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Additional Canada Pension Plan Sustainability Regulations (SOR/2021-6)

Regulations are current to 2023-01-11

Additional Canada Pension Plan Sustainability Regulations

SOR/2021-6

CANADA PENSION PLAN

Registration 2021-02-01

Additional Canada Pension Plan Sustainability Regulations

P.C. 2021-23 2021-01-29

Whereas, pursuant to subsections 113.1(11.145)Footnote a and 115(1.3)Footnote b of the Canada Pension PlanFootnote c, the lieutenant governor in council of each of at least two thirds of the included provinces, having in total not less than two thirds of the population of all the included provinces, has signified the consent of that province to the annexed Additional Canada Pension Plan Sustainability Regulations;

Therefore, His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Finance, pursuant to paragraph 101(1)(d.1)Footnote d and subsection 113.1(11.144)Footnote e of the Canada Pension PlanFootnote c, makes the annexed Additional Canada Pension Plan Sustainability Regulations.

Interpretation

Marginal note:Definitions

 The following definitions apply in these Regulations.

Act

Act means the Canada Pension Plan. (Loi)

additional contribution rate ratio

additional contribution rate ratio means the ratio — rounded to the nearest whole number or, if equidistant from two whole numbers, to the higher whole number — of the percentage specified in paragraph 46(1)(c) of the Act to the percentage specified in paragraph 46(1)(b) of the Act. (rapport du taux de cotisation supplémentaire)

benefits

benefits means the portions of benefits under the Act in respect of the additional Canada Pension Plan. (prestations)

legislated

legislated means

  • (a) in respect of benefits, as determined without regard to subsection 113.1(11.142) of the Act; and

  • (b) in respect of a first additional contribution rate or second additional contribution rate, as set out in Schedule 2 to the Act, without regard to any deemed amendment under subsection 113.1(11.141) of the Act. (législatif)

review period

review period means any three-year period for which the Chief Actuary prepares a report for the purpose of subsection 115(1) of the Act. (période d’examen)

Application of Subsections 113.1(11.141) and (11.142) of Act

Marginal note:Range — paragraph 113.1(11.141)(a)

  •  (1) For the purpose of paragraph 113.1(11.141)(a) of the Act, the range consists of

    • (a) for each year starting with 2024 and ending with 2038, every percentage point that is

      • (i) greater than or equal to 0.41, or

      • (ii) less than or equal to -0.31; and

    • (b) for each year starting with 2039, every percentage point that is

      • (i) greater than or equal to 0.31, or

      • (ii) less than or equal to -0.21.

  • Marginal note:Range — paragraph 113.1(11.141)(b)

    (2) For the purpose of paragraph 113.1(11.141)(b) of the Act, the range consists of

    • (a) for each year starting with 2024 and ending with 2038, every percentage point that is

      • (i) greater than 0.30 and less than 0.41, or

      • (ii) greater than -0.31 and less than -0.20; and

    • (b) for each year starting with 2039, every percentage point that is

      • (i) greater than 0.20 and less than 0.31, or

      • (ii) greater than -0.21 and less than -0.10.

  • Marginal note:Range — paragraph 113.1(11.141)(c)

    (3) For the purpose of paragraph 113.1(11.141)(c) of the Act, the range consists of

    • (a) for each year starting with 2024 and ending with 2038, every percentage point that is

      • (i) greater than or equal to 0.41 multiplied by the additional contribution rate ratio, or

      • (ii) less than or equal to -0.31 multiplied by the additional contribution rate ratio; and

    • (b) for each year starting with 2039, every percentage point that is

      • (i) greater than or equal to 0.31 multiplied by the additional contribution rate ratio, or

      • (ii) less than or equal to -0.21 multiplied by the additional contribution rate ratio.

  • Marginal note:Range — paragraph 113.1(11.141)(d)

    (4) For the purpose of paragraph 113.1(11.141)(d) of the Act, the range consists of

    • (a) for each year starting with 2024 and ending with 2038, every percentage point that is

      • (i) greater than 0.30 multiplied by the additional contribution rate ratio and less than 0.41 multiplied by the additional contribution rate ratio, or

      • (ii) greater than -0.31 multiplied by the additional contribution rate ratio and less than -0.20 multiplied by the additional contribution rate ratio; and

    • (b) for each year starting with 2039, every percentage point that is

      • (i) greater than 0.20 multiplied by the additional contribution rate ratio and less than 0.31 multiplied by the additional contribution rate ratio, or

      • (ii) greater than -0.21 multiplied by the additional contribution rate ratio and less than -0.10 multiplied by the additional contribution rate ratio.

Changes to Contribution Rates and Benefits

Marginal note:Applicable provisions — surplus position

  •  (1) If the applicable differences referred to in subsection 113.1(11.141) of the Act fall within a range described in subparagraph 2(1)(a)(i) or (b)(i), 2(2)(a)(i) or (b)(i), 2(3)(a)(i) or (b)(i) or 2(4)(a)(i) or (b)(i),

    • (a) the first additional contribution rates and second additional contribution rates are to be changed, for the purpose of subsection 113.1(11.141) of the Act, in accordance with paragraph 6(a) or 7(1)(a) or subsection 7(2), if applicable; and

    • (b) benefits are to be determined, for the purpose of subsection 113.1(11.142) of the Act, in accordance with sections 9 and 10, if applicable.

  • Marginal note:Applicable provisions — deficit position

    (2) If the applicable differences referred to in subsection 113.1(11.141) of the Act fall within a range described in subparagraph 2(1)(a)(ii) or (b)(ii), 2(2)(a)(ii) or (b)(ii), 2(3)(a)(ii) or (b)(ii) or 2(4)(a)(ii) or (b)(ii),

    • (a) the first additional contribution rates and second additional contribution rates are to be changed, for the purpose of subsection 113.1(11.141) of the Act, in accordance with subsection 11(2) or (3) or 12(4) or (5), if applicable; and

    • (b) benefits are to be determined, for the purpose of subsection 113.1(11.142) of the Act, in accordance with sections 14 and 15, if applicable.

  • Marginal note:Exception

    (3) If the first additional contribution rates and second additional contribution rates specified in the most recent report prepared for the purpose of subsection 115(1) of the Act include temporary increases in the rates calculated under subparagraphs 115(1.1)(d)(ii) and (e)(ii) of the Act, respectively, and the applicable differences referred to in subsection 113.1(11.141) of the Act would not fall within a range referred to in subsection (2) if those temporary increases were excluded,

    • (a) paragraphs (2)(a) and (b) do not apply; and

    • (b) for each year for which the first additional contribution rate specified in the most recent report prepared for the purpose of subsection 115(1) of the Act includes a temporary increase and for which the sum of that increase and the legislated first additional contribution rate for self-employed persons exceeds the corresponding first additional contribution rate,

      • (i) the first additional contribution rate for self-employed persons is deemed, for the purpose of subsection 113.1(11.141) of the Act, to equal that sum,

      • (ii) the first additional contribution rate for employees and employers is deemed, for the purpose of subsection 113.1(11.141) of the Act, to equal the rate referred to in subparagraph (i), divided by two, and

      • (iii) the second additional contribution rates are deemed, for the purpose of subsection 113.1(11.141) of the Act, to equal the new corresponding first additional contribution rates multiplied by the additional contribution rate ratio.

Marginal note:Benefit multiplier

  •  (1) Subject to subsection (2), in these Regulations, benefit multiplier means the value determined under subsection 9(2) or (3) or 14(2) or (3).

  • Marginal note:Default

    (2) If benefits have not been determined in accordance with these Regulations for a given year, the benefit multiplier for that year is equal to 1.

Actions When Rates in Surplus Position

Marginal note:No previous rate increase or reduction in benefits

 If the first additional contribution rates and second additional contribution rates are equal to the corresponding legislated first additional contribution rates and second additional contribution rates and benefits are equal to or greater than the corresponding legislated benefits, a value for S2 and the period to which S2 is to apply are to be determined, for the purposes of sections 8 to 10, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rate calculated for the first year after the review period would be as close as possible to and no greater than the legislated first additional contribution rate for self-employed persons for that year minus 0.1:

  • (a) S2 is to apply to the shortest period that is a multiple of three years and no fewer than six years, starting with the year after the review period;

  • (b) benefits that become payable after the review period are to be increased for the year in which they become payable in accordance with section 9, using the assumptions set out in the most recent report prepared for the purpose of section 115 of the Act; and

  • (c) for each year of the period to which S2 applies, benefits that became payable before that year are to be adjusted by multiplying them not by the ratio referred to in paragraph 45(2)(b) and subparagraphs 56(2)(c)(ii), 58(1.1)(b)(ii) and 59(c)(ii) of the Act, but by the value determined by the formula

    (1 + S2) × (PIt / PIt–1) – S2

    where

    S2
    is a multiple of 0.01 between 0 and 1,
    PIt
    is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
    PIt–1
    is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.

Marginal note:Previous rate increase

 If the first additional contribution rates and second additional contribution rates are greater than the corresponding legislated first additional contribution rates and second additional contribution rates and benefits are equal to the legislated benefits,

  • (a) the first additional contribution rates are deemed to equal the corresponding legislated first additional contribution rates and the second additional contribution rates are deemed to equal the new corresponding first additional contribution rates multiplied by the additional contribution rate ratio; and

  • (b) a value for S2 and the period to which S2 is to apply are to be determined, for the purposes of sections 8 to 10, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rate calculated for the first year after the review period would be as close as possible to and no greater than the legislated first additional contribution rate for self-employed persons for that year minus 0.1:

    • (i) S2 is to apply to the shortest period that is a multiple of three years and no fewer than six years, starting with the year after the review period,

    • (ii) benefits that become payable after the review period are to be increased for the year in which they become payable in accordance with section 9, using the assumptions set out in the most recent report prepared for the purpose of section 115 of the Act, and

    • (iii) for each year of the period to which S2 applies, benefits that became payable before that year are to be adjusted by multiplying them not by the ratio referred to in paragraph 45(2)(b) and subparagraphs 56(2)(c)(ii), 58(1.1)(b)(ii) and 59(c)(ii) of the Act, but by the value determined by the formula

      (1 + S2) × (PIt / PIt–1) – S2

      where

      S2
      is a multiple of 0.01 between 0 and 1,
      PIt
      is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
      PIt–1
      is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.

Marginal note:Previous reduction in benefits

  •  (1) If benefits are lower than the legislated benefits,

    • (a) the first additional contribution rates and second additional contribution rates are deemed to be decreased, if necessary, to reverse any past temporary increases in those rates resulting from the operation of these Regulations; and

    • (b) a value for S1 and the period to which S1 is to apply are to be determined, for the purposes of sections 8 to 10, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rate calculated for the first year after the review period would be as close as possible to and no greater than the first additional contribution rate for self-employed persons for that year, as adjusted in accordance with paragraph (a), if applicable:

      • (i) S1 is to apply to the shortest period that is a multiple of three years and no fewer than six years, starting with the year after the review period,

      • (ii) benefits that become payable after the review period are to be increased for the year in which they become payable in accordance with section 9, using the assumptions set out in the most recent report prepared for the purpose of section 115 of the Act, and

      • (iii) for each year of the period to which S1 applies, benefits that became payable before that year are to be adjusted by multiplying them not by the ratio referred to in paragraph 45(2)(b) and subparagraphs 56(2)(c)(ii), 58(1.1)(b)(ii) and 59(c)(ii) of the Act, but by the value determined by the formula

        (1 + S1) × (PIt / PIt–1) – S1

        where

        S1
        is a multiple of 0.01 between 0 and 1 that would result in the benefit multiplier for the last year of the period to which S1 applies being greater than the benefit multiplier for the last year of the review period and less than or equal to 1,
        PIt
        is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
        PIt–1
        is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
  • Marginal note:Previous rate increase

    (2) If the rates calculated under paragraph (1)(b) are less than the corresponding first additional contribution rates for self-employed persons, as adjusted in accordance with paragraph (a), if applicable, minus 0.0001, and the latter rates are greater than the corresponding legislated first additional contribution rates,

    • (a) the first additional contribution rates for self-employed persons are deemed to equal the higher of the corresponding legislated first additional contribution rates and the corresponding rates calculated under paragraph (1)(b);

    • (b) the first additional contribution rates for employees and employers are deemed to equal the corresponding rates determined under paragraph (a), divided by two; and

    • (c) the second additional contribution rates are deemed to equal the new corresponding first additional contribution rates multiplied by the additional contribution rate ratio.

  • Marginal note:Increase in benefits

    (3) If the rates calculated under paragraph (1)(b) are less than the corresponding legislated first additional contribution rates for self-employed persons minus 0.1, a value for S2 and the period to which S2 is to apply are to be determined, for the purposes of sections 8 to 10, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rate calculated for the first year after the review period would be as close as possible to and no greater than the legislated first additional contribution rate for self-employed persons for that year minus 0.1:

    • (a) S2 is to apply to the shortest period that is a multiple of three years and no fewer than six years, starting with the year after the review period;

    • (b) benefits that become payable after the review period are to be increased for the year in which they become payable in accordance with section 9, using the assumptions set out in the most recent report prepared for the purpose of section 115 of the Act; and

    • (c) for each year of the period to which S1 or S2 applies, whichever is longer, benefits that became payable before that year are to be adjusted by multiplying them not by the ratio referred to in paragraph 45(2)(b) and subparagraphs 56(2)(c)(ii), 58(1.1)(b)(ii) and 59(c)(ii) of the Act, but by the value determined by the formula

      (1 + S1 + S2) × (PIt / PIt–1) – (S1 + S2)

      where

      S1
      is the value for S1 determined under subsection (1), if applicable to that year,
      S2
      is a multiple of 0.01 between 0 and 1, if applicable to that year,
      PIt
      is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
      PIt–1
      is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
 
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