification of leave form. Group Retirement Services will deduct the required Canada Pension Plan and income tax from your withdrawal(s). There is a $5 fee for each withdrawal (fees subject to change at any time). All contributions must be withdrawn by the end of your leave period before returning to work.

Payment of funds for lump sum withdrawals is initiated on the first and 15th of the month. Payout of funds for monthly withdrawals is initiated on the 15th of each month. It takes approximately five business days to process a withdrawal, and you will not see the funds in your account until the days have lapsed. It will take additional time if you are receiving a cheque by mail.

There will be significant changes to your benefits during your leave period. You are able to continue your health and life insurance benefits coverage during your leave. To do so, you must apply for the coverage and pay monthly premiums in advance. For more information on the cost of benefits, please review the information on the Designated Monthly Premiums for Benefits While on Leave Without Pay. See chart below for the status of benefit plans during the Deferred Salary Leave Program.

Status of benefits plans during the deferred salary leave program

Plan

Deferral Period

Leave Period

MSP, Extended Health and Dental

No change to coverage.

Coverage is optional. You must apply for coverage prior to your leave and pay premiums.

Group Life Insurance

No change to coverage.

Coverage is optional. You must apply for coverage prior to your leave and pay premiums.

Short Term Illness and Injury

No change to coverage.

No coverage during this period.

Long Term Disability

No change to coverage.

Coverage is optional. You must apply for coverage prior to your leave and pay premiums. Please be aware of the potential consequences of not maintaining coverage to the LTD plan in the event of illness or injury.

Public Service Pension Plan

No change to coverage.

Contributions cannot be made during this period.

Upon return to work, you may purchase pensionable service based on BC Pension Corporation and Canada Revenue Agency rules in place at that time.

Employment Insurance

No change to coverage.

Contributions cannot be made during this period.

Benefit entitlement will be determined by EI eligibility rules.

Canada Pension Plan

Contributions based on your reduced biweekly earnings.

Contributions are based on your funds withdrawn during your leave period.

The employer is responsible for its portion of CPP contributions.

You are responsible for any impacts that participation in this program has on your pension plan, employment insurance, income tax and health and other benefits programs.

Income Tax Implications

You are responsible for any tax implications arising from participation in the program, and you may wish to seek expert financial and tax advice to confirm your understanding of how participating in this program may affect you. The employer is not responsible for providing tax advice.

Group Retirement Services deducts income tax based on your program payment only. When you file your taxes, all of your income for the tax year will be considered, which may result in your owing additional money. You should consider your personal tax situation and plan for any additional taxes that you may owe. 

Administration

Each “contribution” you make towards your leave is deposited into a trust account in your name with Group Retirement Services (Great West Life Assurance Company), who administers the program on behalf of the BC Public Service. You will receive quarterly statements from Group Retirement Services, and will be responsible for reconciling these statements against your payroll records. Report any discrepancies to Group Retirement Services immediately. All inquiries should be made to Group Retirement Services at 1 800 724-3402.

There is no annual member administration charge. Group Retirement Services does collect a service fee for each withdrawal you make during your leave period.

Interest income of the deferred funds will be paid out to you in the year in which it is earned. All payments become taxable upon receipt as employment income and a T4A will be issued for income tax purposes.

How to Enrol

  1. Review the program information and consider your personal or financial situation. Use the Deferred Salary Leave Program Calculator (XLS, 71KB) to help with planning. Determine the dates of your deferral period, percentage of contributions and your leave period
  2. Discuss your application with your supervisor
  3. Complete a Deferred Salary Leave Program Application (PDF, 178KB) and obtain the necessary approvals (your application must be signed off by your director or his or her designate)
  4. If approved, attach a copy of your application to an AskMyHR service request to be processed. Please select a payroll deductions date at least 60 days in the future to allow time for your application form to be processed. Once your application is processed, deductions will begin
  5. Send the completed program application to Group Retirement Services. The address is listed on the bottom of the application form

Change or Terminate Program Participation

Changes to personal and/or family circumstances may occur during your participation in this program. Any changes to the program must comply with federal income tax regulations and are subject to approval.

Note:

  • You may apply once per calendar year to change your contribution amount. However, in the event of financial hardship, you may apply to change your contribution amount at any time. Your contribution amount, however, cannot be reduced to less than 10 percent of your gross salary
  • You may postpone your leave of absence or your supervisor may ask you to postpone your leave provided that you remain compliant with the rules of the program
  • If, before your proposed leave period, you apply for a position and are the successful candidate or you receive a promotion, transfer or go on a temporary assignment, you must notify your supervisor that you are participating in the Deferred Salary Leave Program prior to accepting the position. Your new supervisor will advise on whether or not you may continue in the program
  • You may cancel your participation in the program under the following circumstances:
    • You suffer financial hardship OR
    • You suffer total and permanent disability OR
    • You move to another position where your participation in the program is NOT approved OR
    • You are, for any reason, unable to comply with program rules
  • If your employment is terminated, your participation in the program is cancelled immediately and your deferred funds are paid out that same calendar year
  • If you pass away while a participant in the program, the deferred funds will be paid to the beneficiary specified on your application form

How to make changes/cancellations

  1. Review the program information
  2. Complete the Deferred Salary Leave Program Change/Cancellation Request (PDF, 117KB) form and obtain the necessary approvals (your application must be signed off by your director or his or her designate)
  3. Attach a copy of your application to an AskMyHR service request to be processed. Once your application is processed, if you changed the percentage of your contributions, the new contributions should commence. Please log in to Employee Self Service to ensure that the change has been made
  4. Send the original application to Group Retirement Services. The address is listed on the bottom of the application form. If you cancelled participation in the program, include a VOID cheque with your form to have your funds direct deposited into your bank account

Preparing for Your Leave

  1. At least three months prior to commencing your leave, complete the Deferred Salary Leave Program Notification of Leave (PDF, 120KB). (Payment of funds for lump sum withdrawals are initiated on the first and 15th of the month. Payout of funds for monthly withdrawals is initiated on the 15th of each month. It takes approximately five business days to process a withdrawal and you will not see the funds in your account until after this occurred. It will take additional time if you are receiving a cheque by mail)
  2. If you would like to maintain your benefits while on leave, complete the Option to Continue Employee Benefits While On Leave of Absence Without Pay or Layoff (PDF, 665KB) form
  3. Confirm your arrangements and return date with your supervisor
  4. Attach a copy of your Notification of Leave Application to an AskMyHR service request to be processed
  5. Send the original Notification of Leave application to Group Retirement Services. The address is listed on the bottom of the application form. Include a VOID cheque with your form to have your funds direct deposited into your bank account
  6. In a separate AskMyHR service request, attach a copy of your option to continue benefit form if you are paying to maintain your benefits. The Benefit Service Centre will send you a statement of cost
  7. If you are travelling out of province while on leave, consider purchasing extra medical insurance. For more information, see Travel Insurance
  8. Ensure that your address is up to date in Employee Self Service
  9. When you receive your funds, you may want to set aside a portion to cover any additional income tax that you may owe once you file your income tax return for that tax year

Return to Work

Advise your manager or supervisor in writing of your intention to return to work at least two months before your leave of absence ends.

Upon your return to work, you will be eligible for immediate reinstatement of benefits, provided you have not lost your seniority. Please contact AskMyHR to let them know that you have returned to work and about the status of your benefits.

You can also purchase the service back under the Public Service Pension Plan for your leave period. Please visit Purchase of Service for further information.