PART 2Benefits (continued)
DIVISION 1Member’s Benefits (continued)
Participant Who Has Not Less Than Two Years of Pensionable Service (continued)
Marginal note:Terms of payment
(a) in respect of the annuity or annual allowance, until the end of the month during which the pensioner dies; and
(b) in respect of the bridge benefit, until the earliest of the following:
(ii) the last day of the month in which the pensioner reaches 65 years of age, and
(iii) the day that the annuity or annual allowance ceases to be paid.
(2) Any amount in arrears after the pensioner’s death shall be paid to the survivor who is entitled to an annual allowance under Division 2. If there is no survivor, it shall be paid to the pensioner’s estate or succession.
Marginal note:Apportionment if two survivors
(3) If there are two survivors who are entitled to an annual allowance under Division 2, each survivor’s portion shall be determined in accordance with section 64 as if the reference to “death benefit” in that section were a reference to “amount in arrears”.
- SOR/2016-64, s. 69
53 A pensioner who is entitled to a deferred annuity and has not reached 50 years of age may opt for the payment of a transfer value, and the making of the option extinguishes the entitlement to the deferred annuity.
Marginal note:Time limit for opting
54 A pensioner shall make an option for the payment of a transfer value no later than one year after the day on which they cease to be a participant.
Marginal note:Option not made
55 The option is deemed not to have been made if, before the transfer value has been paid, the former participant again is entitled to receive earnings as a member or is required to contribute to the Canadian Forces Pension Fund.
Marginal note:Calculation of transfer value
56 The transfer value is an amount, together with interest calculated in accordance with section 62, equal to the greater of
(a) the actuarial present value, on the date of the option, of the accrued pension benefits that would be payable to or in respect of the pensioner, and
(b) a return of contributions, calculated as of the date of the option as if the pensioner had been entitled to a return of contributions on that date.
Marginal note:Pensionable earnings to pensioner’s credit
57 The calculation of the accrued pension benefits shall be based on the pensionable earnings to the pensioner’s credit on the day after the day on which they cease to be a participant and for which they have paid or ought to have paid before the date of the option.
Marginal note:Calculation rules
58 The calculation of the actuarial present value of the accrued pension benefits is subject to the following rules:
(a) the indexing benefits referred to in Division 3 are to be increased to take into account the period beginning on the later of January 1 of the year in which the option was made and the day on which the pensioner ceased to be a participant and ending on the date of the option; and
(b) the possibility that the pensioner could receive an annual allowance is to be excluded.
Marginal note:Actuarial valuation report
59 (1) For the purpose of subsection (2), the actuarial valuation report is the actuarial valuation report most recently laid before Parliament, under section 56 of the Act, before the date of the option or, if that report was laid before Parliament in the month in which the option was made or in the preceding month, the preceding report that was laid before Parliament, in each case with any terminological modifications that the circumstances require.
Marginal note:Actuarial assumptions
(2) In determining the actuarial present value of the accrued pension benefits, the following actuarial assumptions are to be used:
(a) the mortality rates for pensioners and survivors are the mortality rates, including annual percentages of mortality reduction, in respect of contributors and survivors used in the preparation of the actuarial valuation report;
(b) the interest rates are the interest rates for fully indexed pensions — adjusted by the interest rates for unindexed pensions to take into account Division 3 — determined in accordance with the section entitled “Pension Commuted Values” of the Standards of Practice — Practice-Specific Standards for Pension Plans, published by the Canadian Institute of Actuaries, as amended from time to time;
(c) the probability that a pensioner will be survived by children is based on the rates regarding the average number, average age and eligibility status of children at the death of a pensioner, used in the preparation of the actuarial valuation report;
(d) the probability that a pensioner will become entitled to an annuity under subsection 50(1) is based on the rates of termination owing to disability (any occupation), in respect of contributors used in the preparation of the actuarial valuation report, taking into account the probability — as set out in that report — that there would be immediate eligibility for a disability pension under the Canada Pension Plan or a provincial pension plan; and
(e) the probability that a pensioner will have a survivor at death is based on the probability that a contributor will have a survivor at death and on the age difference between the contributor and the survivor that was used in the preparation of the actuarial valuation report.
Marginal note:Deductions from payment
60 There shall be deducted from the amount of the transfer value
(a) contributions remaining unpaid in respect of earnings that the pensioner is deemed to have received under paragraph 2(b); and
(b) arrears in respect of a past earnings election.
Marginal note:Payment effected by transfer
(iii) a financial institution authorized to sell immediate or deferred life annuities, as defined in subsection 2(1) of the Pension Benefits Standards Regulations, 1985, for the purchase from that financial institution of such an annuity for the former participant; and
(b) by paying any excess to the former participant.
Marginal note:Payment if former participant deceased
(2) If, after the option for the payment of the transfer value described in section 53 has been exercised but before that payment has been effected, the former participant dies, the following rules apply:
(a) the amount that may be transferred shall be paid accordingly and any excess shall be paid
(i) to the person who would have been entitled to an annual allowance as a survivor under Division 2 had the option for the payment of a transfer value not been exercised, or
(ii) to the former participant’s estate or succession if there is no person who would have been entitled to the annual allowance as a survivor; or
(b) if no amount may be transferred, all of the transfer value shall be paid in accordance with subparagraphs (a)(i) and (ii)
(3) If there are two persons who would have been entitled to an annual allowance under Division 2 as survivors had the transfer value option not been exercised, each of them shall be entitled to a portion determined in accordance with section 64 as if the reference to “death benefit” in that section were a reference to “excess” or “transfer value”, as the case may be.
- SOR/2016-64, s. 70
Marginal note:Calculation of interest
62 (1) Interest shall be calculated, in accordance with the rate determined under subsections (2) and (3), and converted to an effective annual rate, for the period beginning on the date of the option and ending on the last day of the month before the month in which the transfer value is paid or, if the former participant has not given the direction referred to in paragraph 61(1)(a), ending 90 days after the date of the option.
Marginal note:Rate of interest
(2) The rate of interest is equal to the rate of return that existed in respect of the second quarter before the date of the option and set out in the table entitled “Balanced” on the line “Mercer Median” in the column entitled “3 Months” in the Summary of Investment Performance Survey of Canadian Institutional Pooled Funds, published by Mercer Investment Consulting, as amended from time to time.
Marginal note:Zero interest
(3) If the rate of return is negative, the rate of interest is 0.0%.
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