Paid Absence Prior to Retirement

Retirement from service is governed by the HR Policy 07 - Pay, Benefits & Leave under Paid Absence Prior to Retirement.

Paid absence prior to retirement is any earned leave banks and allowances you take as paid absence from work, right before you start your Public Service pension.

During the paid absence period, both a part-time schedule and a modified work week revert to a standard full‑time schedule of seven hours per day, five days per week. Therefore, leave banks are drawn down as if you are working full-time

Benefits and Conditions

During the paid absence period, all normal payroll and benefits deductions continue. You also continue to accrue pensionable service.

Your benefit coverage ends on the last day of the month that the paid absence period ends. It is the day before you start your pension.  Please refer to your BC Pension Corporation retirement kit for information on benefits coverage as a pensioner.

In addition you will not be covered by

  • Short Term Illness and Injury Plan (STIIP)
  • Long Term Disability Plan (LTD)
  • Any allowance, wage replacement or further leave provisions

The applicable sections of the Standards of Conduct for Public Service Employees continue to apply.

Earned Leave Banks

Your remaining earned leave banks can be used as

  • Paid absence prior to retirement
  • Lump sum payout at retirement
  • A combination of both

Archived vacation cannot be used as paid absence and is paid out at the rate at which it was earned.

If you use any of your earned leave banks or are on Short Term Illness and Injury (STIIP) between the time you submit your signed PAPR and when your paid absence starts, contact AskMyHR right away. Your form may need to be amended.

Final Year Vacation Entitlement

If you are scheduled to retire and proceed directly to pension, you are granted full vacation entitlement for the final calendar year of service. Your final year vacation entitlement is adjusted for periods of STIIP and pro-rated for periods of part-time service. Contact AskMyHR to confirm your vacation entitlement.

If you are on paid absence prior to retirement and

  • The paid absence using your leave banks carries over from your last year at work to the next calendar year, you are granted a full year’s vacation entitlement in that next calendar year. When the paid absence extends into more than one subsequent calendar year, you will not be granted any further vacation benefits.
  • The paid absence using your retirement allowance carries over from your last year at work to the next calendar year, you are not granted further vacation entitlements in that next calendar year

Your remaining vacation leave bank can be used as

  • Paid absence prior to retirement
  • Lump sum payout at retirement
  • A combination of both 

Pre-1978 - 50 Percent Sick Bank Benefit

This benefit is equivalent to 50 percent of an employee’s unused sick bank credits accumulated before 1978. It may be taken either as paid absence prior to retirement or as a lump sum payment at retirement.  It cannot be split.

Retirement Allowance

The retirement allowance is paid to retiring employees who have accumulated 20 years or more of service with the BC Public Service.  It may be taken either as paid absence prior to retirement or as a lump sum payment at retirement.  It cannot be split.  Contact AskMyHR to confirm your retirement allowance entitlement.

Last Day on Pay Calculation

With earned leave banks

The use of earned leave banks as paid absence prior to retirement is extended by statutory holidays. For example, if you use 20 days of your earned leave banks as paid absence, and two statutory holidays occur during the 20 days, you will remain on payroll for 22 paid days.

With retirement allowance

The use of retirement allowance as paid absence prior to retirement is not extended by statutory holidays. For example, 20 days entitlement equals 20 paid days.

Lump Sum Payouts

Leave bank payouts

Unused earned leave banks will be paid out at the employee’s current base salary rate. This includes salary protection.  Archived vacation will be paid out at the rate at which it was earned.

The leave bank payouts are processed within two pay periods of your last day on pay with the applicable statutory deductions. They are paid out to you by direct deposit or cheque.

Retiring allowance payouts

If taken as a lump sum, the retirement allowance and pre-1978 50 per cent sick bank are considered a “Retiring Allowance” by the Income Tax Act. 

Lump sum payout of a retiring allowance is subject to Canada Revenue Agency (CRA) lump-sum withholding tax deduction rates of

  • 10% for a payment up to $ 5,000
  • 20% for a payment up to $ 15,000
  • 30% for a payment over  $ 15,000

The retirement allowance and sick bank payments are combined to determine the correct withholding tax rate.

The retiring allowance payouts are processed in the month following your last day on payroll. They are disbursed as non-payroll cheques directed to your home address listed on file.

Registered Retirement Savings Plan (RRSP)

Leave bank RRSP contributions

If you intend to contribute some or all of your leave bank payouts to your RRSP or a spousal RRSP, you can ask Revenue Canada to approve a reduction of taxes at source for your payouts. 

How it works:

Once you receive your leave bank payouts, it is your responsibility to put the money into an RRSP. Consult with your financial advisor before making any decisions.

Retiring allowance & RRSP contributions

If taken as lump sum payments, the retirement allowance and pre-1978 50 per cent sick bank are considered a “Retiring Allowance” by the Income Tax Act.

If you intend to contribute some or all of your retiring allowances to your RRSP or a spousal RRSP, you must complete a Direct Transfer of an Eligible Retiring Allowance (TD2R) (PDF, 11KB) form and submit it to AskMyHR .

  • No tax will be withheld at source for the amount directly contributed to an RRSP
  • The retiring allowance RRSP payouts are processed in the month following your last day on payroll
  • They are disbursed as non-payroll cheques, directed to the financial institution you specified on the TD2R form
  • A copy of the cheques will be directed to your home address listed on file
  • Your financial institution will issue you a receipt for the RRSP contribution

T4 Tax Information Slips

Your paid leave and leave bank lump sum payouts are reported, along with your regular earnings, on a standard payroll T4 for the tax year in which it is earned.

Your retiring allowance lump sum payouts will be reported on separate T4 tax information slips, and will be issued in February of the year following the lump sum payouts. 

Your T4s will be sent to your address on file.  If you move or your address on file is incorrect, contact AskMyHR as soon as possible.

Vacation on Re-employment in the BC Public Service

After you retire, if you return to employment  the same year you received your full final-year vacation entitlement, you don't receive any further vacation entitlements or vacation pay for that year.