Vol. 142, No. 25 — December 10, 2008

Registration

SOR/2008-307 November 24, 2008

CANADIAN FORCES SUPERANNUATION ACT FINANCIAL ADMINISTRATION ACT

Regulations Amending the Canadian Forces Superannuation Regulations and the Reserve Force Pension Plan Regulations

T.B. 834581 November 20, 2008

The Treasury Board, on the recommendation of the Minister of National Defence, pursuant to subsection 3.1(1) (see footnote a) and sections 50 (see footnote b) and 59.1 (see footnote c) of the Canadian Forces Superannuation Act and paragraph 7(2)(b) of the Financial Administration Act, hereby makes the annexed Regulations Amending the Canadian Forces Superannuation Regulations and the Reserve Force Pension Plan Regulations.

REGULATIONS AMENDING THE CANADIAN FORCES SUPERANNUATION REGULATIONS AND THE RESERVE FORCE PENSION PLAN REGULATIONS

CANADIAN FORCES SUPERANNUATION REGULATIONS

1. Section 3 of the Canadian Forces Superannuation Regulations (see footnote 1) is amended by adding the following after subsection (3):

(3.1) For the purposes of subsections (1) and (2), days of Canadian Forces service are determined without taking into account section 11.

2. Paragraph 8.1(1)(a) of the Regulations is replaced by the following:

(a) on March 1, 2007 if,

(i) on that date, the member is not a person required to contribute to the Public Service Pension Fund or the Royal Canadian Mounted Police Pension Fund,

(ii) on that date, the member does not have any pensionable service to their credit under Part I of the Act,

(iii) on that date, the member’s total number of days of Canadian Forces service during any period of 60 months beginning on or after April 1, 1999 was no less than 1,674, and

(iv) during the first month of the period, the member already was or became a member of the Canadian Forces and remained a member, without any interruption of more than 60 days, until March 1, 2007;

3. The Regulations are amended by adding the following after section 8.3:

8.31 In respect of a member of the reserve force referred to in section 8.3, subsection 40(1) of the Act is adapted as follows:

40. (1) If, on the death of a contributor who, on ceasing to be a member of the regular force, was entitled to an immediate annuity or an annual allowance from which a deduction had been made in accordance with subsection 15(2), there is no person to whom an allowance provided in this Part may be paid, or if the persons to whom the allowance may be paid die or cease to be entitled to it and no other amount may be paid to them under this Part, any amount by which the calculated amount, within the meaning of subsection (2), exceeds the aggregate of all amounts paid to those persons and to the contributor under this Part shall be paid as provided in section 39 for amounts payable under that section.

4. The Regulations are amended by adding the following after section 8.4:

8.5 In respect of a member of the reserve force referred to in subsection 8.1(3), paragraph 8(2)(c) of the Act is adapted as follows:

(c) an election to pay for a period of service in the reserve force by a member of the reserve force referred to in subsection 8.1(3) of the Canadian Forces Superannuation Regulations, unless the member has made the election referred to in subsection 41(4), as adapted by section 8.4 of those Regulations.

5. Subsection 11(4.1) of the French version of the Regulations is replaced by the following:

(4.1) Durant la période de service comptée comme service ouvrant droit à pension conformément aux paragraphes (2) ou (2.1), le contributeur qui est membre de la force de réserve et à qui a été accordée une exemption de l’instruction et du service en vertu des articles 9.09 ou 9.10 ou un congé de maternité ou parental en vertu des articles 16.26 ou 16.27 des Ordonnances et règlements royaux applicables aux Forces canadiennes, est, pour l’application de la Loi, réputé avoir été autorisé à recevoir et avoir reçu, durant chaque semaine où il bénéficie de l’exemption ou du congé, une solde correspondant au taux de solde hebdomadaire calculé conformément à la directive 205.461(7) des Directives sur la rémunération et les avantages sociaux applicables aux Forces canadiennes, établies en vertu de l’article 35 de la Loi sur la défense nationale.

6. Section 12.1 of the Regulations is replaced by the following:

12.1 For the purposes of subsection 5(6) of the Act, the annual rate of pay is equal to the amount determined by the following formula and rounded to the next highest multiple of $100:

where

A is

(a) in respect of pay received by the person for 1995, $1,722.22, and

(b) in respect of pay received by the person for any year after 1995, the amount of the defined benefit limit determined for that year in accordance with the definition “defined benefit limit” in subsection 8500(1) of the Income Tax Regulations;

B is

(a) in respect of pay received by the person for any year after 1994 and before 2008, 0.013, and

(b) in respect of pay received by the person for any year after 2007, 0.01375; and

C is the Year’s Maximum Pensionable Earnings determined for that year in accordance with section 18 of the Canada Pension Plan.

7. (1) The adapted version of clauses 6(b)(ii)(G) and (H) of the Act, in subsection 12.2(2) of the Regulations, is replaced by the following:

(G) any period of reserve force service referred to in subsection 12.2(1) of the Canadian Forces Superannuation Regulations, if the contributor elects — during the period beginning on the day on which they become a contributor and ending the later of one year after the date of the written notice advising the contributor that they have become entitled to make the election, and March 1, 2010 — to pay for that service,

(2) Subsection 12.2(3) of the Regulations is replaced by the following:

(3) The election for reserve force service set out in clauses 6(b)(ii)(G) and (H) of the Act, as adapted by subsection (2), is for all of the contributor’s reserve force service. However, there shall be counted as years of pensionable service, starting with the most recent, only those that would result in a maximum of 35 years of pensionable service to the credit of the contributor.

8. The adapted version of paragraphs 7(1)(g) and (h) of the Act, in subsection 12.4(1) of the Regulations, is replaced by the following:

(g) in respect of any period specified in clauses 6(b)(ii)(G) and (H), as adapted by subsection 12.2(2) of the Canadian Forces Superannuation Regulations, the full amount calculated under subsection 12.4(2) of those Regulations or a lesser amount for which the contributor opts at the time of making the election;

9. The heading before section 14.2 of the French version of the Regulations is replaced by the following:

CHOIX RELATIF AUX COTISATIONS COMPLÉMENTAIRES — COTISATIONS VERSÉES AU TITRE DU RÈGLEMENT SUR LE RÉGIME DE PENSION DE LA FORCE DE RÉSERVE

10. The portion of paragraph 14.6(3)(b) of the French version of the Regulations before the formula is replaced by the following:

b) à l’égard du service ouvrant droit à pension visé à l’alinéa 14.2b), à la somme des valeurs calculées, pour chaque année civile, selon la formule suivante :

11. Section 14.7 of the Regulations is replaced by the following:

14.7 Subsections 9(1), as adapted by section 14.1, and (1.1) to (5) of the Act apply to a top-up election made under section 14.2 as if any amount to be paid in respect of the election were an amount required to be paid under subsection 7(1) of the Act.

12. Subsection 22.1(1) of the French version of the Regulations is repealed.

13. Subsection 27.1(4) of the Regulations is replaced by the following:

(4) A top-up election may be made only while the contributor is a member of the regular force.

RESERVE FORCE PENSION PLAN REGULATIONS

14. Paragraph 81(1)(a) of the Reserve Force Pension Plan Regulations (see footnote 2) is replaced by the following:

(a) in respect of a pensioner, the month or year during which the pensioner most recently became entitled to an annuity or annual allowance under Division I of Part 2; and

COMING INTO FORCE

15. (1) These Regulations, except for section 6, are deemed to have come into force on March 1, 2007.

(2) Section 6 is deemed to have come into force on January 1, 2008.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

These Regulations include an amendment that is required as consequential to amendments made to the pension calculation set out in the Canadian Forces Superannuation Act (CFSA).

Benefits under the CFSA are coordinated with those payable under the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP). As a result, a retired Canadian Forces (CF) member’s pension is reduced at age 65 when the normal retirement pension becomes payable under the Canada Pension Plan or the Quebec Pension Plan, or immediately if the member is entitled to a Canada Pension Plan or a Quebec Pension Plan disability pension. The Budget Implementation Act, 2006 amended the CFSA by gradually lowering the reduction factor for CF members reaching age 65 over a five-year phased-in period starting on January 1, 2008.

A consequential amendment to the Canadian Forces Superannuation Regulations is required to provide that the formula for calculating the annual maximum pensionable salary under Part I of the Canadian Forces Superannuation Act takes into account the change in the reduction factor. This regulation amendment ensures that the benefits under Part I of the Act are in line with the Income Tax Act requirements for registered pension plans.

The other changes made by these Regulations are for clarity purposes only. They correct oversights and gaps that have been discovered in the Canadian Forces pension modernization regulations that came into force on March 1, 2007. There are no changes in the pension modernization policy reflected in the Regulations that came into force on March 1, 2007.

Alternatives

The pension arrangements for members of the Canadian Forces are set out in the Canadian Forces Superannuation Act and the regulations made under the Act, and therefore there is no alternative to the regulatory route.

Benefits and costs

The regulation amendment that deals with the annual maximum pensionable salary will result in a one-time net increase in actuarial liabilities of $170,000 mainly due to the different tax treatment of retirement savings vehicles under the Income Tax Act. There is no change in the current service cost of the plan as a result of this amendment. The other amendments make no change to existing costs.

Consultation

These regulation amendments make no change in established policy and have been discussed with the Minister’s Pension Advisory Committee. During the development of these amendments, consultations were undertaken with officials of the Treasury Board Secretariat, the Department of Justice and the Office of the Superintendent of Financial Institutions.

Compliance and enforcement

The normal legislative, regulatory and administrative compliance 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

Lynne McKenna-Fleming
Director of Pensions and Social Programs
National Defence Headquarters
Ottawa, Ontario
K1A 0K2
Telephone: 613-996-3700

Footnote a
 S.C. 2003, c. 26, s. 2

Footnote b
 S.C. 2003, c. 26, s. 23

Footnote c
 S.C. 2003, c. 26, s. 41(1)

Footnote 1
 C.R.C., c. 396

Footnote 2
 SOR/2007-32

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