Vol. 136, No. 40 — October 5, 2002

Regulations Amending the Public Service Superannuation Regulations (Election to Pay for Transfer Value Service)

Statutory Authority

Public Service Superannuation Act and Financial Administration Act

Sponsoring Agency

Treasury Board Secretariat

REGULATORY IMPACT ANALYSIS STATEMENT

Description

These Regulations provide for the revocation of a transfer value benefit option where the decision to opt for that benefit was based on erroneous or misleading advice, and allow for the automatic revocation of the option where an individual again becomes a contributor before the benefit is paid. These Regulations also provide for the reinstatement of prior public service for which a transfer value benefit was paid if the individual becomes re-employed in the public service. The modifications are consistent with other revocation provisions and elective service provisions under the Public Service Superannuation Act.

Alternatives

The provisions of the pension arrangements for public service employees are specified in statute or regulations; therefore, there is no alternative to the regulatory route.

Benefits and Costs

The application of these amendments is limited to the affected individuals whose particular circumstances are described in the amendments; the changes would have a positive effect on affected plan members.

Consultation

Consultations and discussions were held within the Pensions Division, Treasury Board Secretariat, and with officials of the Department of Public Works and Government Services. The President of the Treasury Board's Pension Advisory Committee was also consulted.

Compliance and Enforcement

The normal legislative, regulatory and administrative compliance structures will apply, including internal audits, reports to Parliament and responses to enquiries received from Members of Parliament, affected plan members and their representatives.

Contact

Joan M. Arnold, Director, Pensions Legislation Development Group, Pensions and Benefits Division, Treasury Board Secretariat, Ottawa, Ontario K1A 0R5, (613) 952-3119 (Telephone).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Treasury Board, pursuant to subsections 42(1)(see footnote 1)  and 42.1(1)(see footnote 2)  and section 71(see footnote 3)  of the Public Service Superannuation Act and paragraph 7(2)(a) of the Financial Administration Act proposes to make the annexed Regulations Amending the Public Service Superannuation Regulations (Election to Pay for Transfer Value Services).

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 Phil Charko, Assistant Secretary, Pensions and Benefits Division, Treasury Board Secretariat, L'Esplanade Laurier, 300 Laurier Avenue West, 5^th   Floor, Ottawa, Ontario K1A 0R5.

LUCIENNE ROBILLARD
President of the Treasury Board

REGULATIONS AMENDING THE PUBLIC SERVICE SUPERANNUATION REGULATIONS (ELECTION TO PAY FOR TRANSFER VALUE SERVICE)

AMENDMENT

1. The heading before section 19 and sections 19 to 21 of the Public Service Superannuation Regulations (see footnote 4)  are replaced by the following:

Revocation of Option-Erroneous Information

19. Subject to section 19.1, a contributor who has received erroneous or misleading information may, with the consent of the Minister, revoke an option that he or she has exercised under section 12, 13 or 13.01 of the Act or is deemed under paragraphs10(5)(a) or (b) of the Act to have exercised and exercise a new option under those sections if

(a) he or she received the erroneous or misleading information from a person employed in the Public Service or who is engaged by an organization whose employees are deemed to be employed in the Public Service for the purposes of the Act and who normally gives information as to the benefits in respect of which a contributor may exercise an option upon ceasing to be employed in the Public Service; and
(b) the erroneous or misleading information was in respect of the amount, nature or type of any benefit provided under section 12, 13 or 13.01 of the Act, the procedures required to be followed to constitute a valid exercise of an option or an agreement referred to in subsection 40(2) or 40.2(2) of the Act.

19.1 No option may be revoked under section 19 and no new option may be exercised under section 12, 13 or 13.01 of the Act unless all of the following conditions are met:

(a) the person who received the erroneous or misleading information applies to the Minister to revoke the option and to exercise a new option within

(i) in the case of an option made under section 12 or 13 of the Act, three months after the day on which he or she became aware that erroneous or misleading information was given, or
(ii) in the case of an option made under section 13.01 of the Act, the later of three months after the day on which he or she became aware that erroneous or misleading information was given to him or her or six months after the day on which this section and section 19 come into force;

(b) the contributor, in exercising the option that he or she made under section 12, 13 or 13.01 of the Act or having been deemed under paragraph 10(5)(a) or (b) of the Act to have exercised, acted upon the erroneous or misleading information referred to in section 19, and would have made a different choice of benefit or would have exercised the option at an earlier time if there had been no erroneous or misleading information given;
(c) any payment made to the contributor in respect of any benefit during the subsistence of the option made under section 12 or 13 of the Act is, subject to section 20, repaid by the contributor within 30 days after being notified by the Minister of the amount to be repaid or, in the case of a person who exercised an option under section 13.01 of the Act, within 3 months after being notified by the Minister of the amount to be repaid;
(d) any payment made to the contributor under the Retirement Compensation Arrangements Regulations, No. 1, as a result of the contributor having opted for a benefit under section 12, 13 or 13.01 of the Act, is repaid by him or her to the Retirement Compensation Arrangements Account established under the Special Retirement Arrangements Act within the same time limits as provided for the repayment of the benefit under paragraph (c); and
(e) in the case of a person who seeks to revoke an option for a benefit under section 13.01 of the Act based on having received erroneous or misleading information in respect of the amount of any benefit under section 12, 13, or 13.01 of the Act, the information as to the amount of a benefit to which the person was entitled was at least 5 % different from the actual amount of that benefit.

20. If a contributor who exercised an option for a benefit under section 12 or 13 of the Act exercises a new option that results in the payment of an annuity and, if there are reasonable grounds for the Minister to believe that the repayment by the contributor of the amount referred to in paragraph 19.1(c) within the period specified in that paragraph would cause undue financial hardship to the contributor, the payment shall be repaid in monthly instalments in the amounts that the Minister directs to be withheld from the annuity that is payable under the new option and the deductions shall not, in any case, be less than 10 % of the gross monthly amount of the annuity.

Revocation of Option-transfer Agreements

21. A person who ceased to be employed in the Public Service and who was employed by an approved employer within three months after so ceasing or was employed by an eligible employer and who exercised an option under section 12, 13 or 13.01 of the Act or is deemed under paragraphs 10(5)(a) or (b) of the Act to have exercised an option may, with the consent of the Minister, revoke the option and exercise a new option under those sections if he or she has not yet received a benefit under the Act and either of the following conditions are met:

(a) the person, on ceasing to be employed in the Public Service, reasonably expected that an agreement referred to in subsection 40.2(2) of the Act would be entered into, and

(i) no such agreement had been entered into at the time the contributor applied to revoke the option, or
(ii) the agreement was entered into after the contributor ceased to be employed in the Public Service, but the contributor's pensionable service could not be transferred under the agreement; or

(b) the person, on ceasing to be employed in the Public Service, took all necessary actions to transfer his or her pensionable service to the approved or eligible employer but, through no fault on the part of the person, the transfer could not be validly completed.

21.1 The consent of the Minister referred to in section 19 or 21 shall not be withheld if the conditions for the revoking or making of a new option are met by the contributor.

2. Section 23 of the Regulations is repealed.

3. (1) The portion of subsection 83(1) of the Regulations before the definition "new employer" is replaced by the following:

83. (1) The following definitions apply in sections 84 to 104.

(2) Subsection 83(1) of the Regulations is amended by adding the following in alphabetical order:

"transfer value service" means any period of service in respect of which the payment of a transfer value was made in accordance with subsection 13.01(2) of the Act. (période de service achetable)

4. Section 89 of the Regulations and the heading before it is replaced by the following:

Void Option

89. If a contributor exercises an option for a transfer value under section 13.01 of the Act and is re-employed in the Public Service and is required to make contributions under section 5 of the Act before the transfer value has been paid, the exercise of the option for the transfer value is void.

5. Subsection 92(2) of the Regulations is replaced by the following:

(2) The actuarial valuation report referred to in paragraphs (1)(a), (c) and (d) is the actuarial valuation report most recently laid before Parliament in accordance with section 45 of the Act before valuation day or, if that report was laid before Parliament in the month in which valuation day occurs or in the preceding month, the report that was laid before Parliament immediately previous to that report.

6. Section 93 of the Regulations is replaced by the following:

93. (1) The interest referred to in section 90 shall be calculated for the period beginning on valuation day and ending on the last day of the month preceding the month in which payment of the transfer value is effected, at the rate established in accordance with subsections (2) and (3) converted to an effective annual rate.

(2) The rate of interest is the rate that existed in respect of the second quarter preceding valuation day and that is set out in the table entitled "Balanced" on the line "MERCER Median" in the column entitled "3 Months" in the Summary Performance of Canadian Institutional Pooled Funds, published by Mercer Investment Consulting Inc., as amended from time to time.

(3) If the rate of interest under subsection (2) is negative, the amount of interest for the purposes of subsection (1) is zero.

7. The Regulations are amended by adding the following after section 99:

Election for Transfer Value Service

100. (1) Subject to the provisions of the Income Tax Act and the Income Tax Regulations, a contributor while employed in the Public Service may elect, once only, under clause 6(1)(b)(iii)(M) of the Act, to pay for a period of transfer value service for which he or she had not previously had an opportunity to elect.

(2) An election to pay for transfer value service shall be in writing, in the form prescribed by the Minister and dated and signed by the person making the election.

(3) An election shall be sent to the Minister, or to a person designated by the Minister, no later than one year after the later of the date of the written notice sent informing the contributor that he or she has become a contributor under Part I of the Act or the day on which this section comes into force.

(4) An election is deemed to be made on the day on which it is received by the Minister, or the person designated by the Minister.

(5) Subject to subsection (6), a contributor who elects to pay for only a portion of transfer value service may only be credited with the period that is most recent in point of time.

(6) If a contributor elects to pay for only a portion of transfer value service that comprises periods of full-time service and part-time service, the portion elected shall consist of full-time service and part-time service in the same proportions as those used in the determination of the transfer value, based on those periods of service that are most recent in point of time.

(7) An election may not be revoked, except in the circumstances set out in paragraph 18(1)(a), or amended.

(8) Paragraph 8(5)(a) of the Act applies to an election made under subsection (1).

101. (1) The amount required to pay for an election for transfer value service is the aggregate of

(a) the amount determined by multiplying the amount paid as a transfer value under subsection 13.01(2) of the Act and under section 98, by the fraction the numerator of which is the portion of the transfer value service elected under section 100 and the denominator of which is the transfer value service;
(b) the amount representing the interest calculated in accordance with the rates set out in subsection (2) and (3) compounded quarterly, on the amount determined under paragraph (a), for the period beginning on the day on which payment of the transfer value was effected and ending on the last day of the month preceding the month in which the election to pay for the transfer value service is made.

(2) The rate of interest in respect of each quarter is the rate that existed in respect of the second quarter preceding the quarter for which interest is being calculated and set out in the table entitled "Balanced" on the line "MERCER Median" in the column entitled "3 Months" in Summary Performance of Canadian Institutional Pooled Funds, published by Mercer Investment Consulting Inc., as amended from time to time.

(3) If the amount of interest calculated under paragraph (1)(b) is negative, the amount of interest for the purposes of that paragraph is zero.

102. (1) The amount required to pay for an election for transfer value service shall be paid to the Public Service Pension Fund in a lump sum.

(2) If the amount actually paid is less than the amount required to be paid for the entire period of transfer value service elected, the contributor is deemed to have elected to pay for the lesser period of service that the amount remitted is sufficient to pay for.

(3) An election is invalid if payment is not made within 90 days after the day on which the election is received by the Minister, or a person designated by the Minister.

103. An election to pay for transfer value service is invalid if the contributor has not paid to the Retirement Compensation Arrangements Account established under the Special Retirement Arrangements Act any amount required to be paid under paragraph 38.3(a) of the Retirement Compensation Arrangements Regulations, No. 1 in respect of the period contemplated by the election, within the time limit set out in subsection 102(3).

104. If a contributor's election to pay for transfer value service is invalid for a reason set out in subsection 102(3) or section 103, the contributor is not entitled to make another election in respect of any period of transfer value service contemplated by the invalid election.

COMING INTO FORCE

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

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Regulations Amending the Retirement Compensation Arrangements Regulations, No. 1

Statutory Authority

Special Retirement Arrangements Act

Sponsoring Agency

Treasury Board Secretariat

REGULATORY IMPACT ANALYSIS STATEMENT

Description

In order to receive special tax treatment, an employer-sponsored pension plan must limit benefits in accordance with the provisions of the Income Tax Act (ITA) and regulations. The ITA allows for benefits in excess of these limits to be provided for under a retirement compensation arrangement. The Retirement Compensation Arrangements Regulations, No. 1 (RCA No. 1) were introduced in 1994 to provide for the payment of benefits in excess of the ITA limits. These proposed amendments to the RCA No. 1 are required to:

1. make consequential amendments to reflect the amendments to the Public Service Superannuation Regulations (PSSR) permitting the revocation of a transfer value benefit option in cases of erroneous or misleading advice; provide for an automatic revocation of that option where an individual again becomes a contributor before the benefit is paid, and allow for reinstatement of prior public service for which a transfer value benefit was paid,
2. ensure that the benefit options available under the RCA No. 1 are consistent with those under the PSSR.

Alternatives

As the registered pension plans for federal employees are contained in statute, there is no alternative but to amend the Regulations.

Benefits and Costs

The application of these amendments is limited to the affected individuals whose particular circumstances are described in the amendments.

Consultation

Consultations and discussions were held within the Pensions Division, Treasury Board Secretariat, and with officials of the Department of Public Works and Government Services.

Compliance and Enforcement

The normal legislative, regulatory and administrative comliance structures will apply, including internal audits, the usual reports to Parliament, and responses to inquiries received from Members of Parliament, affected plan members and their representatives.

Contact

Joan M. Arnold, Director, Pension Legislation Development, Pensions and Benefits Division, Treasury Board Secretariat, Ottawa, Ontario K1A 0R5, (613) 952-3119 (Telephone).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to sections 11, 13, 15, and 28 of the Special Retirement Arrangements Act (see footnote a)  proposes to make the annexed Regulations amending the Retirement Compensation Arrangements Regulations, No. 1.

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 Phil Charko, Assistant Secretary, Pensions and Benefits Division, Treasury Board Secretariat, L'Esplanade Laurier, 300 Laurier Avenue W, Ottawa, Ontario K1A 0R5.

Ottawa, September 25, 2002

EILEEN BOYD
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE RETIREMENT COMPENSATION ARRANGEMENTS REGULATIONS, NO. 1

AMENDMENTS

1. Subsection 13(3) of the Retirement Compensation Arrangements Regulations, No. 1 (see footnote 5)  is amended by adding the word "and" at the end of paragraph (e) and by repealing paragraph (f).

2. Paragraph 14(2)(b) of the Regulations is replaced by the following:

(b) the participant is entitled to the return of his or her contributions under this Part in respect of that period, together with interest calculated at the rate and in the manner set out in subsection 10(9) of the Public Service Superannuation Act.

3. The Regulations are amended by adding the following after section 14:

14.1 (1) A person who opts for a transfer value under section 13.01 of the Public Service Superannuation Act is deemed to have never been subject to the retirement compensation arrangement under this Part.

(2) The person shall be entitled to the return of his or her contributions under this Part together with interest, if any, calculated at the rate and in the manner set out in subsection 10(9) of the Public Service Superannuation Act.

4. Subsection 15(1) of the Regulations is replaced by the following:

15. (1) A participant who ceases to be required to contribute to the Retirement Compensation Arrangements Account under this Part may opt to receive a benefit, of the type that the participant would otherwise be entitled to receive under section 13 of the Public Service Superannuation Act, based on the participant's age on ceasing to be required to contribute under this Part and on the aggregate of the pensionable service to the credit of the participant under that Act and the period of service in respect of which the participant was required to contribute under this Part.

5. Sections 15.1 to 15.5 of the Regulations are repealed.

6. Section 16 of the Regulations is amended by replacing the reference to "23" with a reference to "22".

7. Section 18.1 of the Regulations is repealed.

8. Section 19 of the Regulations is replaced by the following:

19. (1) A survivor of a participant who is not entitled to the benefit set out in section 18 due to the application of subsection 26(1) of the Public Service Superannuation Act shall be entitled to the benefit referred to in that section if the survivor married the participant or began cohabiting in a relationship of a conjugal nature with the participant during the period in respect of which the participant was required to contribute under this Part.

(2) A person who is not entitled to the benefit set out in section 18 due to the application of subsection 26(2) of the Public Service Superannuation Act shall be entitled to the benefit referred to in that section if the person became the child, within the meaning of "child" in subsection 3(1) of that Act, of the participant during the period in respect of which the participant was required to contribute under this Part.

(3) For the purpose of subsection (2), a child born posthumously to a participant is entitled to a benefit under section 18 if the child is born following a gestation period commencing before the date when the participant ceased to be required to contribute under this Part.

9. (1) Paragraphs 22(2)(a) and (b) of the Regulations are replaced by the following:

(a) the annual amount of any benefit payable to the participant under this Part, determined in accordance with subsection 15(3), not reduced on account of the age or period of pensionable service of the participant,
(b) the annual amount of any benefit payable to the participant under Part II, determined in accordance with subsection 35(2), not reduced on account of the age or period of pensionable service of the participant, and

(2) Paragraphs 22(3)(b) and (c) of the Regulations are replaced by the following:

(b) any amount paid under Divisions I and II of Part II, including any amount paid under section 39; and
(c) any amount paid under Part I of the Public Service Superannuation Act, including any amount paid under section 27 of that Act.

10. Section 31 of the Regulations is replaced by the following:

31. A participant who makes an election under section 57 of the Public Service Superannuation Regulations or under paragraph 6(1)(b) or section 20 of the Public Service Superannuation Act, other than an election under clause 6(1)(b)(iii)(M) of that Act, shall pay to the Retirement Compensation Arrangements Account, in respect of any portion of the participant's annual rate of salary that exceeds the annual rate of salary determined under section 5.1 of those Regulations, the amount that the participant would be required to contribute in respect of that portion under section 57 of those Regulations or under section 7 or paragraph 20(1)(b) of that Act in the same manner and subject to the same conditions as are set out in subsection 57(3) of those Regulations or in section 8 or subsection 20(3) of that Act, respectively.

11. Subsection 35(3) of the Regulations is replaced by the following:

(3) The benefit to which a participant is entitled is payable in the same manner and is subject to the same conditions as the annuity or annual allowance payable to the participant under the Public Service Superannuation Act.

12. Sections 38.1 to 38.5 of the Regulations are replaced by the following:

38.1 (1) A participant who opts for a transfer value under section 13.01 of the Public Service Superannuation Act shall receive a lump sum amount in lieu of any other benefit under this Division.

(2) Subject to subsection (4), the lump sum amount is an amount equal to the actuarial value on valuation day of the accrued benefits that would be payable to or in respect of the participant under subsection 35(2) and section 68 if the participant were entitled to a deferred annuity under section 13 of the Public Service Superannuation Act on ceasing to be employed in the Public Service together with interest.

(3) The actuarial value shall be determined in accordance with sections 91 and 92 and subsection 94(2) of the Public Service Superannuation Regulations, and the interest shall be calculated in accordance with section 93 of those Regulations.

(4) The lump sum amount shall not be less than the aggregate of

(a) the sum of the contributions that the participant has made under this Part as of valuation day plus interest calculated at the rate and in the manner set out in subsection 10(9) of the Public Service Superannuation Act, and
(b) interest after valuation day, if any, on the sum referred to in paragraph (a) calculated in accordance with section 93 of the Public Service Superannuation Regulations.

(5) Despite subsections (2) and (4), where a division of a participant's pension benefits is effected under section 8 of the Pension Benefits Division Act before the date on which payment of a transfer value is effected, the lump sum amount shall be reduced to take into account the adjustment to the participant's pension benefits made in accordance with section 21 of the Pension Benefits Division Regulations.

(6) For the purposes of subsections (2) and (4), "valuation day", in respect of a participant, has the same meaning as in section 83 of the Public Service Superannuation Regulations.

38.2 Subsection 38.1(2) and sections 38.4, 38.5 and 41.3, as those provisions read immediately before the coming into force of this section, continue to apply in respect of a deferred annuity that a participant opted or was deemed to have opted to receive under paragraph 38.1(1)(b) or subsection 38.2(2), as those provisions read immediately before the coming into force of this section.

38.3 The following conditions apply if a person elects under clause 6(1)(b)(iii)(M) of the Public Service Superannuation Act to pay for "transfer value service" within the meaning of subsection 83(1) of the Public Service Superannuation Regulations:

(a) if the person received a lump sum amount under section 38.1 or 41.2 or opted to receive a lump sum amount under paragraph 38.1(1)(a), as that provision read immediately before the coming into force of this section, he or she shall pay to the Retirement Compensation Arrangements Account, within 90 days after the day on which the election referred to in section 100 of those Regulations is received by the Minister, the aggregate of

(i) the amount determined by multiplying the total amount paid under sections 38.1 and 41.2 by the fraction, the numerator of which is the portion of the transfer value service that he or she elects to pay for under section 100 of those Regulations, and the denominator of which is the transfer value service, and
(ii) the amount representing interest on the amount determined under subparagraph (i) calculated in the same manner as provided in paragraph 101(1)(b) of those Regulations; or

(b) if the person opted to receive or was deemed to have opted to receive a deferred annuity under paragraph 38.1(1)(b) or subsection 38.2(2), as those provisions read immediately before the coming into force of this section, the participant shall surrender his or her entitlement to the deferred annuity on the day of the election referred to in section 100 of those Regulations.

13. (1) Paragraph 39(2)(a) of the Regulations is replaced by the following:

(a) the annual amount of any benefit payable to the participant under this Division, determined in accordance with subsection 35(2), or section 38.4 as that provision read immediately before the coming into force of this paragraph, not reduced on account of the age or period of pensionable service of the participant, and

(2) Paragraph 39(3)(a) of the Regulations is replaced by the following:

(a) any amount paid under this Part;

(3) Subsection 39(4) of the Regulations is replaced by the following:

(4) If the amount determined under subsection (2) is less than the total of the participant's contributions under this Part and Part I of the Public Service Superannuation Act together with interest calculated at the rate and in the manner set out in subsection 10(9) of that Act, the benefit payable under subsection (1) shall be equal to the participant's contributions under this Part together with interest calculated at the same rate and in the same manner, reduced by any amount paid to or in respect of the participant under this Part.

14. Sections 41.2 to 41.6 of the Regulations are replaced by the following:

41.2 (1) A benefit shall be paid to a participant who opts for a transfer value under section 13.01 of the Public Service Superannuation Act in the form of a lump sum in an amount equal to the amount by which the transfer value payable to the participant under subsection 13.01(2) of that Act is reduced as a result of the operation of the limits set out in any of subsections 30.6(1) and (2), 30.8(1) and 80.1(1) of the Public Service Superannuation Regulations together with interest, if any.

(2) The interest shall be calculated in accordance with section 93 of those Regulations.

COMING INTO FORCE

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

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Footnote 1 

S.C. 2001, c. 34, s. 80

Footnote 2 

S.C. 1999, c. 34, s. 92

Footnote 3 

S.C. 1999, c. 34, s. 113

Footnote 4 

C.R.C., c. 1358; SOR/93-450

Footnote a 

S.C. 1992, c. 46, Sch. I

Footnote 5 

SOR/94-785

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