Vol. 135, No. 45 — November 10, 2001

Regulations Amending the Non-Mailable Matter Regulations

Statutory Authority

Canada Post Corporation Act

Sponsoring Agency

Canada Post Corporation

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Subitem 3(3) of the schedule to the Non-Mailable Matter Regulations made under the Canada Post Corporation Act states that intoxicating beverages are non-mailable matter except when they are:

— transmitted by post within Canada between manufacturers of those beverages and provincial government liquor boards, or between any of them, or from a provincial liquor board or commission to any person;

— transmitted by post from a provincial government liquor board or commission to a manufacturer or distributor of such beverages outside Canada;

— transmitted by post outside Canada and addressed for delivery to a provincial liquor board or commission or a manufacturer of those beverages; or

— transmitted by post within Canada between a peace officer and a testing laboratory for the purpose of carrying out a lawful investigation.

As other companies in Canada, Canada Post Corporation (Canada Post) is also subject to the federal Importation of Intoxicating Liquors Act, which controls interprovincial and international traffic in intoxicating liquors. This Act in essence prohibits extra-provincial transportation and delivery of intoxicating beverages except to a provincial liquor board, but permits the importation of intoxicating liquor into a province by or to a distiller or brewer.

The Non-Mailable Matter Regulations only apply to Canada Post and are more restrictive than the Importation of Intoxicating Liquors Act. As a result, Canada Post is subject to duplicate legislation with regards to transportation of alcoholic beverages.

It is proposed therefore, that the current restrictions in the Non-Mailable Matter Regulations be repealed. Canada Post would then remain subject to the federal Importation of Intoxicating Liquors Act and to other legislation restricting the transportation of alcoholic beverages.

Alternatives

Maintaining the status quo would mean Canada Post would be subject to parallel and more restrictive legislation with regard to the transportation of intoxicating liquors than its competitors. This change is required in the interest of simplification of such legislation and will ensure that Canada Post is subject to the same legislation as other companies in the package distribution business.

Benefits and Costs

The proposed amendments to these Regulations are consistent with Canada Post's 2002-2006 Corporate Plan. These proposed regulatory amendments will have no material impact on Canadians and will streamline the Regulations to make them more efficient.

Consultation

As required by the Canada Post Corporation Act, these amendments are being published in the Canada Gazette, Part I, thereby initiating a formal 60-day period in which interested persons can make representations to the Honourable Alfonso Gagliano, Minister of Public Works and Government Services, House of Commons, Centre Block, Room 435-S, Ottawa, Ontario K1A 0A6. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice.

Compliance and Enforcement

These Regulations are enforced by Canada Post under the Canada Post Corporation Act. No increase in the cost of enforcement is expected as a result of the proposed changes.

Contact

William R. Price, Director, Economic Strategy and Regulatory Affairs, Canada Post Corporation, 2701 Riverside Drive, Suite N1080, Ottawa, Ontario K1A 0B1, (613) 734-6739 (Telephone), (613) 734-7207 (Facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 20(1) of the Canada Post Corporation Act, that the Canada Post Corporation, pursuant to subsection 19(1) (see footnote a) of that Act, proposes to make the annexed Regulations Amending the Non-Mailable Matter Regulations.

Interested persons may make representations with respect to the proposed amendments within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part 1, and the date of publication of this notice, and be addressed to the Honourable Alfonso Gagliano, Minister of Public Works and Government Services, Minister responsible for the Canada Post Corporation, Room 435-S, Centre Block, House of Commons, Ottawa, Ontario K1A 0A6.

CANADA POST CORPORATION

REGULATIONS AMENDING THE NON-MAILABLE MATTER REGULATIONS

AMENDMENTS

1. The portion of section 5 (see footnote 1) of the Non-Mailable Matter Regulations (see footnote 2) before paragraph (a) is replaced by the following:

5. Where any non-mailable matter is returned to the Corporation by a customs officer, it shall be held by the Corporation

2. Subitem 3(3) (see footnote 3) of the Schedule to the Regulations is repealed.

COMING INTO FORCE

3. These Regulations come into force on the day on which they are registered.

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Regulations Amending the Special Services and Fees Regulations

Statutory Authority

Canada Post Corporation Act

Sponsoring Agency

Canada Post Corporation

REGULATORY IMPACT ANALYSIS STATEMENT

Description

To further improve service to its customers, Canada Post Corporation (Canada Post) proposes to clarify what is an article of a fragile nature in the Special Services and Fees Regulations. Customers have asked for provisions clearly stating what is not acceptable for insurance and what is meant by the term "fragile." With the proposed amendments, "item of mail that contains an article of a fragile or perishable nature" will be replaced by "item of mail that contains a glass or ceramic article or is of a perishable nature."

Canada Post also proposes to reduce the time allowed for customers to submit loss or damage claims for domestic items from 12 months to 90 days. The claim period will remain 12 months for international items because it could take several months before a loss or damage is detected abroad.

This proposal will align the claim period established by Canada Post with the shorter claim periods already established in the marketplace.

Canada Post also proposes to remove the price for the Acknowledgement of Receipt of a registered item addressed to a destination outside of Canada. This change will bring consistency with the existing product structure. Acknowledgement of Receipt is only available for international registered items whose own pricing is already outside of the regulations.

Canada Post needs to repeal paragraph 6(1)(f) of the Special Services and Fees Regulations as a result of the changes made to the International Letter-post Items Regulations on January 1, 2001, that include the elimination of registered "packets" addressed for delivery to the United States.

Benefits and Costs

It is anticipated that the proposed amendments will further improve customer service and contribute to the efficiency of Canada Post. They will not have any material impact on Canadians.

Consultation

As required by the Canada Post Corporation Act, these amendments are being published in the Canada Gazette, Part I, thereby initiating a formal 60-day period in which interested persons can make representations to the Honourable Alfonso Gagliano, Minister of Public Works and Government Services, Centre Block, Room 435-S, House of Commons, Ottawa, Ontario K1A 0A6. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice.

Contact

William R. Price, Director, Economic Strategy and Regulatory Affairs, Canada Post Corporation, 2701 Riverside Drive, Suite N1080, Ottawa, Ontario K1A 0B1, (613) 734-6739 (Telephone), (613) 734-7207 (Facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 20(1) of the Canada Post Corporation Act, that the Canada Post Corporation, pursuant to subsection 19(1) (see footnote b) of that Act, proposes to make the annexed Regulations Amending the Special Services and Fees Regulations.

Interested persons may make representations with respect to the proposed Regulations within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Honourable Alfonso Gagliano, Minister of Public Works and Government Services, Centre Block, Room 435-S, House of Commons, Ottawa, Ontario K1A 0A6.

CANADA POST CORPORATION

REGULATIONS AMENDING THE SPECIAL SERVICES AND FEES REGULATIONS

AMENDMENTS

1. Subsection 6(1) of the Special Services and Fees Regulations (see footnote 4) is amended by adding the word "and" at the end of paragraph (d), by striking out the word "and" at the end of paragraph (e) and by repealing paragraph (f) (see footnote 5).

2. Subsection 18(2) (see footnote 6) of the Regulations is replaced by the following:

(2) Any item of mail that contains a glass or ceramic article or is of a perishable nature shall not be accepted for insurance against damage.

3. (1) Paragraph 23(5)(e) (see footnote 7) of the Regulations is replaced by the following:

(e) the damage was to mail that contained a glass or ceramic article or was of a perishable nature;

(2) Paragraph 23(6)(b) (see footnote 8) of the Regulations is replaced by the following:

(b) subject to subsection (9), the person claiming the indemnity submits a claim to the Corporation within the following claim periods, namely,

4. (1) Paragraph 24(4)(d) (see footnote 9) of the Regulations is replaced by the following:

(d) the damage was to mailable matter that contained a glass or ceramic article or was of a perishable nature;

(2) Paragraph 24(5)(a) (see footnote 10) of the Regulations is replaced by the following:

(a) the person claiming the indemnity submits a claim to the Corporation within the following periods, namely,

5. Paragraph 26(2)(b) (see footnote 11) of the Regulations is replaced by the following:

(b) the person claiming the indemnity submits a claim to the Corporation within the following periods, namely,

6. The portion of subitem 2(2) of Schedule VII to the Regulations in column II (see footnote 12) is replaced by the following:

Item	Column II Rate
2. (2)	rate established by the Corporation

COMING INTO FORCE

7. These Regulations come into force on the day on which they are registered.

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Regulations Amending Certain Regulations Administered and Enforced by the Canadian Food Inspection Agency

Statutory Authority

Canada Agricultural Products Act

Sponsoring Agency

Canadian Food Inspection Agency

REGULATORY IMPACT ANALYSIS STATEMENT

Description

This regulatory package proposes to amend the Fresh Fruit and Vegetable Regulations, the Maple Products Regulations and the Honey Regulations made under the Canada Agricultural Products Act (CPA Act). These Regulations set out grading, packing and marking requirements for fresh fruit and vegetables, maple products and honey. They also establish national standards for, and regulate international and interprovincial trade in, maple products. This package is based on recommendations from the Standing Joint Committee for the Scrutiny of Regulations (SJC).

The SJC observed that the grounds for cancellation of a registration of an establishment under these Regulations are identical to the grounds for suspension. It was therefore requested by the SJC that the relevant sections be modified so as to distinguish between the grounds leading to suspension and the grounds leading to cancellation.

The proposed amendments would make cancellation of an establishment registration conditional upon a suspension whereby the operator has not taken the required corrective action during the time allotted. A suspension would not always be a prerequisite to a cancellation, as in cases of a change of ownership which involve a change in management or where an application for registration of an establishment is found to contain false or misleading information.

An additional technical amendment to incorporate a definition for the word "operator" in the Fresh Fruit and Vegetable Regulations is also being proposed. The word "operator" is defined under other regulations made under the CAP Act, namely the Dairy Products Regulations, the Egg Regulations, the Honey Regulations, the Maple Products Regulations and the Processed Egg Regulations. The proposed amendment will hamonize these Regulations made under the CAP Act in this respect and is being included in this package due to the number of occurrences of the word "operator" in these proposed amendments.

Alternatives/Consultation

These amendments are minor modifications to the existing Regulations which serve to clarify the grounds for suspension and cancellation of registered establishments. The amendments were made in consultation with the Canadian Food Inspection Agency and the Department of Justice under the recommendation of the Standing Joint Committee for the Scrutiny of Regulations. No alternatives were considered.

Compliance and Enforcement

The proposed amendments would not impact on the current enforcement process.

Contact

Alan Goldrosen, Regulatory and Intergovernmental Affairs, Canadian Food Inspection Agency, 59 Camelot Drive, Nepean, Ontario K1A 0Y9, (613) 225-2342, extension 4237 (Telephone), (613) 228-6653 (Facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 32 of the Canada Agricultural Products Act (see footnote c), proposes to make the annexed Regulations Amending Certain Regulations Administered and Enforced by the Canadian Food Inspection Agency.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Mr. Alan Goldrosen, Regulatory and Intergovernmental Affairs, Canadian Food Inspection Agency, 59 Camelot Drive, Ottawa, Ontario K1A 0Y9. Telephone: (613) 225-2342 (4237); Facsimile: (613) 228-6653.

Ottawa, November 1, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

REGULATIONS AMENDING CERTAIN REGULATIONS ADMINISTERED AND ENFORCED BY THE CANADIAN FOOD INSPECTION AGENCY

AMENDMENTS

FRESH FRUIT AND VEGETABLE REGULATIONS

1. Section 2 of the Fresh Fruit and Vegetable Regulations (see footnote 13) is amended by adding the following in alphabetical order:

"operator" means the person who is responsible for the operation of a registered establishment; (exploitant)

2. (1) Subparagraph 57(1)(a)(iv) (see footnote 14) of the Regulations is repealed.

(2) Section 57 of the Regulations is amended by adding the following after subsection (1):

(1.1) Despite subparagraph (1)(a)(ii), the Director shall not suspend the registration of an establishment for not complying with any provision of the Act or these Regulations that establishes a requirement in respect of the grading of produce unless an inspector finds that more than one such contravention has been committed in the establishment in the course of one week.

(3) Paragraphs 57(2)(a) and (b) (see footnote 15) of the Regulations are replaced by the following:

(a) an inspector has, at the time of the inspection, notified the operator of the existence of grounds for suspension under paragraph (1)(a);

(b) an inspector has provided the operator with a copy of an inspection report prepared by the inspector that sets out the grounds for suspension, the required corrective measures and the dates by which those measures must be implemented in order to avoid suspension and cancellation; and

(4) Paragraphs 57(3)(b) to (d) (see footnote 16) of the Regulations are replaced by the following:

(b) until the registration is cancelled; or

(c) in the case of a suspension under subsection (1.1), until 225 000 kg of produce have been shipped from the establishment without more than one additional contravention.

3. Section 58 (see footnote 17) of the Regulations is replaced by the following:

58. (1) The Director may cancel the registration of a registered establishment where

(a) the operator has not implemented the required corrective measures within the 30 day period following the day on which the registration was suspended or within any longer period of time allowed under subsection (2);

(b) there has been a change in ownership that involves a change of management of the establishment; or

(c) the application for registration contains false or misleading information.

(2) If it is not possible for the operator to implement the required corrective measures within 30 days, the Director shall, on the request of the operator, allow the operator a longer period of time that is adequate to implement those measures.

(3) No registration shall be cancelled under subsection (1) unless

(a) the operator was advised of an opportunity to be heard in respect of the cancellation and was given that opportunity; and

(b) a notice of cancellation of registration was delivered to the operator.

4. The Regulations are amended by adding the following after section 58:

Surrender of Certificate of Registration

58.1 If an establishment's registration is suspended or cancelled, the operator of the establishment shall surrender the certificate of registration to an inspector on request.

HONEY REGULATIONS

5. (1) Subparagraph 12(1)(a)(i) (see footnote 18) of the French version of the Honey Regulations (see footnote 19) is replaced by the following:

(2) Paragraph 12(2)(b) (see footnote 20) of the Regulations is replaced by the following:

(b) an inspector has provided the operator with a copy of an inspection report prepared by the inspector that sets out the grounds for suspension, the required corrective measures and the dates by which those measures must be implemented in order to avoid suspension and cancellation; and

(3) Paragraph 12(3)(c) (see footnote 21) of the Regulations is repealed.

6. (1) Paragraphs 13(1)(a) (see footnote 22) and (b) (see footnote 23) of the Regulations are replaced by the following:

(a) the operator has not implemented the required corrective measures within the 30 day period following the day on which the registration was suspended or within any longer period of time allowed under subsection (1.1);

(b) there is a change in ownership that involves a change of management of the establishment; or

(c) the application for registration contains false or misleading information.

(2) Section 13 of the Regulations is amended by adding the following after subsection (1):

(1.1) If it is not possible for the operator to implement the required corrective measures within 30 days, the Director shall, on the request of the operator, allow the operator a longer period of time that is adequate to implement those measures.

(3) Paragraphs 13(2)(a) to (d) (see footnote 24) of the Regulations are replaced by the following:

(a) the operator was advised of an opportunity to be heard in respect of the cancellation and was given that opportunity; and

(b) a notice of cancellation of registration was delivered to the operator.

MAPLE PRODUCTS REGULATIONS

7. (1) Subparagraph 6.3(1)(a)(i) (see footnote 25) of the French version of the Maple Products Regulations (see footnote 26) is replaced by the following:

(2) Paragraph 6.3(2)(b) (see footnote 27) of the Regulations is replaced by the following:

(b) an inspector has provided the operator with a copy of an inspection report prepared by the inspector that sets out the grounds for suspension, the required corrective measures and the dates by which those measures must be implemented in order to avoid suspension and cancellation; and

(3) Paragraph 6.3(3)(c) (see footnote 28) of the Regulations is repealed.

8. (1) Paragraphs 6.4(1)(a) (see footnote 29) and (b) (see footnote 30) of the Regulations are replaced by the following:

(a) the operator has not implemented the required corrective measures within the 30 day period following the day on which the registration was suspended or within any longer period of time allowed under subsection (1.1);

(b) there is a change in ownership that involves a change of management of the establishment; or

(c) the application for registration contains false or misleading information.

(2) Section 6.4 of the Regulations is amended by adding the following after subsection (1):

(1.1) If it is not possible for the operator to implement the required corrective measures within 30 days, the Director shall, on the request of the operator, allow the operator a longer period of time that is adequate to implement those measures.

(3) Paragraphs 6.4(2)(a) to (d) (see footnote 31) of the Regulations are replaced by the following:

(a) the operator was advised of an opportunity to be heard in respect of the cancellation and was given that opportunity; and

(b) a notice of cancellation of registration was delivered to the operator.

COMING INTO FORCE

9. These Regulations come into force on the day on which they are registered.

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Regulations Amending the Crown Corporation Grants Regulations

Statutory Authority

Payments in Lieu of Taxes Act

Sponsoring Department

Department of Public Works and Government Services

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Under paragraph 9(1)(f) of the Payments in Lieu of Taxes Act (PILT Act), the Governor in Council may make regulations respecting any payment that may be made in lieu of a real property tax or a frontage or area tax by any corporation included in Schedule III or IV and, without limiting the generality of the foregoing, providing that any payment that may be made shall be determined on a basis at least equivalent to that provided in this Act.

Canada port authorities operate Canada's major commercial ports at Belledune, Fraser River, Halifax, Hamilton, Montréal, Nanaimo, North Fraser, Port Alberni, Prince Rupert, Québec, Saguenay, Saint John, Sept-Îles, St. John's, Thunder Bay, Toronto, Trois-Rivières, Vancouver, and Windsor.

Under the Canada Marine Act (CMA), port authorities manage real property belonging to the federal Crown and hold or occupy other real property that does not belong to the federal Crown. Subsection 28(2) of the CMA states that the power of a port authority to operate a port is limited to the power to engage in (a) port activities, to the extent that those activities are described in the corporate letters patent of the port authority; and (b) other activities that are deemed in the letters patent to be necessary to support port operations. Port authorities are agents of the federal Crown for the purposes of engaging in activities referred to in paragraph 28(2)(a), but they may not borrow money as agents and they are not agents when conducting activities referred to in paragraph 28(2)(b).

The CMA added port authorities to Schedule III of the PILT Act. The CMA also amended that statute to provide for the phasing-in of payments under that statute in respect of real property managed or held by port authorities that were harbour commissions prior to the enactment of the CMA.

Currently, the Crown Corporation Grants Regulations regulate payments in lieu of taxes made by scheduled corporations, including all port authorities (although the port authorities are not Crown corporations within the meaning of the Financial Administration Act). However, the Regulations do not authorize payments by port authorities in respect of real property that does not belong to the federal Crown.

This amendment to the Regulations clarifies the application of the Regulations to property that belongs to the federal Crown and is managed by the port authorities. It also makes the Regulations applicable to property that does not belong to the federal Crown, that is held by the port authorities, in respect of which the port authority is exempt from real property tax, and on which the port authorities engage in port activities referred to in paragraph 28(2)(a) of the CMA.

Other amendments to the Regulations have been proposed. (See the Canada Gazette, Part I, Vol. 135, No. 25, published June 23, 2001, page 2305.)

Alternatives

There is no alternative means by which to clarify the application of the Regulations to the port authority and by which to apply the Regulations to real property that is held by port authorities and on which they engage in activities referred to in paragraph 28(2)(b) of the CMA.

Benefits and Costs

This amendment will clarify the application of the Crown Corporation Grants Regulations to port authorities.

Most port authorities hold very little real property that does not belong to the federal Crown and on which they engage in activities referred to in paragraph 28(2)(a), and hence, this amendment is not expected to have a significant impact on them. Hamilton and Toronto port authorities do hold significant real property on which they engage in activities referred to in paragraph 28(2)(a). However, some of the property is occupied by tenants and licensees and the Regulations do not authorize payments in such circumstances. Tenants and licensees would be subject to provincial taxing legislation in respect of these properties.

Consultation

The Federation of Canadian Municipalities and the Hamilton and Toronto port authorities have been consulted.

Compliance and Enforcement

Each port authority is responsible for establishing a compliance and enforcement regime as part of their own Payments in Lieu of Taxes Program.

Contact

Colin Boutin, National Manager, Policy and Strategic Initiatives, Payment in Lieu of Taxes Directorate, Public Works and Government Services Canada, Hull, Quebec K1A 0S5, (819) 956-7435 (Telephone), (819) 956-7490 (Facsimile), Colin.Boutin@ pwgsc.gc.ca (Electronic mail).

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 9(2) of the Payments in Lieu of Taxes Act (see footnote d), that the Governor in Council, pursuant to paragraph 9(1)(f) (see footnote e) of that Act, proposes to make the annexed Regulations Amending the Crown Corporation Grants Regulations.

Interested persons may make representations concerning the proposed Regulations to the Minister of Public Works and Government Services within 15 days after the date of publication of this notice. All such representations must be in writing and cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Colin Boutin, National Manager of Policy and Strategic Initiatives, Payments in Lieu of Taxes, Management and Consulting, Department of Public Works and Government Services, Hull, Quebec K1A 0S5 (tel.: (819) 956-7435; fax: (819) 956-7490; e-mail: colin.boutin@pwgsc.gc.ca).

Ottawa, November 1, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE CROWN CORPORATION GRANTS REGULATIONS

AMENDMENT

1. The definition "corporation property" in section 2 of the Crown Corporation Grants Regulations (see footnote 32) is amended by adding the following after paragraph (a):

(a.1) except in Part II,

COMING INTO FORCE

2. These Regulations come into force on the day on which they are registered.

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Regulations Amending the Pension Benefits Standards Regulations, 1985

Statutory Authority

Pension Benefits Standards Act, 1985

Sponsoring Agency

Office of the Superintendent of Financial Institutions

REGULATORY IMPACT ANALYSIS STATEMENT

Description

Under the Pension Benefits Standards Act, 1985 (PBSA), the federal government, through the Office of the Superintendent of Financial Institutions (OSFI), supervises private pension plans covering federally regulated areas of employment.

Bill S-3 (An Act to amend the Pension Benefits Standards Act, 1985, and the Office of the Superintendent of Financial Institutions Act) received Royal Assent on June 11, 1998. This Bill introduced several measures to enhance the supervision of federally regulated private pension plans. As a result, a number of amendments to the Pension Benefits Standards Regulations, 1985 are needed to make these legislative measures effective.

Introduction of Simplified Pension Plans

In Bill S-3, the Government introduced the concept of simplified pension plans to increase the pension plan participation rate among small employers. A simplified pension plan is a defined contribution plan that is administered by a financial institution on behalf of the employees of employers who have entered into a contract with the financial institution to establish the plan. Amendments to the Regulations are needed to enable financial institutions to become the administrator of a simplified pension plan and to set out the specific rules governing these types of plans.

Enhanced Disclosure to Plan Beneficiaries

A number of amendments are being made to the Regulations to enhance disclosure to plan beneficiaries. Currently, the PBSA requires that a member and the member's spouse receive an annual statement outlining their contributions, benefits, and the funded or prescribed ratio of the plan, where applicable, together with other prescribed information. Members also have the right under the PBSA to view certain regulatory information filed with OSFI. Under the amended Regulations, the annual statement will include a statement setting out the member's information rights to access documents establishing the plan, as well as financial and actuarial information. The statement of investment policies and procedures will now be made available to plan members. In addition, the Superintendent may require information pertaining to plan operating expenses paid from the pension fund or on compensation expenses relating to the plan to be filed with OSFI.

The Government is of the view that disclosure of the pension plan solvency ratio is of interest to plan members. As a result, the Regulations are also amended to provide that, where the solvency ratio is less than one, plan administrators must disclose the solvency ratio, along with a definition and interpretation of the ratio to plan members. The administrator must also describe the measures implemented to bring the plan to a fully funded status as well as the effect on members' benefits if the plan were terminated. Well-funded plans are only required to release a statement that their plan is fully funded on a solvency basis.

Enhanced Regulatory Reporting

The Regulations propose amendments to regulatory reporting so as to enhance supervisory assessments of the financial condition of pension plans. Section 12 of the PBSA requires the filing of an Annual Information Return (AIR) as well as other financial information required by regulations. Currently, the Regulations prescribe the content and format of the AIR Form (Form 2 of Schedule II). These Regulations prescribe only the basic information requirements to be reported, such as the names and addresses of the administrator and external auditor and the total membership in the plan. In addition, to support amendments contained in Bill S-3, these Regulations propose that the Superintendent may request any information that the Handbook of the Canadian Institute of Chartered Accountants requires to be set out in financial statements.

Administrative Amendments

Finally, minor administrative amendments are proposed in these Regulations. The proposed amendments will

(a) allow the Superintendent to specify certain exceptions to the standards of practice adopted by the Canadian Institute of Actuaries in accordance with paragraph 12(3.1)(a) of the PBSA;

(b) implement and clarify the distinction between pension committees and pension councils introduced in Bill S-3; and

(c) clarify the provision dealing with exemptions from the PBSA for supplemental plans that provide benefits that are over the Canada Customs and Revenue Agency maximums.

These Regulations also propose the inclusion of Newfoundland as a designated province in which there is, in force, a law substantially similar to the PBSA.

Alternatives

Introduction of Simplified Pension Plans

In Bill S-3, the Government introduced the concept of simplified pension plans to increase the pension plan participation rate among small employers. The amendments to the Regulations enabling financial institutions to become the administrator of a simplified pension plan and setting out the specific rules governing these types of plans are needed to implement the concept of a simplified pension plan. The proposed regulatory amendments achieve the Government's policy goal by simplifying the administration of certain pension plans. The proposed regulatory amendments were deemed to be the most appropriate for all interested parties, which include employers, members, administrators and OSFI; therefore, no other alternatives were considered.

Enhance Disclosure to Plan Beneficiaries

OSFI is of the view that the current disclosure requirements do not provide sufficient information to plan members. Additional information, including investment policies should be available to plan members to provide a greater overview of their plan. The status quo, which is for members to seek that information directly from OSFI, is unsatisfactory for both the member and OSFI.

Enhanced Regulatory Reporting

Alternatives were considered with respect to the changes in regulatory reporting. These alternatives ranged from having no standardized reporting requirements to prescribing all the information that needs to be contained in the AIR. Finally, it was decided to prescribe only the basic information requirements in the AIR and to enable the Superintendent to require the administrator to file any information that the Handbook of the Canadian Institute of Chartered Accountants requires to be set out in a financial statement of a pension plan. This alternative was chosen because it provides flexibility to meet changing information needs without further regulatory changes.

Administrative Amendments

No alternatives were considered with respect to the minor administrative amendments.

Benefits and Costs

Introduction of Simplified Pension Plans

The introduction of simplified pension plans will enable a larger proportion of working Canadians to have access to employer-sponsored pension plans. There are no cost increases anticipated for pension plan members, employers, financial institutions, or OSFI.

Enhanced Disclosure to Plan Beneficiaries

The proposed disclosure requirements will not involve the preparation of additional information given that the information in question is currently being prepared for various regulatory filings. The cost of including the prescribed information in member statements and of producing documents for inspection should be minor. Improved transparency of plan administration and more meaningful disclosure to plan members should decrease the number of inquiries or complaints filed with OSFI.

Enhanced Regulatory Reporting

Standardized reporting of prescribed information in both the AIR and financial statements will

(a) bring financial statements up to minimum standards;

(b) give the needed impetus to financial institutions acting as holders or custodians of pension funds to provide the necessary financial information to the plan sponsors;

(c) enhance risk-based pension plan supervision;

(d) reduce OSFI costs through standardization of data input; and

(e) allow for the development of electronic filing methods in the future.

This initiative responds to the need for improved transparency of plan administration and meaningful disclosure from financial institutions acting as holders or custodians of pension funds to the plan administrator, and from the plan administrator to the members. This proposal will also enable OSFI to enhance its operational efficiency in response to an ever-changing environment.

The costs associated with potential system modifications incurred by certain plan administrators and financial institutions acting as holders or custodians of pension funds as a result of the preceding changes will be mitigated by the emergence of more relevant reports that meet professional standards to the benefit of pension plan administrators, members, financial institutions and OSFI.

Administrative Amendments

The minor administrative amendments have no financial impact either for OSFI or for plan sponsors and reflect the legislative changes introduced by Bill S-3.

Consultation

Extensive consultations with interested parties were conducted while preparing Bill S-3 legislative amendments. In addition, discussion drafts of the proposed Regulations were posted for approximately a month on the OSFI Web site in August 1998 for public comment. The discussion drafts were also sent to various interested parties such as the Canadian Association of Pension Supervisory Authorities, the Canadian Life and Health Insurance Association Inc. and the Canadian Bankers Association. Comments were received from individual pension plan administrators, consulting accountants, actuaries, lawyers, and industry groups. OSFI sent a revised version of the amendments to the interested parties in the fall of 1999 and met with the Canadian Bankers Association in June 2000 to discuss their concerns.

Certain interested parties expressed concern with respect to the increased disclosure on the grounds that plan members may not benefit from additional information and that additional requests for detailed information would generate increased administrative costs for the plan administrators. The Government believes there will be benefits from disclosing additional information to plan members and that these benefits will outweigh the potential costs incurred by plan administrators in preparing such information.

There were also comments concerning the potential administrative burden that would result from the proposal to allow plan participants direct access to information on plan expenses. Based on comments received, the Government amended the proposal to provide that the Superintendent may request information on plan expenses.

Suggestions with respect to the simplified pension plans, enhanced regulatory reporting and administrative amendments that were consistent with the overall government policy have been incorporated in the proposed Regulations.

Compliance and Enforcement

The introduction of simplified pension plans will require no adjustments to OSFI's procedures and practices. No compliance and enforcement problems are anticipated.

Enhanced disclosure is not expected to present any compliance issues. OSFI will follow the development of any new concerns of members resulting from enhanced member disclosure and, if necessary, will issue further guidance to pension plan administrators on the new requirements.

Enhanced regulatory reporting may present some compliance problems in the short term until the new forms become familiar. It is expected that financial institution managers and plan administrators will make every effort to comply with the standardized reporting format. OSFI will issue further guidance to pension plan administrators on the new information reporting requirements.

No compliance problems are anticipated with respect to the minor administrative amendments.

Contact

Nancy Begg-Durkee, Senior Supervisor, Private Pension Plans Division, Office of the Superintendent of Financial Institutions, Ottawa, Ontario K1A 0H2, (613) 991-9382 (Telephone), (613) 990-7394 (Facsimile), penben@osfi-bsif.gc.ca (Electronic mail).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 39 (see footnote f) of the Pension Benefits Standards Act, 1985 (see footnote g), proposes to make the annexed Regulations Amending the Pension Benefits Standards Regulations, 1985.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Christa Sanders, Regulations Officer, Legislation and Precedents Division, Office of the Superintendent of Financial Institutions, 255 Albert Street, Ottawa, Ontario K1A 0H2.

Ottawa, November 1, 2001

RENNIE M. MARCOUX
Acting Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE PENSION BENEFITS STANDARDS REGULATIONS, 1985

AMENDMENTS

1. (1) The definition "financial institution" (see footnote 33) in subsection 2(1) of the Pension Benefits Standards Regulations, 1985 (see footnote 34) is replaced by the following:

"financial institution" means

(a) except in section 11.1,

(b) for the purposes of section 11.1, those entities referred to in subparagraphs (a)(i) to (vi) or a foreign institution for which an order of the Superintendent has been given pursuant to the Insurance Companies Act approving the insurance of risks in Canada. (institution financière)

(2) Subsection 2(1) of the Regulations is amended by adding the following in alphabetical order:

"simplified pension plan" means a defined contribution plan that is administered by a financial institution on behalf of the employees of the employers who have entered into a contract that complies with subsection 11.1(2). (régime de pension simplifié)

2. Section 3 (see footnote 35) of the Regulations is replaced by the following:

3. For the purposes of the definition "designated province" in subsection 2(1) of the Act, the Provinces of Ontario, Quebec, Nova Scotia, New Brunswick, Manitoba, British Columbia, Saskatchewan, Alberta and Newfoundland are prescribed as provinces in which there is in force a law substantially similar to the Act.

3. The heading before section 5 of the Regulations is replaced by the following:

Choice of Pension Committee and Pension Council Representative

4. (1) Subsections 5(1) and (2) (see footnote 36) of the Regulations are replaced by the following:

5. (1) The representatives of the plan members or retired members who are to be included on a pension committee referred to in section 7.1 of the Act or a pension council referred to in section 7.2 of the Act shall be chosen in accordance with this section.

(2) A majority of the plan members or retired members shall notify an employer or a participating employer in writing of their decision to elect a representative of the members or retired members.

(2) Subsection 5(5) of the Regulations is replaced by the following:

(5) If all the plan members or retired members are

(a) represented by a union or group of unions as defined in the Canada Labour Code, or

(b) members of a pension fund society established under the Pension Fund Societies Act or of another similar organization,

the executive of the union, group of unions, pension fund society or other organization may name the pension committee or pension council representative.

(3) Subsection 5(7) of the Regulations is replaced by the following:

(7) If a pension council has been established pursuant to subsection 7.2(1) of the Act and the plan now has fewer than 50 members, the pension council shall be dissolved if a majority of the plan members so request.

5. Paragraph 7.1(3)(a) (see footnote 37) of the Regulations is replaced by the following:

(a) to any pension council that has been established, within 60 days after the later of

6. Paragraph 7.2(2)(a) (see footnote 38) of the Regulations is replaced by the following:

(a) to any pension council that has been established; and

7. Subparagraph (e)(ii) (see footnote 39) of the definition "solvency deficiency" in subsection 9(1) of the Regulations is replaced by the following:

8. Section 10 of the Regulations is replaced by the following:

10. An administrator who fails to pay into the fund any amount remitted to the administrator under subsection 9(14) is liable to the plan for the outstanding payment and interest on it.

9. (1) Subsection 11(1) of the Regulations is amended by adding the following after paragraph (e):

(f) a declaration in the form, if any, specified by the Superintendent and signed by the administrator that states that the plan complies with the Act and the Regulations; and

(g) in respect of a simplified pension plan, a declaration by the administrator that states that the plan constitutes a simplified pension plan.

(2) The portion of subsection 11(3) (see footnote 40) of the Regulations before paragraph (a) is replaced by the following:

(3) An actuarial report referred to in paragraph (1)(d) shall be prepared by an actuary in accordance with the Standard of Practice for Valuation of Pension Plans published by the Canadian Institute of Actuaries in January 1994, as amended from time to time and shall include

10. The Regulations are amended by adding the following after section 11:

SIMPLIFIED PENSION PLAN

11.1 (1) An employer may enter into a contract with a financial institution for the purpose of establishing a simplified pension plan for its employees.

(2) A contract that establishes a simplified pension plan shall provide

(a) that the plan is a simplified pension plan and that the financial institution is the administrator of the plan;

(b) the amount and the frequency, of at least once per month, of the employee and employer contributions that are required to be remitted by the employer to the financial institution;

(c) the day on which the participation of an employer in the plan will cease as a result of the employer's failure to remit the required contributions to the financial institution;

(d) that the plan is subject to section 11.2; and

(e) that the financial institution is subject to section 11.3.

11.2 (1) For the purposes of subsection 7(2) of the Act, the administrator of a simplified pension plan is the financial institution that has entered into the contract establishing the plan.

(2) The contributions made to the fund established in respect of a simplified pension plan, the investments in which pension money is invested and the returns on those contributions and investments constitute the plan's pension fund and shall not at any time constitute assets of the administrator or employer.

(3) The participation of any employer in a simplified pension plan will cease if the employer fails to remit the contributions required by the contract within the period specified in the contract.

(4) If there is more than one participating employer in a plan, the cessation of participation by one or more employers in the plan does not constitute a termination, in whole or in part, of the plan.

(5) If an employer ceases participation in a plan, all benefits shall be vested without regard to age, period of membership in the plan or period of employment and payment of all accrued or payable benefits under the plan as of the date of cessation shall be made to members and former members and to their spouses, common-law partners, beneficiaries, estates or successions.

(6) For the purposes of paragraph 2(2)(c) of the Act, a member of a simplified pension plan ceases to be a member of the plan in any of the following circumstances:

(a) the participation of the member's employer in the plan ceases; or

(b) the administrator terminates the plan or the part of the plan in which the member participates.

11.3 (1) Each administrator of a simplified pension plan shall keep records that are sufficient to allow the ownership of any investment to be traced to the plan at any time.

(2) Each administrator shall notify each participating employer in writing of an intended amendment to the plan at least 30 days before the effective date of the amendment.

(3) If an employer's participation in the plan ceases, the administrator of the plan shall notify in writing, within 30 days of the effective date of the cessation, the members of the plan who are employees of the employer, of the cessation of that employer's participation in the plan and the effective date of the cessation.

(4) If the administrator intends to terminate or wind up the plan in whole or in part, it shall provide each employer whose participation in the plan will cease with a notice in writing to that effect at least 60 days before the date of the intended termination and winding-up.

(5) The administrator shall, no later than each anniversary date of a plan, notify the Superintendent in writing of the employers who have commenced or ceased participation in a simplified pension plan.

11. Paragraphs 15(1)(c) and (d) (see footnote 41) of the Regulations are replaced by the following:

(c) if the plan is not an insured plan,

(d) information concerning the investments of the pension fund, including the information set out in Form 2.1 of Schedule II;

(e) any information relating to the determination of the solvency and funding status of a pension plan;

(f) the location of any books, records or other documents relating to a pension plan or to any securities, obligations or other investments in which pension fund money is invested;

(g) the name of the collective bargaining agent, if any, who represents the pension plan members;

(h) the information necessary to identify the employers who participate in or who have ceased participation in the plan;

(i) a certificate of the administrator or any person preparing, compiling or filing any information on behalf of the administrator that certifies that the information submitted to the Superintendent is accurate;

(j) a record of, or any other document evidencing, any operating expenses paid from the plan fund or that are due or accrued from the plan fund, including the names of any payees, the purpose and amounts of any payments made or to be made to each payee, including the aggregate amounts; and

(k) a record of, or any other document evidencing, all direct and indirect compensation that a person received or that is due or accrued in relation to any service provided by the person in respect of the plan.

12. Subsection 18(1) (see footnote 42) of the Regulations is replaced by the following:

18. (1) Subject to subsection (2), a pension benefit credit shall be determined in accordance with the Recommendations for the Computation of Transfer Values from Registered Pension Plans effective September 1, 1993 issued by the Canadian Institute of Actuaries, as amended from time to time.

13. Subsection 21(4) (see footnote 43) of the Regulations is replaced by the following:

(4) For the purposes of subsection (2), the commuted value of the deferred life annuity shall be determined in accordance with the Recommendations for the Computation of Transfer Values from Registered Pension Plans effective September 1, 1993 issued by the Canadian Institute of Actuaries, as amended from time to time.

14. Paragraphs 23(1)(n) and (o) of the Regulations are replaced by the following:

(n) if applicable, the interest rates credited to the contributions of the plan member for the plan year;

(o) the benefit payable on the death of the plan member and the extent to which that benefit would be reduced by a payment under a group life insurance plan;

(p) a statement setting out the right to access the documents described in paragraph 28(1)(c) of the Act;

(q) in respect of the defined benefit provisions of an uninsured defined benefit plan,

15. The Regulations are amended by adding the following after section 23:

23.1 For the purposes of paragraph 28(1)(c) of the Act, each person referred to in that paragraph may examine the written statement of investment policies and procedures in respect of the plan's portfolio of investments and loans as described in subsection 7.1(1).

16. Section 28.5 (see footnote 44) of the Regulations is replaced by the following:

28.5 A supplemental pension plan is exempt from the application of the Act if, under the terms of the pension plan to which it is supplemental, all the members of the supplemental pension plan are entitled to benefits at least equal to the maximum benefit or contribution limit under the Income Tax Act.

17. Section 32 of the Regulations is replaced by the following:

32. A notice of objection referred to in subsection 32(1) of the Act shall be in the form set out in Form 5 of Schedule II and shall be served by registered mail or delivery to the Superintendent of Financial Institutions.

18. Form 2 of Schedule II to the Regulations is replaced by the following:

FORM 2

REQUIRED INFORMATION

1. Name, address and telephone number of the administrator.

2. Name and address of the pension fund custodian or trustee together with any applicable policy or account number.

3. Name and address of the external auditor.

4. Total membership in the plan at plan year end.

5. List of all members of a board of trustees or pension committee of the plan.

19. Section 6 of Form 2.1 of Schedule II to the Regulations is amended by replacing the words "pension committee" with the words "pension council".

COMING INTO FORCE

20. These Regulations come into force on the day on which they are registered.

[45-1-o]

Footnote a

S.C. 1992, c. 1, s. 34

Footnote 1

SOR/92-695

Footnote 2

SOR/90-10

Footnote 3

SOR/98-557

Footnote b

S.C. 1992, c. 1, s. 34

Footnote 4

C.R.C., c. 1296

Footnote 5

SOR/85-565

Footnote 6

SOR/90-17

Footnote 7

SOR/90-17

Footnote 8

SOR/86-241

Footnote 9

SOR/90-17

Footnote 10

S.C., 1980-81-82-83, c. 54, s. 65

Footnote 11

SOR/81-844

Footnote 12

SOR/98-559

Footnote c

R.S., c. 20 (4th Supp.)

Footnote 13

C.R.C., c. 285

Footnote 14

SOR/95-475

Footnote 15

SOR/95-475

Footnote 16

SOR/95-475

Footnote 17

SOR/90-218

Footnote 18

SOR/91-370

Footnote 19

C.R.C., c. 287

Footnote 20

SOR/91-370

Footnote 21

SOR/91-370

Footnote 22

SOR/91-370

Footnote 23

SOR/91-370

Footnote 24

SOR/91-370

Footnote 25

SOR/91-371

Footnote 26

C.R.C., c. 289

Footnote 27

SOR/91-371

Footnote 28

SOR/91-371

Footnote 29

SOR/91-371

Footnote 30

SOR/91-371

Footnote 31

SOR/91-371

Footnote d

S.C. 2000, c. 8, s. 2

Footnote e

S.C. 2000, c. 8, s. 10(3)

Footnote 32

SOR/81-1030; SOR/97-103

Footnote f

S.C. 1998, c.12, s. 26

Footnote g

R.S., c. 32 (2nd Supp.)

Footnote 33

SOR/95-86

Footnote 34

SOR/87-19

Footnote 35

SOR/94-384

Footnote 36

SOR/95-171

Footnote 37

SOR/93-299

Footnote 38

SOR/93-299

Footnote 39

SOR/94-384

Footnote 40

SOR/90-363

Footnote 41

SOR/93-299

Footnote 42

SOR/94-384

Footnote 43

SOR/94-384

Footnote 44

SOR/94-384

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