Pension Benefits Standards Act, 1985 (R.S.C., 1985, c. 32 (2nd Supp.))

Letters of Credit

Marginal note:Letters of credit

• 9.11 (1) Subject to the regulations, an employer may provide a trustee with, or transfer to a trust, a letter of credit made out to the trustee for the benefit of the pension plan, instead of paying into the pension fund an amount that is required to be paid under subsection 9(1.1).

• Marginal note:Copy to administrator

  (2) As soon as feasible after the letter of credit is issued, the employer must provide the administrator with a copy of it.

• Marginal note:Deductions from remuneration

  (3) The employer may not obtain a letter of credit in respect of an amount that it has deducted from members’ remuneration.

• Marginal note:Non-application

  (4) Subsection (1) does not apply in respect of a pension plan that has been terminated in whole.

Marginal note:Duty of employer

9.12 The employer must ensure that the letter of credit and the trust agreement comply with this Act and the regulations and must, at any intervals or times and in the form that the Superintendent directs, provide the Superintendent and the administrator with a written statement confirming that compliance.

Marginal note:Obligation of trustee

• 9.13 (1) The trustee must hold the letter of credit in trust for the pension plan.

• Marginal note:Disclosure

  (2) The trustee must file with the Superintendent any information in respect of a letter of credit that the Superintendent requires at any intervals or times that the Superintendent directs.

• Marginal note:No liability

  (3) No civil action lies against the trustee for having, in good faith and in accordance with the regulations, on the direction of the employer, allowed the letter of credit to be cancelled or its face value to be reduced.

Marginal note:Demand for payment

• 9.14 (1) In the prescribed circumstances, the trustee must make a demand to the issuer for payment into the pension fund of an amount equal to the face value of the letter of credit.

• Marginal note:Payment by employer

  (2) If the issuer fails to honour the letter of credit, the employer must pay an amount equal to its face value into the pension fund without delay.

• Marginal note:Non-application of subsection 8(1)

  (3) Subsection 8(1) does not apply to an amount in respect of which the employer has obtained a letter of credit unless the issuer fails to honour the letter of credit.

• Marginal note:Bankruptcy, etc., of employer

  (4) In the event of any liquidation, assignment or bankruptcy of the employer, an amount equal to the amount of a letter of credit that has not been honoured by the issuer is deemed to be separate from and form no part of the estate in liquidation, assignment or bankruptcy.

Marginal note:Costs

9.15 The costs that are associated with obtaining, holding, amending or cancelling a letter of credit may not be paid out of the pension fund.

Crown Corporations

Marginal note:Reduction of payments

9.16 If the employer is a Crown corporation, a payment that it is required to make under subsection 9(1.1) may be reduced, provided the payment does not relate to any amount that the employer has deducted from members’ remuneration and the prescribed conditions have been met.

Surplus

Marginal note:Refund of surplus to the employer

• 9.2 (1) If an actuarial report prepared by a designated actuary or filed under subsection 12(2) indicates that there is a surplus, no part of that surplus may be refunded to the employer unless

  • (a) the employer establishes that

    • (i) it is entitled to the surplus, or part of it, under the pension plan, or

    • (ii) it has a claim to the surplus, or part of it, under this section;

  • (b) the requirements of the regulations made under paragraph 39(1)(h.1) are met; and

  • (c) the Superintendent consents to the refund.

• Marginal note:Consent to surplus

  (2) In deciding whether to consent to a refund, the Superintendent shall recognize the claim of the employer to the surplus, or part of it, established under this section.

• Marginal note:Claim to surplus

  (3) An employer has a claim to the surplus, or part of it, if, after being notified of the employer’s proposal for a refund of that surplus or part of it, at least two thirds of the persons in each of the following categories notify the employer that they consent to the proposal:

  • (a) members of the pension plan; and

  • (b) former members of the plan and any other persons within a prescribed class.

• Marginal note:Submission to arbitration

  (4) Subject to subsection (5), if more than one half but fewer than two thirds of the persons in each of the categories referred to in subsection (3) consented to the proposal, the employer may, or if the whole of the pension plan is terminated shall, submit the proposal to arbitration. The employer shall notify the Superintendent, in the form and manner, if any, that the Superintendent directs, and the persons in those categories if the proposal is to be submitted to arbitration.

• Marginal note:Liquidation of employer

  (5) The employer’s claim to the surplus, or part of it, shall be submitted to arbitration within 18 months after the termination of the whole of the pension plan, or any longer period specified by the Superintendent, if

  • (a) the employer has not established a claim to the surplus; and

  • (b) the employer is in the process of being liquidated.

  The employer shall notify the Superintendent, in the form and manner, if any, that the Superintendent directs, and the persons in the categories referred to in subsection (3) that the claim is to be submitted to arbitration.

• Marginal note:Deemed agreement

  (6) If a proposal or claim is submitted to arbitration, the employer and all interested persons are deemed to have agreed to have the employer’s claim determined by the arbitration.

• Marginal note:Choice of arbitrator

  (7) The arbitrator shall be chosen by the employer and the persons in the categories set out in subsection (3). If they cannot agree on an arbitrator within the prescribed period, the Superintendent shall choose the arbitrator.

• Marginal note:Arbitration

  (8) The arbitrator is not bound by any legal or technical rules of evidence in conducting any matter that comes before the arbitrator, and shall deal with it as informally and expeditiously as the circumstances and considerations of fairness and natural justice permit.

• Marginal note:Retention of experts

  (9) An arbitrator may retain any experts that the arbitrator considers necessary.

• Marginal note:Costs of arbitration

  (10) Subject to the provisions of the pension plan, the parties to an arbitration shall pay its costs in the amount, subject to the approval of the Superintendent, and in the proportion that the arbitrator determines.

• Marginal note:Issuance of decision

  (11) The arbitrator shall issue a written decision with reasons, file them with the Superintendent within ten days after issuing them and make them available for inspection by any interested person.

• Marginal note:Scheme of division

  (12) In respect of a claim submitted to arbitration under subsection (5), the arbitrator may impose a scheme of division of the surplus, or of part of it, between the parties to the arbitration.

• Marginal note:Decision binding

  (13) An arbitrator’s decision is final and binding on the parties and on any other person affected by it.

• Marginal note:Notification to unions

  (14) All notifications to unionized members under this section must also be made to the executive of their union.

• Marginal note:Union represents members

  (15) Unless otherwise provided by the relevant collective agreement, the executive of a union shall represent its members, other than former members of the plan, for the purposes of this section.

Registration of Pension Plans

Marginal note:Duty of administrator to file documents

• 10 (1) The administrator of a pension plan shall file with the Superintendent, within 60 days after the plan is established and in the form and manner, if any, that the Superintendent directs,

  • (a) a copy of the plan;

  • (b) a copy of every document that creates or supports the plan or the pension fund; and

  • (c) a declaration signed by the administrator that the plan complies with this Act and the regulations.

• Marginal note:Registration of pension plan

  (2) Subject to subsection (3), the Superintendent shall register a pension plan and issue a certificate of registration in respect of the plan if the administrator has filed the documents under subsection (1).

• Marginal note:Refusal to register

  (3) The Superintendent may refuse to register a pension plan if the plan does not comply with this Act or the regulations.

• Marginal note:Notification

  (4) If the Superintendent refuses to register a pension plan, the Superintendent shall notify the administrator of the particulars of the non-compliance.

• Marginal note:Administration of plan prohibited

  (5) An administrator shall not administer a pension plan before complying with subsection (1) and shall, while the plan remains in force, ensure that it complies with this Act and the regulations.

• Marginal note:Treatment of surplus

  (6) Every pension plan that is filed for registration must provide for the use of surplus during the continuation of the plan and on its termination.

• Marginal note:Funding and governance policies

  (7) The administrator of a negotiated contribution plan must, before the plan is filed for registration, establish a funding policy and a governance policy that contain the prescribed information.

• Marginal note:Filing not required

  (8) The administrator is not required, for the purposes of subsection (1), to file the funding policy and the governance policy established under subsection (7) or to file any amendment to those policies for the purposes of subsection 10.1(1).

• Marginal note:Compliance of policies

  (9) While the plan remains in force, the administrator must ensure that the funding policy and the governance policy established under subsection (7) comply with this Act and the regulations.

• Marginal note:Transitional provision

  (10) An administrator of a negotiated contribution plan that was registered or was filed for registration under this section before the day on which subsection (7) comes into force must, within one year after that day, establish the policies referred to in subsection (7).

Marginal note:Filing of amendments

• 10.1 (1) The administrator of a pension plan must file with the Superintendent, within 60 days after an amendment is made to any document referred to in subsection 10(1), in the form and manner, if any, that the Superintendent directs, a copy of the amendment and a declaration, signed by the administrator that the plan as amended complies with this Act and the regulations.

• Marginal note:Void amendments

  (2) Unless the Superintendent authorizes the amendment, an amendment is void or, in Quebec, null if

  • (a) with respect to a pension plan, it would have the effect of reducing

    • (i) pension benefits accrued before the date of the amendment or pension benefit credits relating to pension benefits accrued before the date of the amendment, or

    • (ii) an immediate or deferred pension benefit to which a member, former member or any other person was entitled before the date of the amendment;

  • (b) with respect to a pension plan other than a negotiated contribution plan,

    • (i) the solvency ratio of the pension plan would fall below the prescribed solvency ratio level,

    • (ii) the amendment would reduce the solvency ratio of the pension plan and the solvency ratio would be below the prescribed solvency ratio level once the amendment is made, or

    • (iii) the solvency ratio of the pension plan is below the prescribed solvency ratio level and the amendment would increase pension benefits or pension benefit credits; or

  • (c) with respect to a negotiated contribution plan, the amendment does not meet the requirements of the regulations.

  • (d) [Repealed, 2021, c. 23, s. 189]

Marginal note:Negotiated contribution plans

10.11 The administrator of a negotiated contribution plan may, subject to section 10.1 and despite the terms of the pension plan, make an amendment to any document referred to in paragraph 10(1)(a) or (b) that has the effect of reducing pension benefits or pension benefit credits.

Transfer of Funds

Marginal note:No transfer without permission

• 10.2 (1) Subject to section 26, the administrator may transfer or permit the transfer of any part of the assets of the pension plan that relate to defined benefit provisions to another pension plan, including a pension plan to which this Act does not apply, only with the Superintendent’s permission.

• Marginal note:Transfer to pooled registered pension plan

  (2) Subject to section 26, the administrator may transfer or permit the transfer of any part of the assets of the pension plan to a pooled registered pension plan, within the meaning of subsection 2(1) of the Pooled Registered Pension Plans Act, only with the Superintendent’s permission.

Marginal note:Designated entity

• 10.3 (1) The Minister may, with the approval of the Governor in Council, designate an entity, as defined in section 2 of the Bank Act, for the purposes, among others, of receiving and holding the pension benefit credit of any person who cannot be located, as well as the assets of a pension plan relating to that credit, and of disbursing that credit in a lump sum.

• Marginal note:Transfer

  (2) The administrator of a pension plan may transfer to the designated entity the pension benefit credit of any person who cannot be located, as well as the assets of a pension plan relating to that credit.

• Marginal note:If transfer impairs solvency

  (3) However, the administrator of a pension plan must obtain the consent of the Superintendent to transfer pension benefit credits and assets to the designated entity if, in the Superintendent’s opinion, the transfer would impair the solvency of the pension fund.

• Marginal note:Transfer to Her Majesty

  (4) A designated entity that holds, for the prescribed period of time, the assets relating to the pension benefit credit of a person who cannot be located, must transfer those assets to Her Majesty in right of Canada.

• Marginal note:Limitation period or prescription

  (5) Upon transfer of assets to Her Majesty in right of Canada, a claim to the pension benefit credit associated with those assets can no longer be made.