You can increase your pension through purchasing service.
Why Purchase Service?
Your pension is based on your total years of pensionable service and the average of your highest five consecutive years of salary. You can increase your pension through purchasing service.
The cost of purchasing pensionable service equals the increase of value in the pension benefit as calculated on the date of application. ATRF makes a calculation using your projected annual pensionable salary or your five-year average pensionable salary at the date of application (whichever is higher), and assumes the pension will be paid at the earliest possible date.
If you are under age 55, it is assumed the pension will be paid the month following your 55th birthday; if you are over age 55, it is assumed the pension will be paid the month following your application to purchase. The purchase is cost-neutral, meaning there is no subsidized cost to you or the plans.
Submitting an Application
All purchase applications require the following:
- a completed application,
- apply online using MyPension; or
- complete and return the Service Purchase Application to ATRF, and
- acceptable proof of your age and any other supporting documents.
Your application does not obligate you to make the payment. If you choose not to make the payment within the required time period, the cost may be recalculated at a future date, providing you reapply and meet all eligibility requirements at that time.
Methods of Payment
You may purchase service by:
- Personal funds via Interac e-Transfer or bill payment. (Payment via Interac e-Transfer or bill payment cannot be made using registered funds such as Registered Retirement Savings Plan (RRSP) or Locked-in Retirement Account (LIRA) ).
- A tax receipt will be issued.
- ATRF is listed as a payee with all major banks and credit unions in Canada.
- When sending an e-Transfer, no password is required as ATRF’s account is set up as auto-deposit.
- All transfers and bill payments are subject to the limits of your financial institution.
- Personal funds via cheque.
- A tax receipt will be issued.
- A transfer of acceptable registered funds.
- To transfer registered funds (note that a tax-free savings account is not registered funds), a Canada Revenue Agency form T2033 or T2151 must be completed by you, ATRF, and the financial institution holding your registered funds. The forms are available from CRA, ATRF, or the financial institution holding your registered funds.
- The registered funds are not reported as income on your income tax return.
- There is no tax deduction for registered funds transferred to ATRF.
- Employer-approved and parental leaves
- Past private school service
- Periods of disability before September 1, 1992
- Previously refunded service
- Reciprocal transfer shortage
- Substitute service
Getting an Estimate
It’s easy to get an estimate for the cost of purchasing service before applying — just contact us for an estimate, or use the Purchase of Service Calculator in the MyPension portal.
Limitations and Conditions
Pensionable service can be purchased in any increment needed, but must be a minimum of a half-year (8 months, 2.5 years, etc.). Each type of pensionable service purchase has specific eligibility requirements.
Under the tax rules, a maximum of one year of pensionable service may be provided for any calendar year or school year. Generally, purchases of post-1989 pensionable service must first be approved by Canada Revenue Agency (CRA). Once approved, the purchase is fully tax-deductible but reduces your RRSP contribution room. Since each plan member’s financial situation is different, you should contact CRA or your financial adviser for more detailed information.
Under the Income Tax Act, there are specific limits for purchasing periods of leave. According to Information Circular IC 72-13R8, the limits for purchasing parental and employer-approved leaves are indicated below.
The maximum that can be purchased is three years of leave for any calendar years prior to 1991. The type of leave is irrelevant; it can be all parental leave, all employer-approved leave, or a combination of both. However, it cannot exceed three years in total.
Members can purchase a maximum of:
- three years of parental leave for calendar years after 1990, and
- five years of employer-approved leave for calendar years after 1990.
More information about how to purchase service and the tax implications of this, can be found below in the Purchasing Service info sheet below.