Income Tax Regulations

• 8503 (1) In this section and subsection 8517(2), the net contribution account of a member of a pension plan in relation to a defined benefit provision of the plan is an account that is

  • (a) credited with

    • (i) the amount of each contribution that is made by the member to the plan in respect of the provision,

    • (ii) each amount that is transferred on behalf of the member to the plan in respect of the provision in accordance with any of subsections 146(16), 147(19) and 147.3(2) and (5) to (7) of the Act,

    • (iii) such portion of each amount that is transferred to the plan in respect of the provision in accordance with subsection 147.3(3) of the Act as may reasonably be considered to derive from contributions that are made by the member to a registered pension plan or interest (computed at a reasonable rate) in respect of those contributions,

    • (iv) the amount of any property that was held in connection with another benefit provision of the plan and that has been made available to provide benefits under the provision, to the extent that if the provisions were in separate registered pension plans, the amount would be included in the member’s net contribution account by reason of subparagraph (ii) or (iii), and

    • (v) interest (computed at a reasonable rate determined by the plan administrator) in respect of each period throughout which the account has a positive balance; and

  • (b) charged with

    • (i) each amount that is paid under the provision with respect to the member, otherwise than in respect of an actuarial surplus under the provision,

    • (ii) the amount of any property that is held in connection with the provision (other than property that is in respect of an actuarial surplus under the provision) and that is made available to provide benefits with respect to the member under another benefit provision of the plan, and

    • (iii) interest (computed at a reasonable rate determined by the plan administrator) in respect of each period throughout which the account has a negative balance.

Permissible Benefits

• (2) For the purposes of paragraph 8502(c), the following benefits may, subject to the conditions set out in respect of each benefit, be provided under a defined benefit provision of a pension plan:

  Lifetime Retirement Benefits

  • (a) lifetime retirement benefits provided to a member where the benefits are payable in equal periodic amounts, or are not so payable only by reason that

    • (i) the benefits payable to a member after the death of the member’s spouse or common-law partner are less than the benefits that would be payable to the member were the member’s spouse or common-law partner alive,

    • (ii) the plan provides for periodic cost-of-living adjustments to be made to the benefits, where the adjustments

      • (A) are determined in such a manner that they do not exceed cost-of-living adjustments warranted by increases in the Consumer Price Index after the benefits commence to be paid,

      • (B) consist of periodic increases at a rate not exceeding 4 per cent per annum after the time the benefits commence to be paid,

      • (C) are based on the rates of return on a specified pool of assets after the benefits commence to be paid, or

      • (D) consist of any combination of adjustments described in clauses (A) to (C),

      and, in the case of adjustments described in clauses (C) and (D), the present value (at the time the member’s benefits commence to be paid) of additional benefits that can reasonably be expected to be paid as a consequence of the adjustments does not exceed the greater of

      • (E) the present value (at the time the member’s benefits commence to be paid) of additional benefits that could reasonably be expected to be paid as a consequence of adjustments warranted by increases in the Consumer Price Index after the member’s benefits commence to be paid, and

      • (F) the present value (at the time the member’s benefits commence to be paid) of additional benefits that would be paid as a consequence of adjustments at a fixed rate of 4 per cent per annum after the time the member’s benefits commence to be paid,

    • (iii) where the plan does not provide for periodic cost-of-living adjustments to be made to the benefits, or provides only for such adjustments as are described in clause (ii)(A) or (B), the plan provides for cost-of-living adjustments to be made to the benefits from time to time at the discretion of any person, where the adjustments, together with periodic cost-of-living adjustments, if any, are warranted by increases in the Consumer Price Index after the benefits commence to be paid,

    • (iv) the amount of the benefits is increased as a consequence of additional lifetime retirement benefits becoming provided to the member under the provision;

    • (v) the amount of the benefits is determined with a reduction computed by reference to the member’s age, duration of service, or both (or with any other similar reduction), and the amount is subsequently adjusted to reduce or eliminate the portion, if any, of the reduction that is not required for the benefits to comply with the conditions in paragraph (3)(c),

    • (vi) the amount of the benefits is determined with a reduction computed by reference to the following benefits and the amount is subsequently adjusted to reduce or eliminate the reduction:

      • (A) disability benefits to which the member is entitled under the Canada Pension Plan or a provincial pension plan as defined in section 3 of that Act,

      • (B) benefits to which the member is entitled under an employees’ or workers’ compensation law of Canada or a province in respect of an injury or disability, or

      • (C) benefits to which the member is entitled pursuant to a sickness or accident insurance plan or a disability insurance plan,

    • (vii) the amount of the benefits is determined with a reduction computed by reference to other benefits provided under the provision in respect of the member that are permissible under paragraph (c), (d), (k) or (n), and the amount is subsequently adjusted to reduce or eliminate the reduction,

    • (viii) the amount of the benefits is reduced as a consequence of benefits that are permissible under paragraph (c), (d), (k) or (n) becoming provided under the provision in respect of the member,

    • (ix) the amount of the benefits payable to the member while the member is in receipt of remuneration from a participating employer is less than the amount of the benefits that would otherwise be payable to the member if the member were not in receipt of the remuneration, or

    • (x) the amount of the benefits is adjusted in accordance with plan terms that were submitted to the Minister before April 19, 2000, where the benefits have commenced to be paid before 2003 and the adjustment is approved by the Minister;

  Bridging Benefits

  • (b) bridging benefits provided to a member where

    • (i) the bridging benefits are payable for a period beginning no earlier than the time lifetime retirement benefits commence to be paid under the provision to the member and ending no later than the end of the month immediately following the month in which the member attains 65 years of age, and

    • (ii) the amount of the bridging benefits payable for a particular month does not exceed the amount that is determined for that month by the formula

      A × (1 - .0025 × B) × C × (D / 10)

      where

      A

      is the amount (or a reasonable estimate thereof) of public pension benefits that would be payable to the member for the month in which the bridging benefits commence to be paid to the member if

      • (A) the member were 65 years of age throughout that month,

      • (B) that month were the first month for which public pension benefits were payable to the member,

      • (C) the member were entitled to the maximum amount of benefits payable under the Old Age Security Act, and

      • (D) the member were entitled to that proportion, not exceeding one, of the maximum benefits payable under the Canada Pension Plan (or a provincial plan as defined in section 3 of the Canada Pension Plan) that the total of the member’s remuneration for the 3 calendar years in which the remuneration is the highest is of the total of the Year’s Maximum Pensionable Earnings for those 3 years (or such other proportion of remuneration to Year’s Maximum Pensionable Earnings as is acceptable to the Minister),

      B

      is

      • (A) except where clause (B) is applicable, the number of months, if any, from the date on which the bridging benefits commence to be paid to the member to the date on which the member attains 60 years of age, and

      • (B) where the member is totally and permanently disabled at the time the bridging benefits commence to be paid to the member and the member was not, at any time after 1990, connected with an employer who has participated in the plan, nil,

      C

      is the greatest of all amounts each of which is the ratio of the Consumer Price Index for a month not before the month in which the bridging benefits commence to be paid to the member and not after the particular month, to the Consumer Price Index for the month in which the bridging benefits commence to be paid to the member, and

      D

      is

      • (A) except where clause (B) is applicable, the lesser of 10 and

        • (I) where the member was not, at any time after 1990, connected with an employer who has participated in the plan, the aggregate of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period that is pensionable service of the member under the provision, and

        • (II) in any other case, the aggregate that would be determined under subclause (I) if the duration of each period were multiplied by a fraction (not greater than 1) that measures the services rendered by the member throughout the period to employers who participate in the plan as a proportion of the services that would have been rendered by the member throughout the period to such employers had the member rendered services on a full-time basis, and

      • (B) where the member is totally and permanently disabled at the time the bridging benefits commence to be paid to the member and the member was not, at any time after 1990, connected with an employer who has participated in the plan, 10;

  Guarantee Period

  • (c) retirement benefits (in this paragraph referred to as “continued retirement benefits”) provided to one or more beneficiaries of a member who dies after retirement benefits under the provision commence to be paid to the member where

    • (i) the continued retirement benefits are payable for a period beginning after the death of the member and ending

      • (A) if retirement benefits permissible under paragraph (d) are provided under the provision to a spouse or common-law partner or former spouse or common-law partner of the member, no later than five years, and

      • (B) in any other case, no later than 15 years

      after the day on which retirement benefits commence to be paid under the provision to the member, and

    • (ii) the aggregate amount of continued retirement benefits payable under the provision for each month does not exceed the amount of retirement benefits that would have been payable under the provision for the month to the member if the member were alive;

  Post-retirement Survivor Benefits

  • (d) retirement benefits (in this paragraph referred to as “survivor retirement benefits”) provided to one or more beneficiaries of a member who dies after retirement benefits under the provision commence to be paid to the member where

    • (i) each beneficiary is, at the time of the member’s death, a spouse, a common-law partner, a former spouse, a former common-law partner or a dependant, of the member,

    • (ii) the survivor retirement benefits provided to a spouse or common-law partner or former spouse or common-law partner are payable for a period beginning after the death of the member and ending with the death of the spouse or common-law partner or former spouse or common-law partner,

    • (iii) the survivor retirement benefits provided to a dependant are payable for a period beginning after the death of the member and ending no later than at the end of the dependant’s eligible survivor benefit period,

    • (iv) the amount of survivor retirement benefits payable for each month to a beneficiary does not exceed 66 2/3 per cent of the amount of retirement benefits that would have been payable under the provision for the month to the member if the member were alive, and

    • (v) the aggregate amount of survivor retirement benefits and other retirement benefits payable under the provision for each month to beneficiaries of the member does not exceed the amount of retirement benefits that would have been payable under the provision for the month to the member if the member were alive;

  Pre-retirement Survivor Benefits

  • (e) retirement benefits (in this paragraph referred to as “survivor retirement benefits”) provided to one or more beneficiaries of a member who dies before retirement benefits under the provision commence to be paid to the member where

    • (i) no other benefits (other than benefits permissible under paragraph (g), (j), (l.1) or (n)) are payable as a consequence of the member’s death,

    • (ii) each beneficiary is, at the time of the member’s death, a spouse, a common-law partner, a former spouse, a former common-law partner or a dependant, of the member,

    • (iii) the survivor retirement benefits provided to a spouse or common-law partner or former spouse or common-law partner are payable for a period beginning after the death of the member and ending with the death of the spouse or common-law partner or former spouse or common-law partner,

    • (iv) the survivor retirement benefits provided to a dependant are payable for a period beginning after the death of the member and ending no later than at the end of the dependant’s eligible survivor benefit period,

    • (v) the amount of survivor retirement benefits payable for a month to a beneficiary does not exceed 66 2/3 per cent of the amount that is determined in respect of the month by the formula set out in subparagraph (vi), and

    • (vi) the aggregate amount of survivor retirement benefits payable under the provision for a particular month to beneficiaries of the member does not exceed the amount that is determined for the particular month by the formula

      ((A + B) / 12) × C

      where

      A

      is the amount (expressed on an annualized basis) of lifetime retirement benefits that accrued under the provision to the member as of the member’s day of death, determined without any reduction computed by reference to the member’s age, duration of service, or both, and without any other similar reduction,

      B

      is, in the case of a member who attains 65 years of age before the member’s death or who was, at any time after 1990, connected with an employer who has participated in the plan, nil, and, otherwise, the amount, if any, by which the lesser of

      • (A) the amount (expressed on an annualized basis) of lifetime retirement benefits that could reasonably be expected to have accrued to the member to the day on which the member would have attained 65 years of age if the member had survived to that day and continued in employment and if the member’s rate of remuneration had not increased after the member’s day of death, and

      • (B) the amount, if any, by which 3/2 of the Year’s Maximum Pensionable Earnings for the calendar year in which the member dies exceeds such amount as is required by the Minister to be determined in respect of benefits provided, as a consequence of the death of the member, under other benefit provisions of the plan and under benefit provisions of other registered pension plans

      exceeds the amount determined for A, and

      C

      is the greatest of all amounts each of which is the ratio of the Consumer Price Index for a month not before the month in which the member dies and not after the particular month, to the Consumer Price Index for the month in which the member dies;

  Pre-retirement Survivor Benefits — Alternative Rule

  • (f) retirement benefits (in this paragraph referred to as “survivor benefits”) provided to a beneficiary of a member who dies before retirement benefits under the defined benefit provision commence to be paid to the member where

    • (i) no other benefits (other than benefits permissible under paragraph (g), (j), (l.1) or (n)) are payable as a consequence of the member’s death,

    • (ii) the beneficiary is a spouse or common-law partner or former spouse or common-law partner of the member,

    • (iii) the survivor benefits are payable for a period beginning not later than the later of

      • (A) the day that is one year after the day of death of the member, and

      • (B) the end of the calendar year in which the beneficiary attains 69 years of age,

      and ending with the death of the beneficiary,

    • (iv) the survivor benefits would be in accordance with paragraph (a) if the beneficiary were a member of the plan, and

    • (v) the present value (at the time of the member’s death) of all benefits provided as a consequence of the member’s death does not exceed the present value (immediately before the member’s death) of all benefits that have accrued under the provision with respect to the member to the day of the member’s death;

  Pre-retirement Survivor Benefits — Guarantee Period

  • (g) retirement benefits provided to one or more individuals as a consequence of the death of a person who

    • (i) is a beneficiary of a member who died before retirement benefits under the provision commenced to be paid to the member,

    • (ii) was, at the time of the member’s death, a spouse or common-law partner or former spouse or common-law partner of the member, and

    • (iii) dies after the member’s death,

    where the benefits would be in accordance with paragraph (c) if the person were a member of the plan;

  Lump Sum Payments on Termination

  • (h) the payment, with respect to a member in connection with the member’s termination from the plan (otherwise than by reason of death), of one or more single amounts where

    • (i) the payments are the last payments to be made under the provision with respect to the member,

    • (ii) if subparagraph (iii) is not applicable, each single amount does not exceed the balance in the member’s net contribution account immediately before the time of payment of the single amount, and

    • (iii) if

      • (A) the Minister has, pursuant to subsection (5), waived the application of the conditions in paragraph (4)(a) in respect of the provision, or

      • (B) the member’s contributions under the provision for each calendar year after 1990 would have been in accordance with paragraph (4)(a) if the reference in clause (i)(B) thereof to “70 per cent” were read as a reference to “50 per cent”,

      each single amount does not exceed the amount that would be the balance in the member’s net contribution account immediately before the time of the payment of the single amount if, for each current service contribution made by the member under the provision, the account were credited at the time of the contribution with an additional amount equal to the amount of the contribution (other than the portion of the contribution, if any, paid in respect of one or more periods that were not periods of regular employment and that would not have been required to be paid by the member if the periods were periods of regular employment);

  Payment of Commuted Value of Benefits on Death Before Retirement

  • (i) the payment of one or more single amounts to one or more beneficiaries of a member who dies before retirement benefits under the provision commence to be paid to the member where

    • (i) no retirement benefits are payable as a consequence of the member’s death, and

    • (ii) the aggregate of all amounts, each of which is such a single amount (other than the portion thereof, if any, that can reasonably be considered to be interest, computed at a rate not exceeding a reasonable rate, in respect of the period from the day of death of the member to the day the single amount is paid), does not exceed the present value, immediately before the death of the member, of all benefits that have accrued under the provision with respect to the member to the day of the member’s death;

  Lump Sum Payments on Death

  • (j) the payment of one or more single amounts after the death of a member where

    • (i) the payments are the last payments to be made under the provision with respect to the member,

    • (ii) if the member dies before retirement benefits under the provision commence to be paid to the member and no retirement benefits are payable as a consequence of the member’s death, the aggregate amount to be paid at any time complies with whichever of the conditions in subparagraphs (h)(ii) and (iii) would be applicable if the single amounts were paid in connection with the member’s termination from the plan otherwise than by reason of death, and

    • (iii) if subparagraph (ii) is not applicable, the aggregate amount to be paid at any time does not exceed the balance, immediately before that time, in the member’s net contribution account in relation to the provision;

  Additional Post-retirement Death Benefits

  • (k) retirement benefits (in this paragraph referred to as “additional death benefits”) payable after the death of a member who dies after retirement benefits under the provision commence to be paid to the member where the additional death benefits are

    • (i) retirement benefits provided to a spouse or common-law partner or former spouse or common-law partner of the member that are in excess of the benefits that are permissible under paragraph (d), but that would be permissible under that paragraph if the reference in subparagraph (d)(iv) to “66 2/3 per cent” were read as a reference to “100 per cent”,

    • (ii) retirement benefits provided to one or more beneficiaries of the member that are in excess of the benefits that are permissible under paragraph (c), but that would be permissible under that paragraph if it were read without reference to clause (i)(A) thereof, or

    • (iii) a combination of retirement benefits described in subparagraphs (i) and (ii),

    and where

    • (iv) the additional death benefits are provided in lieu of a proportion of the lifetime retirement benefits that would otherwise be payable under the provision to the member, and

    • (v) the present value of all benefits provided under the provision with respect to the member does not exceed the present value of the benefits that would be provided if

      • (A) the amount of the member’s lifetime retirement benefits were determined without any reduction dependent on the benefits payable after the death of the member or on circumstances that are relevant in determining such death benefits,

      • (B) the maximum amount of retirement benefits that are permissible under paragraph (d) were payable to the member’s spouse or common-law partner or former spouse or common-law partner after the death of the member, and

      • (C) those present values were determined as of

        • (I) except where subclause (II) applies, the particular time at which retirement benefits under the provision commence to be paid to the member, and

        • (II) where the additional death benefits become provided after the particular time, the time at which the additional death benefits become provided;

  Additional Bridging Benefits

  • (l) bridging benefits in excess of bridging benefits that are permissible under paragraph (b) (referred to in this paragraph as “additional bridging benefits”) provided to a member where

    • (i) the additional bridging benefits would be permissible under paragraph (b) if

      • (A) the formula in subparagraph (b)(ii) were replaced by the formula “A/12 x C”, and

      • (B) the description of A in subparagraph (b)(ii) were read as follows:

        “A

        is 40% of the Year’s Maximum Pensionable Earnings for the year in which the bridging benefits commence to be paid to the member,”

    • (ii) the additional bridging benefits are provided in lieu of all or a proportion of the benefits that would otherwise be payable under the provision with respect to the member, and

    • (iii) the present value (at the time retirement benefits under the provision commence to be paid to the member) of all benefits provided under the provision with respect to the member does not exceed the present value (at that time) of the benefits that would be so provided if the additional bridging benefits were not provided;

  Survivor Bridging Benefits

  • (l.1) retirement benefits (in this paragraph referred to as “survivor bridging benefits”) provided to a beneficiary of a member after the death of the member where

    • (i) the beneficiary is a spouse or common-law partner or former spouse or common-law partner of the member,

    • (ii) the survivor bridging benefits are payable at the election of the beneficiary, and

    • (iii) the survivor bridging benefits would be in accordance with paragraph (l) if the beneficiary were a member of the plan;

  Commutation of Benefits

  • (m) the payment with respect to a member of a single amount in full or partial satisfaction of the member’s entitlement to other benefits under the provision, where the single amount does not exceed the total of

    • (i) the present value (at the particular time determined in accordance with subsection (2.1)) of

      • (A) the other benefits that, as a consequence of the payment, cease to be provided, and

      • (B) benefits, other than benefits referred to in clause (A), that it is reasonable to consider would cease to be provided as a consequence of the payment if

        • (I) where retirement benefits have not commenced to be paid under the provision to the member at the particular time, the plan provided for the retirement benefits that accrued to the member under the provision to be adjusted to reflect the increase in a general measure of wages and salaries from the particular time to the day on which the benefits commence to be paid, and

        • (II) the plan provided for periodic cost-of-living adjustments to be made to the retirement benefits payable under the provision to the member to reflect increases in the Consumer Price Index after the retirement benefits commence to be paid (other than increases before the particular time), and

    • (ii) interest (computed at a reasonable rate) from the particular time to the time the single amount is paid; and

  • (n) the payment, with respect to an individual after the death of a member, of a single amount in full or partial satisfaction of the individual’s entitlement to other benefits under the provision, where

    • (i) the individual is a beneficiary of the member,

    • (ii) the single amount does not exceed the total of

      • (A) the present value (at the particular time determined in accordance with subsection (2.1)) of the other benefits that, as a consequence of the payment, cease to be provided, and

      • (B) interest (computed at a reasonable rate) from the particular time to the time the single amount is paid, and

    • (iii) if the other benefits in respect of which the single amount is paid include benefits described in paragraph (e) and the beneficiary was a spouse or common-law partner or former spouse or common-law partner of the member at the time of the member’s death, the single amount is not transferred from the plan directly to another registered pension plan, a registered retirement savings plan or a registered retirement income fund except with the approval of the Minister.

Rule for Commutation of Benefits

• (2.1) For the purpose of determining the limit on a single amount that can be paid with respect to an individual under paragraph (2)(m) or (n), the particular time referred to in that paragraph is

  • (a) except where paragraph (b) applies, the time the single amount is paid; and

  • (b) an earlier time than the time the single amount is paid, where

    • (i) the amount is based on a determination of the actuarial value (at the earlier time) of the individual’s benefits,

    • (ii) the use of the earlier time in determining the actuarial value

      • (A) is required by the Pension Benefits Standards Act, 1985 or a similar law of a province, or

      • (B) is reasonable having regard to accepted actuarial practice and the circumstances in which the individual acquires the right to the payment, and

    • (iii) except where clause (ii)(A) applies, the earlier time is no more than two years before the time the single amount is paid.

Conditions Applicable to Benefits

• (3) For the purposes of subsection 8501(2) and subparagraph 8502(c)(i), the following conditions are applicable in respect of the benefits provided under each defined benefit provision of a pension plan:

  Eligible Service

  • (a) the only lifetime retirement benefits provided under the provision to a member (other than additional lifetime retirement benefits provided to a member because the member is totally and permanently disabled at the time the member’s retirement benefits commence to be paid) are lifetime retirement benefits provided in respect of one or more of the following periods, namely,

    • (i) a period throughout which the member is employed in Canada by, and receives remuneration from, an employer who participates in the plan,

    • (ii) a period throughout which the member was employed in Canada by, and received remuneration from, a predecessor employer to an employer who participates in the plan,

    • (iii) an eligible period of temporary absence of the member with respect to an employer who participates in the plan or a predecessor employer to such an employer,

    • (iv) a period of disability of the member subsequent to a period described in subparagraph (i) where, throughout such part of the period of disability as is after 1990, the member is not connected with an employer who participates in the plan,

    • (v) a period in respect of which

      • (A) benefits that are attributable to employment of the member with a former employer accrued to the member under a defined benefit provision of another registered pension plan, or

      • (B) contributions were made by or on behalf of the member under a money purchase provision of another registered pension plan,

      where the member has ceased to be a member of that other plan,

    • (vi) a period throughout which the member was employed in Canada by a former employer where the period was an eligibility period for the participation of the member in another registered pension plan, and

    • (vii) a period acceptable to the Minister throughout which the member is employed outside Canada;

  Benefit Accruals After Pension Commencement

  • (b) benefits are not provided under the provision (in this paragraph referred to as the “particular provision”) to a member in respect of a period that is after the day on which retirement benefits commence to be paid to the member under a defined benefit provision of

    • (i) the plan, or

    • (ii) any other registered pension plan if

      • (A) an employer who participated under the particular provision for the benefit of the member, or

      • (B) an employer who does not deal at arm’s length with an employer referred to in clause (A)

      has participated under the defined benefit provision of the other plan for the benefit of the member;

  Early Retirement

  • (c) where lifetime retirement benefits commence to be paid under the provision to a member at any time before

    • (i) in the case of a member whose benefits are provided in respect of employment in a public safety occupation, the earliest of

      • (A) the day on which the member attains 55 years of age,

      • (B) the day on which the member has 25 years of early retirement eligibility service in relation to the provision,

      • (C) the day on which the aggregate of the member’s age (measured in years, including any fraction of a year) and years of early retirement eligibility service in relation to the provision is equal to 75, and

      • (D) if the member was not, at any time after 1990, connected with any employer who has participated in the plan, the day on which the member becomes totally and permanently disabled, and

    • (ii) in any other case, the earliest of

      • (A) the day on which the member attains 60 years of age,

      • (B) the day on which the member has 30 years of early retirement eligibility service in relation to the provision,

      • (C) the day on which the aggregate of the member’s age (measured in years, including any fraction of a year) and years of early retirement eligibility service in relation to the provision is equal to 80, and

      • (D) if the member was not, at any time after 1990, connected with any employer who has participated in the plan, the day on which the member becomes totally and permanently disabled,

    the amount (expressed on an annualized basis) of lifetime retirement benefits payable to the member for each calendar year does not exceed the amount that is determined for the year by the formula

    X × (1 - .0025 × Y)

    where

    X

    is the amount (expressed on an annualized basis) of lifetime retirement benefits that would be payable to the member for the year if the benefits were determined without a reduction computed by reference to the member’s age, duration of service, or both, and without any other similar reduction, and

    Y

    is the number of months in the period from the day on which lifetime retirement benefits commence to be paid to the member to the earliest of the days that would be determined under clauses (i)(A) to (C) or (ii)(A) to (C), as the case may be, if the member continued in employment with an employer who participates in the plan,

    and, for the purposes of this paragraph,

    • (iii) early retirement eligibility service of a member in relation to a defined benefit provision of a pension plan means one or more periods each of which is

      • (A) a period that is pensionable service of the member under the provision, or

      • (B) a period throughout which the member was employed by an employer who has participated in the plan or by a predecessor employer to such an employer, and

    • (iv) years of early retirement eligibility service of a member in relation to a defined benefit provision of a pension plan means the aggregate of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period that is early retirement eligibility service of the member in relation to the provision;

  Increased Benefits for Disabled Member

  • (d) where the amount of lifetime retirement benefits provided under the provision to a member depends on whether the member is physically or mentally impaired at the time (in this paragraph referred to as the “time of commencement”) at which retirement benefits under the provision commence to be paid to the member,

    • (i) the amount of lifetime retirement benefits payable if the member

      • (A) is not totally and permanently disabled at the time of commencement, or

      • (B) is totally and permanently disabled at the time of commencement and was, at any time after 1990, connected with an employer who has participated in the plan

      satisfies the limit that would be determined by the formula set out in paragraph (c) if the member were not impaired at the time of commencement, and

    • (ii) the amount of lifetime retirement benefits payable for a particular month to the member if subparagraph (i) is not applicable does not exceed the amount that is determined for the particular month by the formula

      ((A + B) / 12) × C

      where

      A

      is the amount (expressed on an annualized basis) of lifetime retirement benefits that have accrued under the provision to the member to the time of commencement, determined as if the member were not impaired at the time of commencement and without any reduction computed by reference to the member’s age, duration of service, or both, and without any other similar reduction,

      B

      is, in the case of a member who attains 65 years of age before the time of commencement, nil, and, otherwise, the amount, if any, by which the lesser of

      • (A) the amount (expressed on an annualized basis) of lifetime retirement benefits that could reasonably be expected to have accrued to the member to the day on which the member would have attained 65 years of age if the member had survived to that day and continued in employment and if the member’s rate of remuneration had not increased after the time of commencement, and

      • (B) the amount, if any, by which the Year’s Maximum Pensionable Earnings for the calendar year that includes the time of commencement exceeds such amount as is required by the Minister to be determined in respect of benefits provided to the member under other benefit provisions of the plan and under benefit provisions of other registered pension plans

      exceeds the amount determined for A, and

      C

      is the greatest of all amounts each of which is the ratio of the Consumer Price Index for a month not before the month that includes the time of commencement and not after the particular month to the Consumer Price Index for the month that includes the time of commencement;

  Pre-1991 Benefits

  • (e) all benefits provided under the provision in respect of periods before 1991 are acceptable to the Minister and, for the purposes of this condition, any benefits in respect of periods before 1991 that become provided after 1988 with respect to a member who is connected with an employer who participates in the plan or was so connected at any time before the benefits become provided shall, unless the Minister is notified in writing that the benefits are provided with respect to the member, be deemed to be unacceptable to the Minister;

  Determination of Retirement Benefits

  • (f) the amount of retirement benefits provided under the provision to a member is determined in such a manner that the member’s pension credit (as determined under Part LXXXIII) under the provision for a calendar year with respect to an employer is determinable at the end of the year;

  Benefit Accrual Rate

  • (g) if the amount of lifetime retirement benefits provided under the provision to a member is determined, in part, by multiplying the member’s remuneration (or a function of the member’s remuneration) by an annual benefit accrual rate, or in a manner that is equivalent to that calculation, the annual benefit accrual rate or the quivalent annual benefit accrual rate does not exceed

    • (i) in the case of a member whose benefits are provided in respect of employment in a public safety occupation and for whom the formula for determining the amount of the lifetime retirement benefits can reasonably be considered to take into account public pension benefits, 2.33 per cent, and

    • (ii) in any other case, 2 per cent;

  Increase in Accrued Benefits

  • (h) where the amount of lifetime retirement benefits provided to a member in respect of a calendar year depends on

    • (i) the member’s remuneration in subsequent years, or

    • (ii) the average wage (or other general measure of wages and salaries) for subsequent years,

    and this condition has not been waived by the Minister, the formula for determining the amount of lifetime retirement benefits is such that

    • (iii) the percentage increase from year to year in the amount of lifetime retirement benefits that accrued to the member in respect of the year can reasonably be expected to approximate or be less than the percentage increase from year to year in the member’s remuneration or in the average wage (or other general measure of wages and salaries), as the case may be, or

    • (iv) the condition in subparagraph (iii) is not satisfied only by reason that the formula can reasonably be considered to have been designed taking into account the public pension benefits payable to members,

    and, for the purposes of this condition, where in determining the amount of lifetime retirement benefits provided under the provision to a member there is deducted an amount described in subparagraph (j)(i), it shall be assumed that the amount so deducted is nil;

  • (i) where the amount of lifetime retirement benefits provided to a member in respect of a calendar year depends on the member’s remuneration in other years, the formula for determining the amount of the lifetime retirement benefits is such that any increase in the amount of lifetime retirement benefits that accrued to the member in respect of the year that is attributable to increased remuneration is primarily attributable to an increase in the rate of the member’s remuneration;

  Offset Benefits

  • (j) where

    • (i) in determining the amount of lifetime retirement benefits provided under the provision to a member there is deducted

      • (A) the amount of lifetime retirement benefits provided to the member under a benefit provision of a registered pension plan, or

      • (B) the amount of a lifetime annuity that is provided to the member under a deferred profit sharing plan, and

    • (ii) a single amount is paid in full or partial satisfaction of the member’s entitlement to benefits under the benefit provision referred to in clause (i)(A) or the deferred profit sharing plan referred to in clause (i)(B),

    the amount that is so deducted in determining the amount of the member’s lifetime retirement benefits under the defined benefit provision includes the amount of lifetime retirement benefits or lifetime annuity that may reasonably be considered to have been foregone as a consequence of the payment of the single amount;

  Bridging Benefits — Cross-plan Restriction

  • (k) bridging benefits are not paid under the provision to a member who receives bridging benefits under another defined benefit provision of the plan (in this paragraph referred to as the “particular plan”) or under a defined benefit provision of another registered pension plan, except that this condition is not applicable where it is waived by the Minister or where

    • (i) bridging benefits are paid to the member under only one defined benefit provision of the particular plan,

    • (ii) the decision to provide bridging benefits under the particular plan to the member was not made by the member, by persons with whom the member does not deal at arm’s length or by the member and such persons, and

    • (iii) each employer who has participated in any registered pension plan (other than the particular plan) under a defined benefit provision of which the member receives bridging benefits

      • (A) has not participated in the particular plan, and

      • (B) has always dealt at arm’s length with each employer who has participated in the particular plan,

    and, for the purposes of this paragraph, bridging benefits provided under a defined benefit provision of a registered pension plan to the member do not include benefits that are provided on a basis no more favourable than an actuarially equivalent basis in lieu of all or a proportion of the benefits that would otherwise be payable under the provision with respect to the member; and

  Division of Benefits on Breakdown of the Marriage or Common-law Partnership

  • (l) if, by reason of a provision of a law described in subparagraph 8501(5)(b)(ii), an individual who is a spouse or common-law partner or former spouse or common-law partner of a member becomes entitled to receive all or a portion of the benefits that would otherwise be payable under the defined benefit provision to the member, and paragraph 8501(5)(d) applies with respect to the benefits,

    • (i) the present value of benefits provided under the provision with respect to the member (including, for greater certainty, benefits provided with respect to the individual) is not increased as a consequence of the individual becoming so entitled to benefits, and

    • (ii) the benefits provided under the provision to the member are not, at any time, adjusted to replace, in whole or in part, the portion of the member’s benefits to which the individual has become entitled.

Additional Conditions

• (4) For the purposes of section 8501, the following conditions are applicable in respect of each defined benefit provision of a pension plan:

  Member Contributions

  • (a) where members are required or permitted to make contributions under the provision,

    • (i) the aggregate amount of current service contributions to be made by a member in respect of a calendar year after 1990, no part of which is a period of disability or an eligible period of reduced pay or temporary absence of the member, does not exceed the lesser of

      • (A) 9 per cent of the aggregate of all amounts each of which is the member’s compensation for the year from an employer who participates in the plan in the year for the benefit of the member, and

      • (B) the aggregate of $1,000 and 70 per cent of the aggregate of all amounts each of which is the amount that would be the member’s pension credit (as determined under Part LXXXIII) for the year under the provision with respect to an employer if section 8302 were read without reference to paragraphs (2)(b) and (3)(g) thereof,

    • (ii) the method for determining current service contributions to be made by a member in respect of a calendar year that includes a period of disability or an eligible period of reduced pay or temporary absence of the member (referred to in this subparagraph as a “period of reduced services”) is consistent with that used for determining contributions in respect of years described in subparagraph (i), except that the member may be permitted or required to make, in respect of a period of reduced services, current service contributions not exceeding the amount reasonably necessary to fund the member’s benefits in respect of the period of reduced services, and

    • (iii) the aggregate amount of contributions to be made by a member in connection with benefits that, as a consequence of a transaction, event or circumstance occurring at a particular time, become provided under the provision in respect of periods before that time does not exceed the amount reasonably necessary to fund such benefits;

  Pre-payment of Member Contributions

  • (b) the contributions that are made under the provision by a member in respect of a calendar year are not paid before the year;

  Reduction in Benefits and Return of Contributions

  • (c) where the plan is not established by an enactment of Canada or a province, it includes a stipulation that permits, for the purpose of avoiding revocation of the registration of the plan,

    • (i) the plan to be amended at any time to reduce the benefits provided under the provision with respect to a member, and

    • (ii) a contribution that is made under the provision by a member or an employer to be returned to the person who made the contribution,

    which stipulation may provide that an amendment to the plan, or a return of contributions, is subject to the approval of the authority administering the Pension Benefits Standards Act, 1985 or a similar law of a province;

  Undue Deferral of Payment

  • (d) each single amount that is payable after the death of a member is paid as soon as is practicable after the member’s death (or, in the case of a single amount permitted by reason of paragraph (2)(j), after all other benefits have been paid);

  Evidence of Disability

  • (e) where additional lifetime retirement benefits are provided under the provision to a member because the member is totally and permanently disabled, the additional benefits are not paid before the plan administrator has received from a medical doctor who is licensed to practise under the laws of a province or of the place where the member resides a written report providing the information on the medical condition of the member taken into account by the administrator in determining that the member is totally and permanently disabled; and

  • (f) where lifetime retirement benefits are provided under the provision to a member in respect of a period of disability of the member, the benefits, to the extent that they would not be in accordance with paragraph (3)(a) if that paragraph were read without reference to subparagraph (iv) thereof, are not paid before the plan administrator has received from a medical doctor who is licensed to practise under the laws of a province or of the place where the member resides a written report providing the information on the medical condition of the member taken into account by the administrator in determining that the period is a period of disability.

Waiver of Member Contribution Condition

• (5) The Minister may waive the conditions in paragraph (4)(a) where member contributions under a defined benefit provision of a pension plan are determined in a manner acceptable to the Minister and it is reasonable to expect that, on a long-term basis, the aggregate of the regular current service contributions made under the provision by all members will not exceed 1/2 of the amount that is required to fund the aggregate benefits in respect of which those contributions are made.

Pre-retirement Death Benefits

• (6) A pension plan may provide, in the case of a member who dies before retirement benefits under a defined benefit provision of the plan commence to be paid to the member but after becoming eligible to have retirement benefits commence to be paid, benefits under the provision to the beneficiaries of the member where the benefits would be in accordance with subsection (2) if retirement benefits under the provision had commenced to be paid to the member immediately before the member’s death.

Commutation of Lifetime Retirement Benefits

• (7) Where a pension plan permits a member to receive a single amount in full or partial satisfaction of the member’s entitlement to lifetime retirement benefits under a defined benefit provision of the plan, the following rules apply:

  • (a) the condition in subparagraph (2)(b)(i) that the payment of bridging benefits under the provision not commence before lifetime retirement benefits commence to be paid under the provision to the member is not applicable where, before the member’s lifetime retirement benefits commence to be paid, a single amount is paid in full satisfaction of the member’s entitlement to the lifetime retirement benefits; and

  • (b) such part of the member’s lifetime retirement benefits as remains payable after a single amount is paid in full satisfaction of the member’s entitlement to lifetime retirement benefits that would otherwise be payable after the member attains a particular age shall be deemed, for the purposes of the conditions in this section, to be lifetime retirement benefits and not to be bridging benefits.

Bridging Benefits and Election

• (7.1) Where a pension plan permits a member, or a spouse or common-law partner or former spouse or common-law partner of the member, to elect to receive benefits described in any of paragraphs (2)(b), (l) or (l.1) under a defined benefit provision of the plan on a basis no more favourable than an actuarially equivalent basis in lieu of all or a proportion of the benefits that would otherwise be payable under the provision with respect to the member, the following rules apply:

  • (a) the condition in subparagraph (2)(b)(i) that the payment of bridging benefits under the provision not commence before lifetime retirement benefits commence to be paid under the provision to the member does not apply if, as a consequence of the election, no lifetime retirement benefits remain payable under the provision to the member; and

  • (b) for the purpose of determining whether retirement benefits provided under the provision to beneficiaries of the member are in accordance with paragraphs (2)(c), (d) and (k), the election may be disregarded.

Suspension or Cessation of Pension

• (8) A pension plan may provide for

  • (a) the suspension of payment of a member’s retirement benefits under a defined benefit provision of the plan where

    • (i) the retirement benefits payable to the member after the suspension are not altered by reason of the suspension, or

    • (ii) subsection (9) is applicable in respect of the member’s retirement benefits; and

  • (b) the cessation of payment of any additional benefits that are payable to a member under a defined benefit provision of the plan because of a physical or mental impairment of the member or the termination of the member’s employment under a downsizing program (within the meaning assigned by subsection 8505(1)).

Re-employed Members

• (9) Subject to subsection (10), where a pension plan provides, in the case of a member who becomes an employee of a participating employer after the member’s retirement benefits under a defined benefit provision of the plan have commenced to be paid, that

  • (a) payment of the member’s retirement benefits under the provision is suspended while the member is employed by a participating employer, and

  • (b) the amount of retirement benefits payable to the member after the suspension is redetermined

    • (i) to include benefits in respect of all or a part of the period throughout which payment of the member’s benefits was suspended,

    • (i.1) where the retirement benefits payable under the provision to the member after the suspension are not adjusted by any cost-of-living or similar adjustments in respect of the period throughout which payment of the member’s benefits was suspended, to take into account the member’s remuneration from the employer for the period throughout which payment of the benefits was suspended,

    • (ii) where the member was totally and permanently disabled at the time the member’s retirement benefits commenced to be paid, to include benefits in respect of all or a part of the period of disability of the member,

    • (iii) where the amount of the member’s retirement benefits was previously determined with a reduction computed by reference to the member’s age, duration of service, or both, or with any other similar reduction, by redetermining the amount of the reduction, or

    • (iv) where payment of the member’s retirement benefits resumes after the member attains 65 years of age, by applying an adjustment for the purpose of compensating, in whole or in part, for the payments foregone by the member after attaining 65 years of age,

  the following rules apply:

  • (c) the condition in paragraph (3)(b) is not applicable in respect of benefits provided under the provision to the member in respect of a period throughout which payment of the member’s benefits is suspended,

  • (d) where the member was totally and permanently disabled at the time the member’s retirement benefits commenced to be paid, the condition in paragraph (3)(b) is not applicable in respect of benefits provided under the provision to the member in respect of a period of disability of the member,

  • (e) the conditions in paragraphs (2)(b) and (3)(c) and (d) and section 8504 are applicable in respect of benefits payable under the provision to the member after a suspension of the member’s retirement benefits as if the member’s retirement benefits had not previously commenced to be paid, and

  • (f) for the purpose of paragraph 8502(c) as it applies in respect of benefits provided under the provision on the death of the member during or after a period throughout which payment of the member’s benefits is suspended, subsections (2) and (6) are applicable as if the member’s retirement benefits had not commenced to be paid before the period.

Re-employed Member — Special Rules Not Applicable

• (10) Subsection (9) does not apply in respect of benefits provided under a defined benefit provision of a pension plan to a member unless the terms of the plan that provide for the redetermination of the amount of the member’s retirement benefits do not apply where retirement benefits have, at any time, been paid under the provision to the member while the member was an employee of a participating employer.

Re-employed Member — Anti-avoidance

• (11) Where a member of a registered pension plan has become an employee of a participating employer after the member’s retirement benefits under a defined benefit provision of the plan have commenced to be paid and it is reasonable to consider that one of the main reasons for the employment of the member is to enable the member to benefit from terms of the plan that provide for a redetermination of the amount of the member’s retirement benefits provided in respect of a period before the benefits commenced to be paid, the plan becomes a revocable plan at the time the payment of the member’s benefits resumes.

Limits Dependent on Consumer Price Index

• (12) Benefits provided under a defined benefit provision of a pension plan that are benefits to which a condition in any of subparagraphs (2)(b)(ii) and (e)(v) and (vi) and (3)(d)(ii) is applicable shall be deemed to comply with the condition where they would so comply if the Consumer Price Index ratio computed as part of the formula that applies for the purpose of the condition were replaced by a substantially similar measure of the change in the Consumer Price Index.

Statutory Plans — Special Rules

• (13) Notwithstanding subsection (3),

  • (a) for the purposes of the condition in paragraph (3)(b) as it applies in respect of benefits provided under the pension plan established by the Public Service Superannuation Act, the reference to “any other registered pension plan” in subparagraph (3)(b)(ii) does not include the pension plans established by the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act; and

  • (b) the condition in paragraph (3)(c) does not apply in respect of benefits provided under the pension plan established by the Canadian Forces Superannuation Act.

Artificially Reduced Pension Adjustments

• (14) Where

  • (a) the amount of lifetime retirement benefits provided under a defined benefit provision of a registered pension plan to a member depends on the member’s remuneration,

  • (b) remuneration (in this subsection referred to as “excluded remuneration”) of certain types is disregarded for the purpose of determining the amount of the member’s lifetime retirement benefits, and

  • (c) it can reasonably be considered that one of the main reasons that remuneration in the form of excluded remuneration was paid to the member by an employer at any time was to artificially reduce a pension credit of the member under the provision with respect to the employer,

  the following rules apply for the purposes of the conditions in subsection 8504(1):

  • (d) the member shall be deemed to have been connected with the employer while the member was employed by the employer, and

  • (e) the member shall be deemed not to have received such remuneration as is excluded remuneration.

Past Service Employer Contributions

• (15) Where

  • (a) a contribution that is made by an employer to a registered pension plan is made, in whole or in part, in respect of benefits (in this subsection referred to as “past service benefits”) provided under the plan to a member in respect of a period before 1990 and before the calendar year in which the contribution is made,

  • (b) the contribution is made

    • (i) after December 10, 1989, or

    • (ii) before December 11, 1989 where the contribution has not, before that date, been approved by the Minister under paragraph 20(1)(s) of the Act, and

  • (c) it is reasonable to consider that all or substantially all of such portion of the contribution as is in respect of past service benefits was paid by the employer, with the consent of the member, in lieu of a payment or other benefit to which the member would otherwise be entitled,

  the plan becomes, for the purposes of paragraph 147.1(11)(c) of the Act, a revocable plan on the later of December 11, 1989 and the day immediately before the day on which the contribution is made.