Early Service Payout Option (NSTU Employees)

Early Service Payout Option (NSTU Employees)

The Teachers’ Professional Agreement and Classroom Improvements (2017) Act contained a provision for an early payout of service awards to eligible NSTU members.

On January 16, 2018, all school boards in Nova Scotia were directed by the provincial government to begin this process.

Documents

Contact

For further information, check the Frequently Asked Questions section below or:

  • Email: servicepayout@srsb.ca (Preferred method for earliest response)
  • Phone: 902-625-2191 (Please leave a message)

Frequently Asked Questions (FAQs)

Q: I have reviewed the FAQs and/or received a response from SRSB staff about how my term and/or substitute service was considered in the calculation of my service payout amount and do not agree with the interpretation being provided. Who can I speak to?

A: If you disagree or have questions about the Board’s interpretation of how your term and/or substitute service is factored into the service payout calculation, please contact your Nova Scotia Teachers Union (NSTU) representative.

 

Q: Under the section Registered Retirement Savings Plan (RRSP) contributions, the CRA T1213 Form says “Give details or a copy of the payment arrangement contract.” What is this?

A: Please attach a copy of your Notice of Election Form to the T1213 Form when you submit it to the Canadian Revenue Agency.

 

Q: The CRA Form T1213 asks for Employer information. What do I put on the form?

A: Please use the following:

Employer/Payer

Name

Contact Person

Telephone and Fax Numbers

Strait Regional School Board

Financial Services

902-625-2191

 

Q: My pensionable service is higher than the eligible service listed on my Notice of Election Form, used to calculate my service payout amount. Why?

A: Your pensionable service may be higher than the eligible service used to calculate the service payout if:

  1. You have worked at another board in the province (ie. you may have pensionable service at the other board but this may not count toward eligible service for the service payout)
  2. You have bought back pensionable service for an unpaid leave (ie. this would count as pensionable service but not as eligible service for the service payout)
  3. You worked at another board in the province and had a break in service between working at the other board and starting work at the SRSB (ie. your eligible service only includes the time since you started work at the SRSB)
  4. You bought back pensionable service for time on Long Term Disability (LTD).


Q: What is the Early Service Payout?

A: The Early Service Payout is a one-time option for eligible teachers to receive a lump-sum payment in lieu of a service award, which was frozen effective August 1, 2015.

 

Q: Who is eligible for the Early Service Payout option?

A: To qualify for the Early Service Payout option, you must have eligible years of service before August 1, 2015.

 

Q: What counts as “eligible service”?

A: For NSTU members, eligible service is as defined in Article 61 of the Teachers’ Provincial Agreement.

 

Q: Do I have to take the Early Service Payout now? What are my options?

A: No, you do not have to take the Early Service Payout. Your other option is to wait to receive your service award when you retire, if eligible, as per the terms of the collective agreement and regulations in place at that time.

 

Q: I was hired after 2015. What are my options?

A: Teachers hired after the service award was frozen (after August 1, 2015 for NSTU employees) do not qualify for an Early Service Payout and are also not eligible for a service award at retirement.

 

Q: I am not sure how much Early Service Payout I am eligible for. How do I find out?

A: The Board is currently making payout calculations for each employee based on employment records, eligible years of service and salary on March 31, 2018. That information was sent to you in a communication on Monday, February 5, 2018, and will include a form for you to complete if you elect to take the Early Service Payout.

 

Q: How will you calculate the Early Service Payout amount?

A: The one-time Early Service Payout amount will be calculated in accordance with applicable contract provisions. For NSTU members, this is Article 61 of the Teachers’ Provincial Agreement. Teachers employed prior to August 1, 2002 will also need to consult the Memorandum dated January 17, 2003 noted in 61.02 (i) http://nstu.ca/nstu-members/member-services/contracts-agreements/provinc.... The calculation is based on contract eligible service up to August 1, 2015 and salary on March 31, 2018.

 

Q: How do I elect to be paid the Early Service Payout?

A: If eligible, you will receive a letter on February 5, 2018 outlining the amount of Early Service Payout that you are eligible for before deductions for income tax, CPP and EI. It will also include a form for you to indicate that you are taking the Early Service Payout. More detailed instructions will be provided in the above-referenced communication. If you elect to take the Early Service Payout option, you are not able to retract or change this decision.

Q: By when do I have to make my decision?

A: You will have to return your election form so that it is received by the Board by March 19, 2018. Late submissions will not be processed.

 

Q: Will I have another opportunity to take this Early Service Payout?

A: No, the Early Service Payout is a one-time option. If you do not elect to take it by March 19, 2018, your only other option is to wait until retirement to receive your service award, if eligible, as per the terms of the collective agreement and regulations in place at that time.

 

Q: If I elect to take the Early Service Payout, when will I receive my payment?

A: All payments will be made in summer 2018. The exact date has yet to be confirmed.

 

Q: Will the payout be included on my T4?

A: Yes, as employment income, the payment will be included on your T4 in the year that the payment is made.

 

Q: Will the Early Service Payout be taxed?

A: The Early Service Payout will be taxed as employment income, and subject to income tax withholdings, CPP and EI deductions. Since it is not being paid on retirement, it cannot be treated as a retirement allowance.

 

Q: If I am currently receiving Employment Insurance (EI) benefits and choose to take the Early Service Payout, will this impact my EI benefits?

A: The Early Service Payout is employment income and may impact your EI benefits.

 

Q: Can I roll this payment into my Registered Retirement Savings Plan (RRSP)?

A: The Early Service Payout is not retirement income – it is a payment in lieu of your service award. As employment income, it is subject to all applicable taxes and deductions. However, the Province of Nova Scotia has obtained a tax waiver from Canada Revenue Agency (CRA) so that you may transfer all or some of your payment, up to $15,000, to your RRSP without income tax being deducted, depending on your personal RRSP contribution room. This will be paid on your regular pay and you are responsible for ensuring it is contributed to your RRSP. Further detail will be provided in the communication you receive in early to mid-February.

 

Q: How do I know if I have enough room in my RRSP to cover the whole payment?

A: You will find the amount of RRSP 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.

 

Q: What if the $15,000 tax waiver from CRA is not enough to cover my full payout? What are my options?

A: If you expect your Early Service Payout to be more than the $15,000 covered by the waiver, you have two options:

  1. You can receive up to $15,000 of your payout without income tax deducted (CPP and EI will be deducted as applicable) to be put into an RRSP. This will be paid on your regular pay and you are responsible for ensuring it is contributed to your RRSP. The payout amount over the $15,000 will be paid to you through your regular pay after appropriate income taxes, CPP, and EI are deducted.
  2. To put an amount more than $15,000 into an RRSP without income tax 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 letter from CRA (this can take up to 90 days to process), you must forward it to the Board to process your Early Service Payout. Please note that, if you choose this option, you must still complete and return your election form so that it is received by the Board by March 19, 2018. You can submit the personal tax waiver letter from CRA to the Board after March 19, 2018. More detail will be provided in your communication in early to mid-February.

 

Q: If I choose the Early Service Payout option, can I receive some now and the rest at retirement?

A: No, this is a one-time, lump-sum payment. If you elect to receive the Early Service Payout, you will be paid the full amount as calculated, less applicable taxes and deductions (unless you have opted to have taxes waived as referenced above). There is no option to receive some now and the rest at retirement. If you choose not to take this one-time option for the Early Service Payout, your other option is to receive your service award, if eligible, upon retirement, as per the terms of the collective agreement and regulations in place at that time.

 

Q: I retired and received my Service Award but have since returned to active employment. Am I eligible for the Early Service Payout? What years will it cover?

A: As a currently active employee on a permanent/probationary contract, you are eligible for the Early Service Payout if you came back to work before August 1, 2015. The Early Service Payout will be based on the eligible service since you returned, to August 1, 2015. Your combined eligible service will be capped subject to applicable collective agreements and/or regulation.

 

Q: I am currently on Long Term Disability. Do I qualify for the Early Service Payout?

A: Yes, as long as you have years of eligible service before August 1, 2015. You should be aware that once you are on LTD, you stop accruing eligible years of service. The Early Service Payout will be calculated based on years of eligible service up to the beginning of your LTD, using the salary in effect on March 31, 2018.

 

Q: I had an unpaid leave of absence before August 1, 2015. Does that impact my Early Service Payout?

A: Yes, an unpaid leave of absence will impact the eligible service, as defined in Article 61 of the Teachers’ Provincial Agreement.

 

Q: I am a term employee. Do I qualify for the Early Service Payout?

A: No. Current term teachers, provided they had service prior to August 1, 2015 and that service is deemed as probationary service, may become eligible for a service award at time of retirement.

 

Q: I am not sure what I should do. Where can I get financial advice?

A: If you need help making your decision about the Early Service Payout, you are encouraged to seek professional financial advice based on your personal situation and goals. Board staff will not provide financial advice.

 

Q: Which former board is used to determine my service payout?

A: If you were hired prior to amalgamation (1996), the board in which you received your probationary/permanent contract is the former board you are assigned to.

If you were hired after amalgamation and prior to 2002, the same rule applies. Anyone hired after 2002 is assigned “SRSB” as the board.

Q: If I worked for the SRSB or predecessor board on a permanent contract, resigned and subsequently returned to the SRSB, will my service be broken?

A: Yes, if you resigned from the SRSB and returned, your service will only count from the date you returned to the employ of the SRSB.

 

Q: If I was hired after July 31, 2002 and currently have a permanent/probationary contract, what years of term contract service qualify as eligible service for the calculation of my service payout amount?

A: The only term contract service that qualifies as eligible service in this scenario is a maximum of two full time term contract years immediately preceding the receipt of your permanent contract, so long as they are the deemed probationary years pursuant to Article 33.05 of the Teachers Provincial Agreement, i.e. a term contract of 175 days or more in consecutive school years.

 

Note that a maximum of two years of substitute service may also be eligible service if it is deemed probationary pursuant to Article 32.13 of the Teachers Provincial Agreement. These years can also be eligible in combination with term contract service pursuant to Article 33.05 (referenced above), to a maximum of two full time years.

 

Q: Who can I contact if I have more questions?

A: Questions will be addressed in one of two ways:

Email: servicepayout@srsb.ca (Preferred method for earliest response)

Phone: 902-625-2191 (Please leave a message)