Substitute Service


Why Purchase Service?

If you have substitute service, you may want to purchase this service so it can count toward your TRAF pension.

TRAF contributions are not automatically deducted for substitute service. As a plan member, you have the option of increasing your TRAF pension by paying contributions missed during your substitute service.

How it Works

Your pension is calculated using years of service and average salary. The higher these two factors, the larger your pension.

Counting each day of substitute service can increase your pension just as it increases your years of service.

How to Proceed

If you would like the cost calculated, complete a Substitute Service Buyback Application and return it to TRAF. Your school division must confirm the number of substitute days and the related earnings.

Once we receive your request, we will send you a letter with the cost details and an estimate of the impact it will have on your pension.

If you decide not to make the payment at this time, you can apply again anytime before you retire.

Terms of Payment

If you apply by March 31 of the year following your substitute service,
your cost will be based on the actual contribution rate you should have made on those earnings.

If you apply after this date, your cost will be calculated on the actuarial value of the missed contributions. This cost is higher than the original contributions required above.

Different rules apply if you are paying for substitute service prior to 1977.

The longer you wait, the more expensive it is to purchase your substitute service days.

Making Payments

Once we calculate your cost, you have the choice to pay in full or by installments plus interest. The installment option is only available for amounts over $1,000. Payments must be completed within four years and all payments must be completed before your pension starts.

You also have the option of making your payments through a transfer of your RRSP funds. To make the transfer to TRAF, ask your financial institution to help you complete a T2033 - Transfer of Registered Investments application.

You can choose to buy only a portion of your substitute service.

It is best to pay the cost as soon as possible to avoid interest charges.

Income Tax
Deductions

Payment for 1989 or earlier service can be deducted from your income over time for tax purposes. Each year you may deduct the difference between $3,500 and your current annual TRAF contributions.

If your annual TRAF contributions are greater than $3,500, you have the option of carrying your payments forward to when you are making lower pension contributions or when you are no longer making pension contributions.

Payment for 1990 or later service is deductible only in the calendar year the payment is made. However, it may reduce the amount you can contribute to your RRSPs or it may require de-registering some of your RRSPs. This is dependent on your RRSP contribution room.

Payments made through RRSP transfers are not tax deductible.

Contact Canada Revenue Agency at 1-800-959-8281 for more information.