8515 (1) For the purposes of subsections (5) and (9), and subject to subsection (3), a registered pension plan that contains a defined benefit provision is a designated plan throughout a calendar year if the plan is not maintained pursuant to a collective bargaining agreement and
(a) the aggregate of all amounts each of which is a pension credit (as determined under Part LXXXIII) for the year of a specified individual under a defined benefit provision of the plan
exceeds
(b) 50 per cent of the aggregate of all amounts each of which is a pension credit (as determined under Part LXXXIII) for the year of an individual under a defined benefit provision of the plan.
Designated Plan in Previous Year
(2) For the purposes of subsections (5) and (9), a registered pension plan is a designated plan throughout a particular calendar year after 1990 if the plan was a designated plan at any time in the immediately preceding year, except where the Minister has waived in writing the application of this subsection in respect of the plan.
Exceptions
(3) A registered pension plan is not a designated plan in a calendar year pursuant to subsection (1) if
(a) the plan would not be a designated plan in the year pursuant to that subsection if the reference in paragraph (1)(b) to “50 per cent” were read as a reference to “60 per cent”,
(b) the plan was established before the year, and
(c) the amount determined under paragraph (1)(a) in respect of the plan for the immediately preceding year did not exceed the amount determined under paragraph (1)(b),
or if
(d) there are more than 9 active members of the plan in the year, and
(e) the Minister has given written notice to the administrator of the plan that the plan is not a designated plan in the year.
Specified Individuals
(4) An individual is a specified individual for the purposes of paragraph (1)(a) in respect of a pension plan and a particular calendar year if
(a) the individual was connected at any time in the year with an employer who participates in the plan; or
(b) the aggregate of all amounts each of which is the remuneration of the individual for the year from an employer who participates in the plan, or from an employer who does not deal at arm’s length with a participating employer, exceeds 2 1/2 times the Year’s Maximum Pensionable Earnings for the year.
Eligible Contributions
(5) For the purpose of determining whether a contribution that is made by an employer to a registered pension plan at a time when the plan is a designated plan is an eligible contribution under subsection 147.2(2) of the Act, a prescribed condition is that
(a) the contribution satisfies the condition in subsection (6); or
(b) the contribution would satisfy the condition in subsection (6) if
(i) paragraph (6)(b) and subparagraph (7)(e)(i) were applicable only in respect of retirement benefits that became provided under the plan after 1990,
(ii) paragraph (6)(c) were applicable only in respect of those benefits payable after the death of a member that relate to retirement benefits that became provided under the plan to the member after 1990, and
(iii) the assumption as to the time retirement benefits (other than retirement benefits that became provided after 1990) will commence to be paid is the same for the purposes of the maximum funding valuation as for the purposes of the actuarial valuation that forms the basis for the recommendation referred to in subsection 147.2(2) of the Act pursuant to which the contribution is made.
Funding Restriction
(6) The condition referred to in subsection (5) is that the contribution would be required to be made for the plan to have sufficient assets to pay benefits under the defined benefit provisions of the plan, as registered, with respect to the employees and former employees of the employer if
(a) required contributions were determined on the basis of a maximum funding valuation prepared as of the same effective date as the actuarial valuation that forms the basis for the recommendation referred to in subsection 147.2(2) of the Act pursuant to which the contribution is made;
(a.1) each defined benefit provision of the plan provided that, with respect to restricted-funding members, retirement benefits are payable monthly in advance;
(b) each defined benefit provision of the plan provided that, after retirement benefits commence to be paid with respect to a restricted-funding member, the benefits are adjusted annually by a percentage increase for each year that is one percentage point less than the percentage increase in the Consumer Price Index for the year, in lieu of any cost-of-living adjustments actually provided;
(c) each defined benefit provision of the plan provided the following benefits after the death of a restricted-funding member who dies after retirement benefits under the provision have commenced to be paid to the member, in lieu of the benefits actually provided:
(i) where the member dies within 5 years after retirement benefits commence to be paid under the provision, the continuation of the retirement benefits for the remainder of the 5 years as if the member were alive, and
(ii) where an individual who is a spouse or common-law partner of the member when retirement benefits commence to be paid under the provision to the member is alive on the later of the day of death of the member and the day that is 5 years after the day on which the member’s retirement benefits commence to be paid, retirement benefits payable to the individual for the duration of the individual’s life, with the amount of the benefits payable for each month equal to 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;
(d) where more than one employer participates in the plan, assets and actuarial liabilities were apportioned in a reasonable manner among participating employers with respect to their employees and former employees; and
(e) the rule in paragraph 147.2(2)(d) of the Act that provides for the disregard of a portion of the assets of the plan apportioned to the employer with respect to the employer’s employees and former employees were applicable for the purpose of determining required contributions pursuant to this subsection.
Maximum Funding Valuation
(7) For the purposes of subsection (6), a maximum funding valuation is a valuation prepared by an actuary in accordance with the following rules:
(a) the projected accrued benefit method is used for the purpose of determining actuarial liabilities and current service costs;
(b) the valuation rate of interest is 7.5 per cent per annum;
(c) it is assumed that
(i) the rate of increase in general wages and salaries and in each member’s rate of remuneration will be 5.5 per cent per annum, and
(ii) the rate of increase in the Consumer Price Index will be 4 per cent per annum;
(d) each assumption made in respect of economic factors other than those referred to in paragraph (c) is consistent with the assumptions in that paragraph;
(e) in the case of a restricted-funding member, it is assumed that
(i) retirement benefits will commence to be paid to the member no earlier than the day on which the member attains 65 years of age,
(ii) the member will survive to the time the member’s retirement benefits commence to be paid,
(iii) where the member is employed by a participating employer as of the effective date of the valuation, the member will continue in employment until the time the member’s retirement benefits commence to be paid, and
(iv) when the member’s retirement benefits commence to be paid, the member will be married to a person who is the same age as the member;
(f) the rate of mortality at each age is equal to
(i) in the case of a restricted-funding member, 80 per cent of the average of the rates at that age for males and females in the 1983 Group Annuity Mortality Table, as published in Volume XXXV of the Transactions of the Society of Actuaries, and
(ii) in the case of any other member, 80 per cent of the rate at that age in the mortality table referred to in subparagraph (i) for individuals of the same sex as the member;
(g) it is assumed that where a member has a choice between receiving retirement benefits or a lump sum payment, retirement benefits will be paid to the member; and
(h) the plan’s assets are valued at an amount equal to their fair market value as of the effective date of the valuation.
Restricted-Funding Members
(8) For the purposes of subsections (6) and (7) as they apply in respect of a contribution made to a registered pension plan, a member of the plan is a restricted-funding member if, at the time the maximum funding valuation is prepared,
(a) the member has a right, whether absolute or contingent, to receive retirement benefits under a defined benefit provision of the plan and the benefits have not commenced to be paid; or
(b) the payment of retirement benefits under a defined benefit provision of the plan to the member has been suspended.
Member Contributions
(9) Where
(a) a member of a registered pension plan makes a contribution to the plan to fund benefits that have become provided at a particular time under a defined benefit provision of the plan in respect of periods before that time,
(b) the contribution is made at a time when the plan is a designated plan, and
(c) the contribution would not be an eligible contribution under subsection 147.2(2) of the Act if it were made by an employer who participates in the plan on behalf of the member,
the plan becomes, for the purposes of paragraph 147.1(11)(c) of the Act, a revocable plan immediately before the time the contribution is made.
- [NOTE: Application provisions are not included in the consolidated text
- see relevant amending Acts and regulations.]
- SOR/92-51, s. 7
- SOR/95-64, s. 17
- SOR/2001-188, s. 14
- Date modified: