Self-Funded Leave
What is it?
Self-Funded Leave provides you with an opportunity to defer a portion of your gross salary to fund a period of leave from work to be taken at a later date.
How does it work?
You can defer up to 33 1/3% of your gross regular salary to fund a period of absence from work.
The following provides an example of how Self-Funded Leave works.
John earns $45,000 per year. He wants to take 6 months off starting September 1, 2003 to travel and would like 40% ($18,000) of his current income paid to him during his period of absence.
In August 2001, John applied to have 10% of his gross salary deferred in 2001, 20% deferred in 2002 and 10% deferred in 2003 (a total of 52 pay periods). Starting with his first pay in September 2001, $346.15 (1/52 x $18,000) will be deferred to a trust account in John’s name.
How long do I have to defer funds?
The deferral period can be any length of time to a maximum of six (6) years. Your leave of absence must immediately follow the deferral period.
A leave of how long?
The leave of absence may be taken for a period of six (6) to twelve (12) consecutive months.
Can I change the deferral period?
You may, at any time before the last six (6) months of the deferral period, request that the period of leave originally chosen be changed. Such a request is subject to the following:
- The period of leave may not be changed for a period of less than six (6) months or more than twelve (12) consecutive months.
- The period of leave may not commence at a time which is later than six (6) years after the commencement of the deferral period.
- Approval of your request for a change is subject to operational requirements and cannot be guaranteed.
How will deductions be made?
The amount authorized by you on your application for this option will be deducted from each of your regular bi-weekly cheques. No deductions for income tax or Canada/Quebec Pension Plan will be made on the salary being deferred. All other deductions will continue.
You may vary the percentage of the deduction of your gross regular salary. This request is subject to the following:
- Such a request will only be accepted once in a calendar year.
- The change will become effective one (1) month following your request.
- No changes can be requested if less than six (6) months remain in the deferral period.
- Such a request must be addressed in writing to AccessHR.
Where do the deferred funds go?
The deferred amount will be transferred into a trust account in your name with the Alterna Savings. You will be required to enter into a Self-funded Leave Custodial Agreement with the Alterna Savings. Information regarding this agreement will be provided upon approval of your request.
The trust account will generate interest which will be paid to you annually.
Maturity of trust agreement:
- Upon maturity of your trust agreement, the funds will be released to an account of your choice.
- The amount of the funds returned will be added to your income for the taxation year during which you received the funds for the purpose of calculating federal income tax and CPP premiums for that taxation year.
Note: Employees residing in the province of Quebec will be responsible for monies owed to Revenue Quebec for the QPP and income tax as only the federal income tax for those funds will be deducted.
Must I return to work after my leave?
Yes. You must return to work for a period of time equal to your leave period. You will return to your position.
What about my benefit Coverage? |
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|---|---|
| Pension | Contributions: First 3 consecutive months – your share is mandatory, after 3 consecutive months – two times your share, optional. |
| Basic Life Insurance Plan (BLIP) | Coverage: yes. Premiums: your share plus corporate share from the first month of leave. |
| Long Term Disability Insurance (LTD) or Disability Insurance (DI) | Coverage: yes. Premiums: your share plus corporate share from the first month of leave. |
| Life and Accident Insurance (LAIP) (for Management/Exempt employees only) | Coverage: yes. Premiums: your share (Employee paid) |
| Extended Health Care Plan (EHCP) | Coverage: yes. Premiums: your share plus corporate share from the first month of leave. |
| Vision/Hearing & Dental Care | No coverage. |
| Provincial Health Care (BC and Alberta only) | You must pay your share plus corporate share directly to the province. |
| Vacation and Sick Leave No accumulation or use during leave. | How are the premiums paid? |
Premiums will be recovered upon return to work, over a period equal to two times the period of absence.You must already be a member of the above benefit plans in order to have coverage under this program. This chart applies only to the Work Options Program. |
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Additional Information
- Should you voluntarily withdraw from this option, you will be responsible for the financial and tax implications of the withdrawal.
- During the approved leave, you may accept employment outside the Corporation provided such employment:
- is not with any third party, subsidiary or affiliated company or for any other federal institution; and,
- meets CPC Conflict of Interest guidelines or of any subsidiary or affiliated company. Such outside employment must not be with a competitor.
Questions and Answers
Why must I sign a custodial agreement?
The custodial agreement, which is between you and the custodial institution, outlines the conditions that will govern the administration of your deferred funds.
I don’t have an account with the Alterna Savings. Can I deal directly with my financial institution?
No. As this type of leave requires special arrangements with a financial institution, it is only available through the Alterna Savings. The Alterna Savings was chosen because it already has a plan in place and involves no administration costs.
Can I make a partial withdrawal from the trust account before it matures?
No, partial withdrawals cannot be made from the trust account.
May I terminate my participation in the Self-Funded Leave option prior to the maturity of my trust account?
Yes. You will be required to provide a written request to your Pay office for the premature termination of the Self-Funded Leave option. You will be responsible for any tax implications resulting from such a request.
I have deferred a portion of my salary to fund a leave of absence to be taken in 2006. However, due to personal circumstances, I wish to have my leave period changed to 2005. Would this be feasible?
Yes, however, such a request would be subject to certain conditions. Please refer to the section entitled “Can I change the Deferral Period”
May I fund two separate leave of absences at the same time?
No. Upon the conclusion of your first leave of absence, you may submit another application to commence the deferral of funds for a second leave of absence.