Canada Pension Plan

Marginal note:Definitions

• 110 (1) In this section and sections 111 to 117,

  appropriate provincial Minister

  ministre provincial compétent

  appropriate provincial Minister, in respect of a province, means the province’s minister of the Crown who has primary responsibility for that province’s finances; (ministre provincial compétent)

  Investment Board

  Office

  Investment Board means the Canada Pension Plan Investment Board established by section 3 of the Canada Pension Plan Investment Board Act; (Office)

  operating balance

  solde d’exploitation

  operating balance means the amount of the balance to the credit of the Canada Pension Plan Account less the balance in the Canada Pension Plan Investment Fund; (solde d’exploitation)

  province

  [Repealed, R.S., 1985, c. 30 (2nd Supp.), s. 55]

  security

  titre

  security means

  • (a) an obligation

    • (i) that was held to the credit of the Canada Pension Plan Investment Fund before the coming into force of the Canada Pension Plan Investment Board Act,

    • (ii) that, as applied to Canada, is an obligation of the Government of Canada and, as applied to a province, is an obligation of the government of the province or an obligation of any agent of Her Majesty in right of the province that is guaranteed as to principal and interest by that government, and

    • (iii) that complies with the conditions that were set out in section 111 as that section read before the coming into force of the Canada Pension Plan Investment Board Act, or

  • (b) an obligation that

    • (i) is purchased by the Minister of Finance under this section after the coming into force of the Canada Pension Plan Investment Board Act, and

    • (ii) is an obligation of the government of a province or an obligation of any agent of Her Majesty in right of a province that is guaranteed as to principal and interest by that government. (titre)

• Marginal note:Interest to be credited to Account monthly

  (2) Interest shall be credited to the Canada Pension Plan Account on the last day of each month, calculated at such rate on the average daily operating balance in that Account for the preceding month as the Minister of Finance may fix.

• Marginal note:Additional interest

  (2.1) Where an amount referred to in paragraph 108(3)(a) is charged to the Canada Pension Plan Account pursuant to subsection (3), interest shall, notwithstanding that the amount has been so charged, be credited to the Canada Pension Plan Account, at the prescribed time and in the prescribed manner, in respect of that amount until the amount is effectively paid out of the Consolidated Revenue Fund.

• Marginal note:Replacement security

  (3) On the maturity of a security of a province held to the credit of the Canada Pension Plan Investment Fund that was issued before January 1, 1998, the Minister of Finance shall purchase another security issued by that province if

  • (a) the Minister of Finance is requested to do so, in writing, by the appropriate provincial Minister of that province at least 30 days before the date of maturity; and

  • (b) the operating balance in the Canada Pension Plan Account exceeds the amount that the Minister of Finance estimates will be required to meet all payments under subsection 108(3) in the month in which the security comes to maturity and in the two months immediately following that month.

• Marginal note:Principal amount

  (4) The principal amount of the replacement security shall be not more than the principal outstanding under the maturing security.

• Marginal note:Term to maturity

  (5) The replacement security shall be for a term of 20 years.

• Marginal note:Interest

  (6) The replacement security shall bear interest at a rate fixed by the Minister of Finance. In fixing that rate, the Minister of Finance shall choose a rate that is substantially the same as the interest rate that the province would be required to pay if it were to borrow the same amount for the same term through the issuance of a security on the public capital market.

• Marginal note:Features of replacement security

  (6.1) The replacement security shall be issued to or payable to the credit of the Canada Pension Plan Investment Fund and shall be expressed to be not negotiable and not transferable or assignable.

• Marginal note:Redemption

  (6.2) The replacement security shall be redeemable in whole or in part before maturity only at the option of the Minister of Finance where

  • (a) the Minister of Finance considers the redemption necessary in order to meet any payments that will be required to be made under subsection 108(3);

  • (b) the Minister of Finance gives notice in writing to the appropriate provincial Minister of the province at least six months before the date of the redemption; and

  • (c) there are no securities of the province held to the credit of the Canada Pension Plan Investment Fund that have a shorter remaining term to maturity than that of the replacement security.

• Marginal note:Amount redeemable

  (6.3) Where one or more securities of a province held to the credit of the Canada Pension Plan Investment Fund is redeemed in whole or in part by the Minister of Finance at any time before the maturity of the securities, the amount redeemed under those securities shall not exceed the amount determined by the formula

  A x B/C

  where

  A

  is the total amount to be realized at that time on the redemption of securities held to the credit of the Fund;

  B

  is the total amount outstanding at that time under securities of the province held to the credit of the Fund; and

  C

  is the total amount outstanding at that time under all securities held to the credit of the Fund.

• Marginal note:Redemption at request of province

  (6.4) Despite subsections (6.2) and (6.3), the Minister of Finance shall redeem a security in whole or in part before maturity if

  • (a) the Minister of Finance is requested to do so, in writing, by the appropriate provincial Minister of a province at least 30 days before the proposed redemption date; and

  • (b) the appropriate provincial Minister has agreed to pay on the redemption date

    • (i) any payments of principal or interest due on or before the redemption date but not yet paid,

    • (ii) interest on the principal amount being redeemed accrued to the date of redemption, and

    • (iii) an amount equal to the present value of the remaining instalments of principal being redeemed and interest on that principal.

• Marginal note:Calculation of present value

  (6.5) For the purposes of subparagraph (6.4)(b)(iii), the present value shall be calculated by discounting the instalments of principal being redeemed and interest on that principal using an interest rate fixed by the Minister of Finance. In fixing that rate, the Minister of Finance shall choose a rate that

  • (a) if the security to be redeemed was issued before January 1, 1998, is substantially the same as the rate the Government of Canada would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of the security to be redeemed through the issuance of a security on the public capital market; or

  • (b) if the security to be redeemed was issued after January 1, 1998, is substantially the same as the rate the province would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of the security to be redeemed through the issuance of a security on the public market.

• Marginal note:Consolidation of securities

  (7) At the request of the provincial treasurer or other similar officer of a province, the Minister of Finance may accept in the place of any series of securities of that province purchased by the Minister under this section during any consecutive period of not more than twelve months, on payment of any interest then accrued thereon, another security of that province in an amount equal to the aggregate amount then outstanding of the securities of that series, and bearing interest at a rate determined by the Minister of Finance to be the average of the rates of interest on each of the securities of that series weighted according to the amounts then outstanding of each of those securities.

• Marginal note:Saving provision

  (8) Nothing in this section shall be construed as limiting or restricting the authority of the Minister of Finance, when he deems it advisable for the sound and efficient management of the Canada Pension Plan Account,

  • (a) to purchase or acquire short term obligations of the Government of Canada not limited or restricted as to the negotiability or the transfer or assignment thereof, in an aggregate amount that, when added to the amount of all those obligations then held by him that were purchased or acquired as described in this subsection, does not exceed in any month the amount estimated by him to be required to meet all payments under subsection 108(3) in the immediately following period ending three months after that month, and to pay for those obligations out of the Consolidated Revenue Fund and charge the cost thereof to the Canada Pension Plan Account; or

  • (b) to hold or sell any of those obligations and to pay any interest thereon or proceeds of sale thereof into the Consolidated Revenue Fund and credit the interest or proceeds to the Canada Pension Plan Account.