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

Variable Benefit

Marginal note:Variable benefit

• 16.2 (1) Subject to the regulations, a pension plan may provide that a member or former member who is entitled to an immediate pension benefit under subsection 16(1) or eligible to receive an immediate pension benefit under subsection 16(2) may elect to receive a variable benefit payable under a defined contribution provision.

• Marginal note:Conditions

  (2) A member or former member may make the election only if

  • (a) their spouse or common-law partner notifies the administrator of their consent, in the prescribed form; and

  • (b) the whole of the pension plan has not been terminated at the time the election is made.

• Marginal note:Non-application

  (3) Section 22 does not apply to a variable benefit.

Marginal note:Entitlement of survivor

• 16.3 (1) In the case of the death of a former member who had a spouse or common-law partner at the time payment of a variable benefit referred to in subsection 16.2(1) commenced, the survivor is entitled to receive, subject to the regulations and the regulations made under the Income Tax Act, a variable benefit payable under a defined contribution provision based on the amount remaining in the former member’s account maintained in respect of the defined contribution provision.

• Marginal note:Designated beneficiary or estate or succession

  (2) If a former member dies without leaving a survivor, the amount remaining in the former member’s account maintained in respect of a defined contribution provision is to be paid, subject to the regulations made under the Income Tax Act, to the former member’s designated beneficiary or, if there is none, to the former member’s estate or succession.

Marginal note:Transfer

• 16.4 (1) At least once every year, or more frequently if the pension plan permits, a former member or their survivor may elect

  • (a) to transfer the amount remaining to another pension plan, including a plan referred to in paragraph 26(5)(a) or (b), if that other plan permits;

  • (b) to transfer the amount remaining to a retirement savings plan of the prescribed kind for the former member or survivor, as the case may be; or

  • (c) to use the amount remaining to purchase an immediate or deferred life annuity of the prescribed kind for the former member or survivor, as the case may be.

  The former member or survivor must notify the administrator of their intention to make such an election in the prescribed form and the administrator must, without delay, take the necessary action to give effect to the notification.

• Marginal note:Transfer in case of death

  (2) If the survivor notifies the administrator of their intention to do so, in the prescribed form, within 90 days after the former member’s death or, if the Superintendent allows a longer period under paragraph 28(1)(d), within 60 days after the administrator has given the written statement under that paragraph, the survivor may also

  • (a) transfer the amount remaining to another pension plan, including a plan referred to in paragraph 26(5)(a) or (b), if that other plan permits;

  • (b) transfer the amount remaining to a retirement savings plan of the prescribed kind for the survivor; or

  • (c) use the amount remaining to purchase an immediate or deferred life annuity of the prescribed kind for the survivor.

  The administrator must, without delay, take the necessary action to give effect to the notification.

Marginal note:Cessation

16.5 Before a pension plan ceases to provide for the payment of a variable benefit referred to in subsection 16.2(1), an administrator must offer a former member or survivor who receives that variable benefit the options referred to in subsection 16.4(1).

Vesting of Benefits

Marginal note:Provision respecting vesting

17 A pension plan must provide that any member of the plan is entitled, on cessation of membership in the plan,

• (a) to a deferred pension benefit, based on the member’s period of employment and salary up to the time of cessation of membership, and calculated in a similar manner and payable on the same terms and conditions as the immediate pension benefit — other than that provided by additional voluntary contributions — that the member would have been eligible to receive under the plan if they had attained pensionable age; and

• (b) to any other benefit or option, based on the member’s period of employment and salary up to the time of cessation of membership, and calculated in a similar manner and payable on the same terms and conditions as the benefit or option to which, if the member had remained a member of the plan until pensionable age, the member would have been entitled under the terms of the plan that are required or permitted by subsections 16(2), (4) and (6) and sections 22 to 25 and 27.

Entitlement Not Affected

Marginal note:For greater certainty

17.1 For greater certainty, a pension plan is not to provide that a pension benefit, or any other benefit or option referred to in paragraph 17(b), or a member’s entitlement to such a pension benefit or option, is affected when a plan is terminated.

Locking-in

Marginal note:Provisions respecting locking-in

• 18 (1) Subject to subsections 23(5) and 25(4), a pension plan shall provide

  • (a) that no benefit provided under the plan is capable of being assigned, charged, anticipated or given as security or confers on a member or former member, that person’s personal representative or dependant or any other person any right or interest in the benefit that is capable of being assigned, charged, anticipated or given as security;

  • (b) that, except in the case of the unexpired period of a guaranteed annuity, no benefit described in section 16 or 17 is capable of being surrendered or commuted during the lifetime of the member or former member or that person’s spouse or common-law partner or confers on a member or former member, on that person’s personal representative or dependant or on any other person any right or interest in the benefit that is capable of being surrendered or commuted during the lifetime of the member or former member or that person’s spouse or common-law partner; and

  • (c) with respect to a person who has been a member for a continuous period of at least two years, that, except as provided in section 26, that person — if they are entitled to a benefit described in section 16 or 17 or would be entitled to the benefit if they retired or ceased membership in the plan — is not permitted to withdraw any part of their contributions to the plan, other than additional voluntary contributions, in respect of any period of membership in the plan on or after October 1, 1967 for which they are entitled to the benefit, and that any pension fund moneys attributable to those contributions shall be applied under the terms of the plan toward the payment of the benefit.

• Marginal note:Optional provisions

  (2) Notwithstanding subsection (1), a pension plan may provide

  • (a) [Repealed, 2010, c. 12, s. 1806]

  • (b) that a member or former member who is entitled to a deferred pension benefit described in section 17 may, before the commencement of payment thereof, elect, or be authorized, to receive a payment or series of payments by reason of disability, as defined by the regulations, partly or wholly in lieu of the deferred pension benefit described in section 17; and

  • (c) that, if the pension benefit credit is less than 20% of the Year’s Maximum Pensionable Earnings for the calendar year in which a member ceases to be a member of the plan or dies, or any other percentage that may be prescribed, the pension benefit credit may be paid to the member or survivor, as the case may be.

Interest

Marginal note:Interest (defined contribution plans)

• 19 (1) In the case of a defined contribution plan, the members’ accounts shall be credited with such interest, gains and losses as can reasonably be attributed to the operation of the pension fund.

• Marginal note:Interest (defined benefit plans)

  (2) In the case of a defined benefit plan,

  • (a) interest shall be credited on members’ contributions at a rate equal to or greater than the rate fixed in advance by the Superintendent, or

  • (b) members’ contributions shall be credited with such interest, gains and losses as can reasonably be attributed to the operation of the pension fund,

  and the plan shall specify which of paragraph (a) or (b) operates, but the plan may specify that one of those two paragraphs applies to required contributions and the other paragraph applies to additional voluntary contributions, in which case the reference in paragraph (b) to “the operation of the pension fund” shall be read as either “the operation of that portion of the pension fund that relates to required contributions” or “the operation of that portion of the pension fund that relates to additional voluntary contributions”, as the case may be.

• Marginal note:Superintendent’s guideline

  (3) The rate fixed by the Superintendent under subsection (2) must be fixed so that it reflects reasonably current interest rates.

20 [Repealed, 2010, c. 12, s. 1807]

Minimum Employer Contributions for Defined Benefit Plans

Marginal note:Minimum pension benefit

• 21 (1) Subject to paragraph 26(3)(b), if a member of a defined benefit plan retires, ceases to be a member or dies, the pension benefit in respect of the member is to be increased by the amount that can be provided by the amount of the aggregate of the member’s contributions, other than additional voluntary contributions, together with interest in accordance with section 19, that exceeds 50 per cent of the pension benefit credit in respect of the member’s membership in the plan.

• Marginal note:Exception

  (2) Subsection (1) does not apply to a contribution, or the pension benefit arising from it, in respect of any defined contribution provision of a defined benefit plan.

• Marginal note:If plan provides for indexation

  (3) Subsection (1) does not apply if a defined benefit plan provides for annual indexation of a deferred pension benefit, up to the day when payment of that deferred pension benefit commences, on the basis of

  • (a) increases of at least 75 per cent of the annual increase of the Consumer Price Index, minus one per cent; or

  • (b) any other formula that, in the Superintendent’s opinion, would provide protection that on the average would be comparable to that described in paragraph (a).

• Marginal note:Calculation of annual increase of Consumer Price Index

  (4) For the purposes of paragraph (3)(a),

  • (a) the Consumer Price Index means the Consumer Price Index for Canada, as published by Statistics Canada under the authority of the Statistics Act; and

  • (b) the annual increase of the Consumer Price Index must be calculated, in prescribed manner, by the comparison between two consecutive and reasonably current 12-month periods.

Post-retirement

Meaning of normal form of the pension benefit

• 22 (1) In this section, normal form of the pension benefit means the form of pension benefit under a pension plan that would be paid to a member at pensionable age were it not for this section.

• Marginal note:Joint and survivor pension benefit

  (2) A pension benefit that commences to be paid on or after January 1, 1987 to a member or former member of a pension plan who has a spouse or common-law partner at the time the pension benefit commences to be paid shall be in the form of a joint and survivor pension benefit, subject to subsection 25(7).

• Marginal note:Reduction by reason of death

  (3) A pension benefit described in subsection (2) may be reduced by reason of the death of either spouse or common-law partner, to an amount not less than sixty per cent of the amount of the pension benefit that would have been payable in respect of the member or former member had the death not occurred.

• Marginal note:Initial adjustment

  (4) The initial amount of a pension benefit described in subsection (2) may be adjusted, provided that the actuarial present value of that pension benefit is not less than the actuarial present value of the normal form of the pension benefit.

• Marginal note:Other forms of pension benefit

  (5) Notwithstanding subsections (2) to (4), a pension plan shall provide that, in respect of a pension benefit that commences to be paid on or after January 1, 1987, a member or former member may elect to receive

  • (a) the normal form of the pension benefit, or

  • (b) the pension benefit in any other form provided for under the terms of the plan,

  except that, where the member or former member has a spouse or common-law partner, an election as a result of which the pension benefit would reduce on the death of the member or former member, where the member or former member predeceases the spouse or common-law partner, to less than sixty per cent of the amount payable when both were alive, may not be made without the spouse’s or common-law partner’s written agreement, in prescribed form and deposited with the administrator of the plan.

Pre-retirement Death Benefit

Marginal note:If member dies before retirement

• 23 (1) In the case of the death of a member or former member of a pension plan who is entitled to a deferred pension benefit under section 17, or, in the case of a member, would be entitled to that benefit if the member ceased membership in the plan, the member’s or former member’s survivor is entitled to the pension benefit credit, calculated in accordance with section 21, to which the member or former member would have been entitled on the day of death if they had terminated employment on that day and had not died.

• Marginal note:No survivor

  (1.1) If a member or former member dies without leaving a survivor, the pension benefit credit referred to in subsection (1) is to be paid to the member’s or former member’s designated beneficiary or, if there is none, to their estate or succession.

• Marginal note:Alternative

  (2) A pension plan may provide for a survivor, as an alternative to what is provided by subsection (1), an immediate pension benefit equal to or greater than what is provided by subsection (1).

• (3) and (4) [Repealed, 2010, c. 12, s. 1809]

• Marginal note:Surrender of pension benefit or pension benefit credit

  (5) A pension plan may provide that a survivor may, after the death of a member or former member, surrender, in writing, the pension benefit or pension benefit credit to which the survivor is entitled under this section and designate a beneficiary who is a dependant, within the meaning of subsection 8500(1) of the Income Tax Regulations, of the survivor, member or former member.

• Marginal note:Effect of group life insurance plan

  (6) Subject to subsection (7), a defined benefit plan may provide for the reduction of the benefit payable under subsection (1) or (2) by an amount equal to that part of the group life insurance payment that can be considered to have been paid by employer premiums, calculated in a manner satisfactory to the Superintendent, if

  • (a) in the circumstances described in subsection (1) or (2), a survivor is entitled to a payment under a group life insurance plan on the death of the member or former member of the pension plan;

  • (b) the group life insurance plan is one that is approved by the Superintendent for the purposes of this subsection; and

  • (c) the group life insurance premiums are paid in whole or in part by the employer.

• Marginal note:Limitation

  (7) In respect of a reduction referred to in subsection (6),

  • (a) the actuarial present value of the reduction may not exceed the amount of the payment to which the survivor is entitled under the group life insurance plan; and

  • (b) in the case of a contributory pension plan, the reduction may not reduce the benefit payable to the survivor to an amount less than the aggregate of the member’s required contributions together with interest in accordance with section 19.