Income Tax Regulations (C.R.C., c. 945)

Past Service Pension Adjustment

PSPA with Respect to Employer

• 8303 (1) For the purpose of subsection 248(1) of the Act, past service pension adjustment of an individual for a calendar year in respect of an employer means the total of

  • (a) the accumulated past service pension adjustment (in this Part referred to as “accumulated PSPA”) of the individual for the year with respect to the employer, determined as of the end of the year,

  • (b) the total of all amounts each of which is the foreign plan PSPA (determined under subsection 8308.1(5) or (6)) of the individual with respect to the employer associated with a modification of benefits in the year under a foreign plan (as defined in subsection 8308.1(1)), and

  • (c) the total of all amounts each of which is the specified retirement arrangement PSPA (determined under subsection 8308.3(4) or (5)) of the individual with respect to the employer associated with a modification of benefits in the year under a specified retirement arrangement (as defined in subsection 8308.3(1)).

Accumulated PSPA for Year

• (2) For the purposes of this Part, the accumulated PSPA of an individual for a calendar year with respect to an employer, determined as of any time, is the total of all amounts each of which is the individual’s provisional past service pension adjustment (in this Part referred to as “provisional PSPA”) with respect to the employer that is associated with

  • (a) a past service event (other than a certifiable past service event with respect to the individual) that occurred in the preceding year; or

  • (b) a certifiable past service event with respect to the individual where the Minister has, in the year and before that time, issued a certification for the purposes of subsection 147.1(10) of the Act in respect of the event and the individual.

1991 Past Service Events and Certifications

• (2.1) For the purposes of subsection (2),

  • (a) a past service event that occurred in 1991 (including, for greater certainty, a past service event that is deemed by paragraph 8304(3)(b) to have occurred immediately after the end of 1990) shall be deemed to have occurred on January 1, 1992 and not to have occurred in 1991; and

  • (b) a certification issued by the Minister in 1991 shall be deemed to have been issued on January 1, 1992 and not to have been issued in 1991.

Provisional PSPA

• (3) Subject to subsections (8) and (10) and sections 8304 and 8308, for the purposes of this Part, the provisional PSPA of an individual with respect to an employer that is associated with a past service event that occurs at a particular time in a particular calendar year is the amount determined by the formula

  A - B - C + D

  where

  A

  is the aggregate of all amounts each of which is, in respect of a calendar year after 1989 and before the particular year, the amount that would have been the individual’s pension credit for the year with respect to the employer under a defined benefit provision of a registered pension plan (other than a plan that is, at the particular time, a specified multi-employer plan) had the individual’s benefit entitlement under the provision in respect of the year and the employer been equal to the individual’s redetermined benefit entitlement (determined as of the particular time) under the provision in respect of the year and the employer,

  B

  is the aggregate that would be determined for A if the reference in the description of A to “determined as of the particular time” were read as a reference to “determined as of the time immediately before the particular time”,

  C

  is such portion of the amount of the individual’s qualifying transfers made in connection with the past service event as is not deducted in computing the provisional PSPA of the individual with respect to any other employer, and

  D

  is the total of all amounts each of which is an excess money purchase transfer in relation to the individual and the past service event that is not included in determining any other provisional PSPA of the individual that is associated with the past service event.

Redetermined Benefit Entitlement

• (4) For the purposes of the description of A in subsection (3), an individual’s redetermined benefit entitlement under a defined benefit provision of a registered pension plan in respect of a calendar year and an employer, determined as of a particular time, is the amount that would be determined under section 8302 to be the individual’s benefit entitlement under the provision in respect of the year and the employer if, for the purpose of computing the benefit accrual of the individual in respect of the year under the provision and, where subsection 8302(6) is applicable, under any other defined benefit provision, the amount determined under paragraph 8302(2)(a) in respect of a specific provision were equal to that portion of the individual’s normalized pension (computed in accordance with subsection (5)) under the specific provision at the particular time, determined with reference to the year, as may reasonably be considered to have accrued in respect of the year.

Normalized Pensions

• (5) For the purposes of subsection (4), the normalized pension of an individual under a defined benefit provision of a registered pension plan at a particular time, determined with reference to a calendar year (in this subsection referred to as the “pension credit year”), is the amount (expressed on an annualized basis) of lifetime retirement benefits, other than excluded benefits, that would be payable to the individual under the provision immediately after the particular time if

  • (a) where lifetime retirement benefits have not commenced to be paid under the provision to the individual before the particular time, they commenced to be paid immediately after the particular time,

  • (b) where the individual had not attained 65 years of age before the time at which lifetime retirement benefits commenced to be paid (or are assumed by reason of paragraph (a) to have commenced to be paid) to the individual, the individual attained that age at that time,

  • (c) the amount of the individual’s lifetime retirement benefits were determined with regard to all past service events occurring at or before the particular time and without regard to past service events occurring after the particular time,

  • (d) paragraphs 8302(3)(c) to (p) (other than paragraph 8302(3)(g), where subsection 8302(11) was applicable in respect of the pension credit year and the provision or would have been applicable had all benefits provided as a consequence of past service events become provided in the pension credit year) were applied for the purpose of determining the amount of the individual’s lifetime retirement benefits and, for the purpose of those paragraphs, the pension credit year were the particular year referred to in those paragraphs, and

  • (e) where

    • (i) the amount of the individual’s lifetime retirement benefits under the provision depends on the individual’s remuneration, and

    • (ii) all or part of the individual’s lifetime retirement benefits in respect of the pension credit year became provided as a consequence of a past service event, pursuant to terms of the provision that enable benefits to be provided to members of the plan in respect of periods of employment with employers who have not participated under the provision,

    the remuneration received by the individual from each such employer in respect of a period of employment in respect of which the individual is provided with benefits under the provision were remuneration received from an employer who has participated under the provision for the benefit of the individual,

  and, for the purposes of this subsection, the following benefits are excluded benefits:

  • (f) where the formula for determining the amount of lifetime retirement benefits payable under the provision to the individual requires the calculation of an amount that is the product of a fixed rate and the duration of all or part of the individual’s pensionable service, benefits payable as a direct consequence of an increase in the value of the fixed rate at any time (in this paragraph referred to as the “time of increase”) after the pension credit year, other than benefits

    • (i) provided as a consequence of a second or subsequent increase in the value of the fixed rate after the time that retirement benefits under the provision commenced to be paid to the individual, or

    • (ii) that would not have become provided had the value of the fixed rate been increased to the amount determined by the formula

      A × (B / C)

      where

      A

      is the value of the fixed rate immediately before the time of the increase,

      B

      is the average wage for the calendar year that includes the time of the increase, and

      C

      is

      • (A) if the value of the fixed rate was last increased or established in the calendar year that includes the time of the increase, the average wage for that year, or

      • (B) otherwise, the average wage for the year immediately preceding the calendar year that includes the time of increase,

  • (f.1) where the formula for determining the amount of lifetime retirement benefits payable under the provision to the individual includes a limit that is the product of the duration of the individual’s pensionable service and the lesser of a percentage of the individual’s remuneration and a fixed rate, and the value of the fixed rate is increased after the pension credit year to an amount equal to the defined benefit limit for the earlier of the year in which the increase occurs and the year in which retirement benefits under the provision commenced to be paid to the individual, the portion of the benefits payable as a direct consequence of the increase that would not have become provided had the value of the fixed rate been set at the defined benefit limit for the pension credit year, if

    • (i) the value of the fixed rate was, immediately before the increase, equal to the defined benefit limit for the year in which the value of the fixed rate was last established, and

    • (ii) where the year in which the value of the fixed rate was last established precedes the year immediately preceding the year in which the increase occurs,

      • (A) the Minister has approved in writing the application of this paragraph in respect of the past service event,

      • (B) there are more than nine active members (within the meaning assigned by paragraph 8306(4)(a)) under the provision, and

      • (C) the plan is not a designated plan,

  • (f.2) where the formula for determining the amount of lifetime retirement benefits payable under the provision to the individual includes a limit that is the product of the duration of the individual’s pensionable service and the lesser of a percentage of the individual’s remuneration and a fixed rate the value of which can reasonably be considered to be fixed each year as a portion of the defined benefit limit for that year, benefits payable as a direct consequence of an increase, after the pension credit year, in the value of the fixed rate to reflect the defined benefit limit for the year in which the increase occurs, if

    • (i) except as otherwise expressly permitted by the Minister, it is reasonable to consider that, for years after 1989, the ratio of the fixed rate to the defined benefit limit has been, and will remain, constant,

    • (ii) the benefits are not provided as a consequence of a second or subsequent increase in the value of the fixed rate after the time that retirement benefits under the provision commenced to be paid to the individual,

    • (iii) the Minister has approved in writing the application of this paragraph in respect of the past service event, and

    • (iv) the plan is not a designated plan,

  • (g) where

    • (i) the provision is a flat benefit provision,

    • (ii) at the particular time, the amount (expressed on an annual basis) of lifetime retirement benefits provided under the provision to each member in respect of pensionable service in each calendar year does not exceed 40 per cent of the defined benefit limit for the year that includes the particular time,

    • (iii) the conditions in subsection 8306(2) are satisfied in respect of the provision and the past service event in connection with which the normalized pension is being calculated, and

    • (iv) only one fixed rate is applicable in determining the amount of the individual’s lifetime retirement benefits,

    benefits provided as a direct consequence of an increase in the value of the fixed rate at any time (in this paragraph referred to as the “time of increase”) after the pension credit year, other than benefits

    • (v) provided as a consequence of a second or subsequent increase in the value of the fixed rate after the time that retirement benefits under the provision commenced to be paid to the individual, or

    • (vi) that would not have become provided had the value of the fixed rate been increased to the greater of

      • (A) the greatest of all amounts each of which is an amount determined by the formula

        A × (B / C)

        where

        A

        is a value of the fixed rate in the period beginning on January 1, 1984 and ending immediately before the time of increase,

        B

        is the average wage for the calendar year that includes the time of increase, and

        C

        is the average wage for the later of 1984 and the calendar year in which the value of the fixed rate used for A was first effective, and

      • (B) the amount determined by the formula

        D + (E × F)

        where

        D

        is the value of the fixed rate immediately before the time of increase,

        E

        is the amount by which the value of the fixed rate used for D would have to be increased to provide an increase in the individual’s annual lifetime retirement benefits equal to $18 for each year of pensionable service, and

        F

        is the duration (measured in years, including any fraction of a year) of the period beginning on the later of January 1, 1984 and the day on which the value of the fixed rate used for D was first effective and ending on the day that includes the time of increase,

  • (h) where the provision is a flat benefit provision, benefits provided as a direct consequence of an increase at any time (in this paragraph referred to as the “time of increase”) after the pension credit year in the value of a fixed rate under the provision where

    • (i) the value of the fixed rate was increased pursuant to an agreement made before 1992, and

    • (ii) at the time the agreement was made, it was reasonable to expect that the percentage increase in the value of the fixed rate would approximate or be less than the percentage increase in the average wage from the calendar year in which the value of the fixed rate was last increased before the time of increase (or, if the increase is the first increase, the calendar year in which the initial value of the fixed rate was first applicable) to the calendar year that includes the time of increase,

  • (i) where the provision is a flat benefit provision under which the amount of each member’s retirement benefits depends on the member’s job category or rate of pay in such a manner that the ratio of the amount of lifetime retirement benefits to remuneration does not significantly increase as remuneration increases, benefits provided as a direct consequence of a change, after the pension credit year, in the individual’s job category or rate of pay,

  • (j) where

    • (i) the individual’s pensionable service under the provision ends before the particular time,

    • (ii) the individual’s lifetime retirement benefits under the provision have been adjusted by a cost-of-living or similar adjustment in respect of the period (in this paragraph referred to as the “deferral period”) beginning at the latest of

      • (A) the time the individual’s pensionable service under the provision ends,

      • (B) if the amount of the individual’s lifetime retirement benefits depends on the individual’s remuneration, the end of the most recent period for which the individual received remuneration that is taken into account in determining the individual’s lifetime retirement benefits,

      • (C) if the amount of the individual’s lifetime retirement benefits depends on the individual’s remuneration and the remuneration is adjusted as described in paragraph 8302(3)(h), the end of the period in respect of which the adjustment is made, and

      • (D) if the formula for determining the amount of the individual’s lifetime retirement benefits requires the calculation of an amount that is the product of a fixed rate and the duration of all or part of the individual’s pensionable service (or other measure of services rendered by the individual), the time as of which the value of the fixed rate applicable with respect to the individual was established,

      and ending at the earlier of the particular time and the time, if any, at which lifetime retirement benefits commenced to be paid under the provision to the individual, and

    • (iii) the adjustment is warranted, having regard to all prior such adjustments, by the increase in the Consumer Price Index or in the wage measure from the commencement of the deferral period to the time the adjustment was made,

    benefits payable as a consequence of the adjustment,

  • (k) benefits payable as a consequence of a cost-of-living adjustment made after the time lifetime retirement benefits commenced to be paid under the provision to the individual, where the adjustment

    • (i) is warranted, having regard to all prior such adjustments, by the increase in the Consumer Price Index from that time to the time the adjustment was made, or

    • (ii) is a periodic adjustment described in subparagraph 8503(2)(a)(ii), and

  • (l) such portion of the individual’s lifetime retirement benefits as

    • (i) would not otherwise be excluded in determining the individual’s normalized pension,

    • (ii) may reasonably be considered to be attributable to cost-of-living adjustments or to adjustments made by reason of increases in a general measure of salaries and wages (other than increases in such a measure after the time lifetime retirement benefits commenced to be paid under the provision to the individual), and

    • (iii) is acceptable to the Minister.

Qualifying Transfers

• (6) For the purposes of subsections (3) and 8304(5), (7) and (10), and subject to subsection (6.1) and paragraph 8304(2)(h), the amount of an individual’s qualifying transfers made in connection with a past service event is the total of all amounts each of which is

  • (a) the portion of an amount transferred to a registered pension plan

    • (i) in accordance with any of subsections 146(16), 147(19) and 147.3(2), (5) and (7) of the Act, or

    • (ii) from a specified multi-employer plan in accordance with subsection 147.3(3) of the Act

    that is transferred to fund benefits provided to the individual as a consequence of the past service event; or

  • (b) the amount of any property held in connection with a benefit provision of a registered pension plan that is made available to fund benefits provided to the individual under another benefit provision of the plan as a consequence of the past service event, where the transaction by which the property is made so available is such that, if the benefit provisions were in separate registered pension plans, the transaction would constitute a transfer of property from one plan to the other in accordance with any of subsections 147.3(2), (5) and (7) of the Act.

Exclusion for Pre-1990 Benefits

• (6.1) The amount of an individual’s qualifying transfers made in connection with a past service event shall be determined under subsection (6) without regard to the portion, if any, of amounts transferred or property made available, as the case may be, that can reasonably be considered to have been transferred or made available to fund benefits provided in respect of periods before 1990.

Deemed Payment

• (7) Where

  • (a) an individual has given an irrevocable direction that

    • (i) an amount be paid to a registered pension plan, or

    • (ii) property held in connection with a benefit provision of a registered pension plan be made available to fund benefits provided to the individual under another benefit provision of the plan

    in the event that the Minister issues a certification for the purposes of subsection 147.1(10) of the Act with respect to the individual and to benefits provided under a defined benefit provision of the plan as a consequence of a past service event, and

  • (b) the amount is to be paid or the property is to be made available, as the case may be,

    • (i) where subparagraph (ii) does not apply, on or before the day that is 90 days after the day on which the certification is received by the administrator of the plan, and

    • (ii) where the plan was deemed by paragraph 147.1(3)(a) of the Act to be a registered pension plan at the time the direction was given, on or before the day that is 90 days after the later of

      • (A) the day on which the certification is received by the administrator of the plan, and

      • (B) the day on which the administrator of the plan receives written notice from the Minister of the registration of the plan for the purposes of the Act,

  the amount or property, as the case may be, is deemed, for the purpose of subsection (6), to have been paid or made available, as the case may be, at the time the direction was given.

Excess Money Purchase Transfer

• (7.1) Where lifetime retirement benefits have, as a consequence of a past service event, become provided to an individual under a defined benefit provision of a registered pension plan (other than a specified multi-employer plan) in respect of a period (in this subsection referred to as the “past service period”) that

  • (a) was previously pensionable service of the individual under a particular defined benefit provision of a registered pension plan (other than a specified multi-employer plan),

  • (b) ceased to be pensionable service of the individual under the particular provision as a result of the payment of a single amount, all or part of which was transferred on behalf of the individual from the particular provision to a registered retirement savings plan, a registered retirement income fund, a money purchase provision of a registered pension plan or a defined benefit provision of a registered pension plan that was, at the time of the transfer, a specified multi-employer plan,

  • (c) has not, at any time after the payment of the single amount and before the past service event, been pensionable service of the individual under any defined benefit provision of a registered pension plan (other than a specified multi-employer plan), and

  • (d) is not, for the purpose of subsection 8304(5), a qualifying past service period in relation to the individual and the past service event,

  the amount determined by the formula

  A - B

  is, for the purpose of the description of D in subsection (3), an excess money purchase transfer in relation to the individual and the past service event, where

  A

  is the portion of the amount transferred, as described in paragraph (b), that can reasonably be considered to be attributable to benefits in respect of the portion of the past service period that is after 1989, and

  B

  is the total of all amounts each of which is the portion of a pension credit, or the grossed-up amount of a provisional PSPA, of the individual that can reasonably be considered to be attributable to benefits previously provided under the particular provision in respect of the past service period.

Specified Multi-employer Plan

• (8) Where, in a calendar year, an individual makes a contribution (other than an excluded contribution) in respect of a defined benefit provision of a registered pension plan that is, in the year, a specified multi-employer plan, and the contribution

  • (a) is made in respect of a period after 1989 and before the year, and

  • (b) is not included in determining the individual’s pension credit for the year with respect to any employer under the provision,

  the individual’s provisional PSPA with respect to an employer who participates in the plan, associated with the payment of the contribution, is the portion of the contribution that is not included in the individual’s provisional PSPA with respect to any other employer who participates in the plan, and, for the purpose of this subsection, the plan administrator shall determine the portion of the contribution to be included in the provisional PSPA of the individual with respect to each employer.

Conditional Contributions

• (9) For the purpose of subsection (8), a contribution includes an amount paid by an individual to a registered pension plan where the right of any person to retain the amount on behalf of the plan is conditional on the Minister issuing a certification for the purposes of subsection 147.1(10) of the Act as it applies with respect to the individual and to benefits provided as a consequence of the payment.

Benefits in respect of Foreign Service

• (10) Where, as a consequence of a past service event, benefits become provided to an individual under a defined benefit provision of a registered pension plan in respect of a period throughout which the individual was employed outside Canada, and the Minister has consented in writing to the application of this subsection, each provisional PSPA of the individual that is associated with the past service event shall be determined on the assumption that no benefits were provided in respect of the period.