New Contribution Procedure for Leave of Absence
Effective October 1, 2003
Members who take an unpaid leave of absence for more than a month may contribute during their leave. If a member elects this option he/she had the option of paying in monthly instalments throughout the leave or in a lump sum. If the member takes a pregnancy, parental, adoption or illness leave and pays in instalments, employer contributions would also have to be submitted on a monthly basis.
The monthly instalment option was time-consuming and created a significant amount of paperwork. To help reduce the processing time, as of October 1, 2003, we have made the following changes:
- If the leave is 3 or more months, members now pay in tri-monthly instalments. The cost would be broken down into 3-month periods, starting from the first day of the leave (the last payment may be less than 3 months).
- Members may contribute for the leave in a single payment only if the leave starts and ends in the same year. This is because contributions are only tax-deductible for the year in which they're paid. A lump-sum payment cannot cover the portion of a leave that will occur in the next year, because members cannot receive a tax receipt for these `future' contributions.
- If the leave is less than 3 months, full payment is required at the end of the leave.
We will continue to provide the member with a payment schedule, which will outline the cost breakdown and when we must receive the post-dated cheques. The member will still receive an income tax receipt from us after each cheque is cashed.
Please note that if a member contributes for a pregnancy, parental, adoption or illness leave in tri-monthly instalments, the matching contributions will be required every 3 months. Employers will be advised when their contributions are to be submitted.
We have updated our Leaves of Absence memo to reflect the change in payment options. Copies are available from the OPB.