Pension Reform Act (S.C. 2012, c. 22)
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Assented to 2012-11-01
Pension Reform Act
S.C. 2012, c. 22
Assented to 2012-11-01
An Act to amend the Members of Parliament Retiring Allowances Act
SUMMARY
This enactment amends the Members of Parliament Retiring Allowances Act to increase the contribution rates in order to bring the members’ share of the current service cost to 50% and to increase the retirement age from 55 to 65. The amendments also provide for a reduced allowance before members reach the age of 65, and they coordinate allowances with pension benefits paid under the Canada Pension Plan or under a similar provincial pension plan. They also reduce the rate of interest to be credited to the pension accounts established under the Members of Parliament Retiring Allowances Act and change the allowance payable to former Prime Ministers who cease to hold the office of Prime Minister after December 31, 2012.
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
SHORT TITLE
Marginal note:Short title
1. This Act may be cited as the Pension Reform Act.
R.S., c. M-5MEMBERS OF PARLIAMENT RETIRING ALLOWANCES ACT
Marginal note:1992, c. 46, s. 81
2. (1) The portion of subsection 2(1) of the Members of Parliament Retiring Allowances Act before the first definition is replaced by the following:
Marginal note:Definitions
2. (1) The following definitions apply in this Act.
Marginal note:1992, c. 46, s. 81
(2) The definition “earnings limit” in subsection 2(1) of the Act is replaced by the following:
“earnings limit”
« gains maximums »
“earnings limit”, in relation to a member in respect of one or more sessions in any calendar year, means
(a) for any calendar year before 2016, the amount in respect of which benefits may be accrued during that calendar year for the purposes of a registered pension plan within the meaning of the Income Tax Act, determined by dividing the defined benefit limit in respect of that calendar year by 0.02, and
(b) for 2016 and subsequent calendar years, the amount determined by the following formula, rounded to the next highest multiple of $100:
[(A – (B × C)) / 0.02] + C
where
- A
- is the the amount determined for the calendar year in accordance with the definition “defined benefit limit” in subsection 8500(1) of the Income Tax Regulations,
- B
- is the number fixed by the Chief Actuary under subsection (6), and
- C
- is the amount of the Year’s Maximum Pensionable Earnings, as defined in subsection 2(1) of the Canada Pension Plan, for that calendar year.
(3) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:
“average annual pensionable earnings”
« moyenne annuelle des gains ouvrant droit à pension »
“average annual pensionable earnings”, with respect to any member, means the average annual pensionable earnings received as a member during any five-year period of pensionable service selected by or on behalf of the member, or during any period so selected consisting of consecutive periods of pensionable service totalling five years.
“average maximum pensionable earnings”
« moyenne des maximums des gains ouvrant droit à pension »
“average maximum pensionable earnings”, with respect to any former member, means the average of the Year’s Maximum Pensionable Earnings, as defined in subsection 2(1) of the Canada Pension Plan, for the earlier of the years referred to in paragraphs (a) and (b), and for each of the four years preceding that earlier year,
(a) the year in which the former member ceased to be a member, and
(b) the year in which the former member becomes entitled to receive a retirement pension under the Canada Pension Plan or under a similar provincial pension plan.
“Chief Actuary”
« actuaire en chef »
“Chief Actuary” means the Chief Actuary of the Office of the Superintendent of Financial Institutions.
“pensionable earnings”
« gains ouvrant droit à pension »
“pensionable earnings”, with respect to any member in respect of any calendar year, means the aggregate of
(a) his or her sessional indemnity for the year,
(b) any annual allowance payable to him or her in respect of the year, and
(c) any salary payable to the member in respect of the year.
“reduction factor”
« facteur de réduction »
“reduction factor”, with respect to any former member, means the number determined by the calculation referred to in the description of D in subsection 37.3(2).
Marginal note:1992, c. 46, s. 81
(4) Subsection 2(2) of the Act is replaced by the following:
Marginal note:Calculation of average annual sessional indemnity
(2) For the purposes of calculating a member’s average annual sessional indemnity, any period during which he or she is, by virtue of paragraph 12(1)(b) or (c) or 34(1)(b), as it read immediately before January 1, 2013, prohibited from contributing in respect of the sessional indemnity payable to him or her is deemed to be a period of pensionable service to the member’s credit.
Marginal note:Calculation of average annual sessional indemnity
(2.1) For the purposes of calculating a member’s average annual sessional indemnity, any period during which he or she is required to make contributions under subsection 12(2) or would be required to contribute under that subsection if he or she were under 71 years of age is deemed to be a period of pensionable service to the member’s credit.
Marginal note:Calculation of average annual pensionable earnings
(2.2) For the purposes of calculating a member’s average annual pensionable earnings, any period during which he or she is required to make contributions under subsection 12(2.1) or would be required to contribute under that subsection if he or she were under 71 years of age is deemed to be a period of pensionable service to the member’s credit.
(5) Section 2 of the Act is amended by adding the following after subsection (5):
Marginal note:Power to fix number
(6) The Chief Actuary may, taking into account the percentage fixed for the purposes of subsection 17.1(2), fix a number for the purpose of the description of B in paragraph (b) of the definition “earnings limit” in subsection (1).
3. The Act is amended by adding the following after section 2.6:
CONTRIBUTION RATES
Marginal note:Obligation to fix rates
2.7 (1) The Chief Actuary shall fix contribution rates for the purpose of the provisions of this Act that require contributions to be made at the applicable contribution rate.
Marginal note:Classes
(2) In fixing contribution rates for the purpose of any provision of this Act, the Chief Actuary may fix a rate for all of the members of the Senate or House of Commons or for any class of members specified by the Chief Actuary.
Marginal note:Applicable contribution rate
(3) For the purposes of any provision of this Act that requires the payment of a contribution, the applicable contribution rate with respect to a member is the contribution rate that is fixed by the Chief Actuary for the purposes of that provision that applies to the member or to the class of members to which the member belongs.
Marginal note:Contribution rate for purpose of paragraph 31.1(1)(a) — 2013 to 2015
(4) Despite subsection (1), but subject to subsection (9), the applicable contribution rate for the purpose of paragraph 31.1(1)(a) for the calendar years 2013 to 2015 is 4%.
Marginal note:Contribution rates for purpose of paragraph 31.1(1)(b) — 2013 to 2015
(5) Despite subsection (1), the applicable contribution rates for the purpose of paragraph 31.1(1)(b) for the calendar years 2013 to 2015 are
(a) for 2013, 4%;
(b) for 2014, 5%; and
(c) for 2015, 6%.
Marginal note:Contribution rates for purpose of paragraphs 31.1(1)(c) and (2)(a) and (b) — 2013 to 2015
(6) Despite subsection (1), but subject to subsections (7) to (9), the applicable contribution rates for the purpose of paragraphs 31.1(1)(c) and (2)(a) and (b) for the calendar years 2013 to 2015 are
(a) for 2013, 8%;
(b) for 2014, 9%; and
(c) for 2015, 10%.
Marginal note:Contribution rate for certain members — 2013 to 2015
(7) Despite subsection (1), the applicable contribution rate for the purpose of paragraph 31.1(1)(c) for the calendar years 2013 to 2015 for members who are required to contribute under subsection 12(2) is 4% in respect of the portion of salary or annual allowance that is payable to them that exceeds their earnings limit for the calendar year.
Marginal note:Contribution rates for certain members — 2013 to 2015
(8) Despite subsection (1), the applicable contribution rates for the purpose of paragraph 31.1(1)(c) for the calendar years 2013 to 2015, in respect of salary or annual allowance, for members who are required to contribute under subsection 12(2) are
(a) for 2013, 4%;
(b) for 2014, 5%; and
(c) for 2015, 6%.
Marginal note:Contribution rate for certain members — 2013 to 2015
(9) Despite subsection (1), the applicable contribution rate for the purpose of paragraphs 31.1(1)(a) and (2)(a) for the calendar years 2013 to 2015 for members who are required to contribute under subsection 12(2) and members who would be required to contribute under subsection 12(2) if they were under 71 years of age is 1%.
Marginal note:Publication of rates
(10) The Minister shall cause to be published in the Canada Gazette the contribution rates fixed under subsection (1) as soon as feasible after they are fixed.
Marginal note:Objective
2.8 In fixing contribution rates, the Chief Actuary’s objective is to ensure that by not later than January 1, 2017 the total amount of contributions to be paid by members under Parts I and II will meet 50% of the current service cost in respect of the benefits payable under Parts I, II and IV.
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