Pensionable service is a key factor in determining a member’s pension. Taking a period of leave without salary (for example, maternity or parental leave) will create a gap in a member’s pensionable service and, therefore, affect their future pension amount.
Under MEPP, members have the option of buying back service for periods of leave. Members can make these payments during the leave or wait until they return to work. They might be able to use funds from a Registered Retirement Savings Plan (RRSP) or other retirement savings tool to pay for their buyback.
Members can purchase up to three years of maternity or parental leave, and up to a maximum of five years of any other kind of leave. Additional years of maternity or parental leave can be applied to this five-year amount.
Note: Only the first year of leave is cost-shared between employer and employee in MEPP; that is, the member’s employer pays their share of contributions, with interest, and the member pays the employee share. With any additional leave in MEPP, the member is responsible for paying both the employee and employer share.
The Process to Buy a Leave
If a member is considering buying a leave, they should contact their employer's human resources department.
Once a member’s employer has confirmed with us that their leave of absence can be purchased, the member will be sent a Buyback Proposal. This information package will help the member make an informed choice about their purchase options.
To purchase a leave of absence, a member must let MEPP know by the earlier of:
- 90 days from the date the member is sent their Buyback Proposal; or
- December 31st of the year following the year in which the member’s leave ended.
How to Purchase a Buyback
There are several payment options to suit members’ needs.
Payment(s) must be made according to the schedule shown on the member’s Buyback Proposal; however, if a member prefers to avoid paying interest, they can pay for the entire buyback in one payment. They can also transfer funds from an RRSP, or LIRA by using Canada Revenue Agency's T2033 form.
Members can even take a break from making payments should they go on another period of leave.
Buyback Considerations Before Leaving the Plan
Paying for a Buyback When Members Leave Their Employer
If a member should leave the Plan while still making payments towards a leave of absence, the member will have 90 days to complete the buyback. If the member does not complete this purchase within 90 days, the service will be prorated—that is, only the amount of service the member has paid for will be credited to them.
If, while on a leave of absence (but before commencing buyback payments), a member should leave their employer or move to a position where they are no longer eligible to contribute to MEPP, the member may still purchase the leave. In this case, the member will need to inform their employer immediately if they intend to purchase the service, as their employer must report the leave period to us within 30 days of the day the member stops contributing to the Plan.
Can Members Pay for Less Than the Whole Amount?
If a member has a set amount they wish to pay towards their buyback, or should their financial situation change before they finish paying, only the service the member paid for will be prorated.
For example, if the cost of buying one year of service was $10,000 and a member decided to stop making payments after paying $5,000, the member would receive the service credit for the partial year.
How Leaves Affect Combined Pensionable Service (CPS)
If purchasing a leave of absence where a CPS relationship is in place, there are certain impacts members should take into consideration.