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Part of Benefits directives

Pension plan membership, pensionable salary and pensionable service

This directive provides rules for the application of employee pension and retirement plans.

About this directive

Reference to applicable legislation (act or regulation):Employment Pension Plans Act and Regulations
Joint Governance of Public Sector Pension Plans Act
Public Service Pension Plan (Plan Text)
Public Sector Pension Plans Act
Public Sector Pension Plans (Legislative Provisions) Regulation
Management Employees Pension Plan Regulation
Part 2, Section 13, 39, 40, 41, 49, 55, 56, 57, 66, 98, Part 17,
Public Service Employment Regulation
Article 4, 16, 17, 18, LOU 3, 4, 5, 22, Collective Agreement
Application:All employees appointed or employed pursuant to the Public Service Act
Last updated:February 2022
Last reviewed:February 2022
Amended by:Alberta Public Service Commission:
Strategic Services and Public Agency Secretariat, Workforce Policy, Pension and Benefits Policy

Purpose

This directive provides consistent and transparent rules for the application of the Public Service Pension Plan (PSPP), Management Employees Pension Plan (MEPP), and Management Supplementary Retirement Plan (SRP) to employees subject to the Public Service Act (PSA).

Overview

This directive outlines the Government of Alberta's rules, as related to pension membership, pensionable salary and calculating pensionable service under the PSPP, MEPP and SRP. These rules will be applied fairly and consistently throughout the Government of Alberta.

Definition of terms

Disclaimer: If there are any discrepancies in how the terms are defined below and the Public Service Act and Public Service Employment Regulation (PSER), the act and regulation supersede.

The following terms identified in this directive have the same meaning described in the Pension Membership Policy: Part-time, Temporary and Fixed Term Contract Employees.

Terminology related to types of employment are consistent with those identified in the PSER.

Participation in PSPP or MEPP

Pension participation for employees of the Government of Alberta is in either PSPP or MEPP (including the SRP).

MEPP (and SRP) participation applies to employees in the following categories:

  1. employees holding a position that is classified or designated as a management position, according to the PSER
  2. certain employees who are grandfathered to participate in MEPP pursuant to section 10(1)(o) of the Management Employees Pension Plan (AR 367/93) Regulation – in particular: employees who are, or were, a MEPP participant by virtue of holding a position in another eligible category at any time from September 1, 2019 to January 1, 2023 and who, during that period, are either:
    • reclassified to a position to which PSPP otherwise applies, or
    • on the initiative of the Government of Alberta, are appointed to another position in the Government to which PSPP otherwise applies (except if resulting from a disciplinary action or the Government’s common law duty to accommodate), and provided their employment is continuous through the reclassification or re-appointment, and participation continues only for so long as their employment remains continuous in the reclassified position or position to which they were appointed.

For more information on eligibility for grandfathered participation in MEPP, see the MEPP Grandfathering Guidelines.

All other Government of Alberta employees eligible to participate in a pension plan (pursuant to the other rules listed as 1 and 2 above) participate in PSPP.

Exclusions

Notwithstanding the above, pension plan participation is not permitted if an employee:

  • works less than 14 hours per week or 728 hours per service year, or
  • after an employee reaches his or her latest pension commencement date (December 31 of the year in which the member turns 71 years of age), or
  • is in receipt of a pension from the PSPP, MEPP or the Public Service Management (Closed Membership) Pension Plan, based on previous participation in any of those plans.

Pension plan membership

Pension plan participation will commence immediately upon the first date of employment for eligible employees. Eligibility for pension plan participation for part-time, temporary and fixed term contract employees is set out in the Pension Membership Policy – Part-time, Temporary and Fixed Term Contract Employees.

  • Permanent employees

    Pension plan participation is mandatory for the following:

    • full-time permanent employees whose regularly scheduled hours of work are not fewer than 30 hours per week, and
    • part-time permanent employees whose regularly scheduled hours of work are fewer than 30 hours per week, and at least 14 hours per week, or 728 hours per service year.

  • Temporary employees

    Pension plan participation is mandatory for full-time temporary employees whose regularly scheduled hours of work are not fewer than 30 hours per week. Part-time temporary employees are not eligible to participate in the PSPP or the MEPP.

    Read the Temporary Employment Directive for more information about entitlements.

  • Wage employees

    An individual commencing employment on wages is not eligible for participation in the PSPP or the MEPP.

    Pension plan participation is mandatory for employees who are categorized as 2850 Hour Wage Employees, as per the requirements of the PSER or Collective Agreement.

    Read the Wage Employment Directive for more information about entitlements.

    The Public Service Employment Regulation governs the terms, conditions of employment, and entitlements for Management, Opted Out and Excluded Employees. The Collective Agreement governs the terms, conditions of employment and entitlements for Bargaining Unit employees.

  • Contract employees

    Employees hired on a Contract of Employment for fixed term employment have pension eligibility determined in accordance with the guidelines established by the Public Service Commissioner. These apply to Crown employees appointed pursuant to the PSA and as per their employment contracts for other designated executives and senior officials appointed by Order in Council. A deputy head who is considering any exceptions to the standard terms and conditions for contracts of employment as set out in the guidelines for employees appointed under the PSA, such as pension plan participation, requires prior approval of the Public Service Commissioner.

    Read the Administrative Guidelines for Contracts of Employment for more information about entitlements.

    A contract of employment that does not include participation in a public service pension plan, cannot be credited as pensionable service in any of the Alberta Public Service Pension plans if the employee transfers, at a later date, to a position in which  pension plan participation is required. However, the individual may be permitted to purchase previous service under the applicable pension plan rules. This provision continues after the conclusion or termination of the contract that was not inclusive of pension plan participation.

Pensionable salary

The following represent the types of salary which are pensionable (list is not exhaustive):

  • gross basic annual salary, including salary associated with entitlements, for example:
    • General Illness
    • Long Term Disability Income (LTDI)
    • Supplemental Employment Benefits
  • salary modifiers, such as acting incumbent pay and others
  • premium pay, such as shift differential for working nights and weekend premium for working weekends
  • retroactive salary adjustments

The following represent the types of salary, which are non-pensionable salary types (list is not exhaustive):

  • overtime
  • standby pay
  • vacation leave payout
  • expense allowance payments (for example: meal allowances)
  • non-cash benefits

  • Pensionable salary – Calculation

    Pensionable salary is calculated, and pension plan contributions are deducted from employee pay, on a bi-weekly pay period basis.

  • Annualized salary for the purposes of calculation pensionable salary

    PSPP

    1. In situations when a full-time employee's annualized pensionable salary will exceed the Year's Maximum Pensionable Earnings (YMPE) limit established for the PSPP for the reporting year, the employee's pensionable salary and YMPE will be annualized and contributions will be prorated amongst each bi-weekly pay period, for the purpose of determining employee and employer contributions to the pension plan.
    2. The above approach applies to part-time employees' salary.

    MEPP and SRP

    1. In situations when an employee's annualized pensionable salary will exceed the salary cap established for the MEPP, the employee's pensionable salary and the salary cap will be annualized, and contributions prorated, amongst each bi-weekly pay period, for the purposes of determining employee and employer contributions to both the MEPP and the SRP.

  • Pensionable salary – Calculation parameters

    In accordance with guidelines issued by the Alberta Pensions Services Corporation, the employee’s and employer’s annual pension plan contribution rates, YMPE and salary cap amounts will correspond to all pensionable salary paid to active employees within that pension plan reporting year.

    Any period during which an employee receives LTDI benefits, is considered pensionable service and employee and employer contributions will be made based on the employee’s salary prior to the LTDI period, including eligible salary increases.

    For information about other pensionable salary types, please contact your Ministry Payroll Specialist.

Pensionable service

Pension plan reporting (service) year

For the purposes of calculating service year for pension purposes, a bi-weekly pay schedule is used. The pension “service year” begins the first day of the first pay period of the calendar year and ends on the last day of the final pay period of the calendar year.

Pensionable service

Pensionable service is calculated on a daily basis by determining the number of days an eligible employee worked in a pension plan reporting year as compared to the total possible number of working days within a pension plan reporting year.

The weekly hours used in the calculation of pensionable service are set out in accordance with the Public Service Employment Regulation or Collective Agreement and shall be either:

  • 40 hours per week, or
  • 38.75 hours per week, or
  • 36.25 hours per week

Part-time equivalents are calculated as a percentage (%) of the full-time equivalent as outlined above.

Pensionable service – Maximum pensionable service accrual

Pensionable service earned within a service year will not exceed one year of service under the pension plan.