Make a decision on buying service

Explore the factors involved when buying service and what you should consider. Buying service can potentially increase your future pension.

1. Cost considerations

3. Example of buying service

2. Tax considerations

Cost considerations

The cost to buy most service types is based on:

The number of months of service you want to buy
Your current full-time-equivalent pensionable salary
The current employee and employer contribution rates

The cost is calculated by multiplying the length of your gap in service by the employee and employer contribution rates and your full-time equivalent salary. Sign in to My Account and use the purchase cost estimator to get an estimate of your cost.

In some cases, your employer will cover its share of the cost. For example, your employer will cover a portion of the cost to buy service for a maternity, parental/adoption or compassionate care leave.

You must buy service for the entire leave period if the leave is less than one year. If the leave is greater than one year and it ended on or after April 1, 2013, you can:

Buy service for the entire leave
Buy service for the leave in annual portions

The cost is based on your salary and contribution rates at the time you apply to buy service (not the salary and rates when you took your leave). This means that if you get a raise after you return to work, for example, your cost to buy service will be higher. Because of this, it can be a good idea to buy service as soon as possible rather than waiting until the deadline.

The calculation below shows an estimate to buy service for a six-month leave, assuming a current full-time gross monthly salary of $3,500.

Points to consider

To buy service, you must apply within five years from the end of your leave or within 30 days of ending your employment with the employer with whom the leave occurred, whichever comes first.
If you buy an annual portion of a multi-year leave, the five-year purchase deadline starts at the end of the portion that is purchased. You don’t need to wait until you return to work to buy an annual portion of a multi-year leave.
For longer leaves, the cost to buy service can be a lot to pay in one lump sum. You might wish to put some money aside every month during your leave to make this easier.
You can pay for your service by transfer from an existing RRSP.