Pension Benefits Standards Regulations, 1985 (SOR/87-19)

Portability of Pension Benefit Credits

• 18 (1) Subject to subsection (2), a pension benefit credit shall be determined in accordance with the Recommendations for the Computation of Transfer Values from Registered Pension Plans effective September 1, 1993 issued by the Canadian Institute of Actuaries, as amended from time to time.

• (2) In the case of a defined contribution plan, where the contributions under the plan are allocated to an individual plan member, the pension benefit credit of a plan member or the survivor of a plan member shall be the value of the accumulated contributions made under the plan by or in respect of the plan member since the plan member became a plan member.

• (3) A plan member or the survivor of a plan member who wishes to transfer the pension benefit credit of the plan member or the survivor shall notify the administrator thereof in the form set out in Form 3 of Schedule II.

• (3.1) The consent referred to in subsection 26(2.1) of the Act shall be in Form 3.1 of Schedule II.

• (4) A pension benefit credit shall be determined

  • (a) where a plan member retires or dies or the whole or part of the plan is terminated, as of the date of the retirement, death or termination;

  • (b) where a plan member ceases to be a plan member, as of the date that the plan member ceases to be a plan member; and

  • (c) where a plan member makes an assignment under subsection 25(4) of the Act, on the effective date of the assignment.

• 19 (1) Where a plan has a solvency ratio that is less than one, any amount transferred out of the pension fund shall be considered to impair the solvency of the pension fund.

• (2) Where a plan has a solvency ratio that is equal to one, any amount transferred out of the pension fund that would result in the plan having a solvency ratio of less than one shall be considered to impair the solvency of the pension fund.

19.1 For the purposes of sections 16.4 and 26 of the Act, a life income fund, a restricted life income fund and a locked-in registered retirement savings plan are retirement savings plans into which a pension benefit credit may be transferred.

• 20 (1) A locked-in registered retirement savings plan shall provide that

  • (a) the funds may only be

    • (i) transferred to another locked-in registered retirement savings plan,

    • (ii) transferred to a plan, including any pension plan referred to in subsection 26(5) of the Act, if the plan permits such a transfer and if the plan administers the benefit attributed to the transferred funds as if the benefit were that of a plan member with two years of membership in the plan,

    • (iii) used to purchase an immediate life annuity or a deferred life annuity, or

    • (iv) transferred to a life income fund or to a restricted life income fund;

  • (b) on the death of the holder of the locked-in registered retirement savings plan, the funds shall be paid to the survivor of the holder by

    • (i) transferring the funds to another locked-in registered retirement savings plan,

    • (ii) transferring the funds to a plan, including any pension plan referred to in subsection 26(5) of the Act, if the plan permits such a transfer and if the plan administers the benefit attributed to the transferred funds as if the benefit were that of a plan member with two years membership in the plan,

    • (iii) using the funds to purchase an immediate life annuity or a deferred life annuity, or

    • (iv) transferring the funds to a life income fund or to a restricted life income fund;

  • (c) except as provided in subsection 25(4) of the Act, the funds shall not be assigned, charged, anticipated or given as security and any transaction purporting to assign, charge, anticipate or give the funds as security is void;

  • (d) the holder of the locked-in registered retirement savings plan may withdraw an amount from that plan up to the lesser of the amount determined by the formula set out in subsection (1.1) and 50% of the Year’s Maximum Pensionable Earnings minus any amount withdrawn in the calendar year under this paragraph — from any locked-in registered retirement savings plan — or under paragraph 20.1(1)(m), 20.2(1)(e) or 20.3(1)(m)

    • (i) if the holder certifies that the holder has not made a withdrawal in the calendar year under this paragraph — from any locked-in registered retirement savings plan — or under paragraph 20.1(1)(m), 20.2(1)(e) or 20.3(1)(m) other than within the last 30 days before this certification,

    • (ii) if, in the event that the value of M in subsection (1.1) is greater than zero,

      • (A) the holder certifies that the holder expects to make expenditures on medical or disability-related treatment or adaptive technology for the calendar year in excess of 20% of the holder’s total expected income for that calendar year determined in accordance with the Income Tax Act, excluding withdrawals in the calendar year under this paragraph — from any locked-in registered retirement savings plan — or under paragraph 20.1(1)(m), 20.2(1)(e) or 20.3(1)(m), and

      • (B) a physician certifies that such medical or disability-related treatment or adaptive technology is required, and

    • (iii) if the holder gives a copy of Form 1 and Form 2 of Schedule V to the financial institution with whom the contract or arrangement for the locked-in registered retirement savings plan was entered into;

  • (e) the holder of the locked-in registered retirement savings plan who has ceased to be a resident of Canada for at least two years may withdraw any amount from that plan; and

  • (f) in the calendar year in which the holder of the locked-in registered retirement savings plan reaches 55 years of age or in any subsequent calendar year, the funds may be paid to the holder in a lump sum if

    • (i) the holder certifies that the total value of all assets in all locked-in registered retirement savings plans, life income funds, restricted locked-in savings plans and restricted life income funds that were created as a result of a transfer of pension benefit credits under section 16.4 or 26 of the Act, a transfer under these Regulations or a transfer under section 50, 53 or 54 of the Pooled Registered Pension Plans Act or Pooled Registered Pension Plans Regulations, is less than or equal to 50% of the Year’s Maximum Pensionable Earnings, and

    • (ii) the holder gives a copy of Form 2 and Form 3 of Schedule V to the financial institution with whom the contract or arrangement for the locked-in registered retirement savings plan was entered into.

• (1.1) The amount referred to in paragraph (1)(d), 20.1(1)(m), 20.2(1)(e) or 20.3(1)(m) is determined by the following formula:

  M + N

  where

  M

  is the total amount of the expenditures that the holder expects to make on medical or disability-related treatment or adaptive technology for the calendar year, and

  N

  is the greater of zero and the amount determined by the formula

  P - Q

  where

  P

  is 50% of the Year’s Maximum Pensionable Earnings, and

  Q

  is two thirds of the holder’s total expected income for the calendar year determined in accordance with the Income Tax Act, excluding withdrawals in the calendar year under paragraph (1)(d), 20.1(1)(m), 20.2(1)(e) or 20.3(1)(m).

• (2) Where a pension benefit credit transferred into a locked-in registered retirement savings plan was not varied according to the sex of the plan member, an immediate life annuity or a deferred life annuity purchased by the funds accumulated in the locked-in registered retirement savings plan shall not differentiate as to sex.

• (3) A locked-in registered retirement savings plan shall contain a statement as to whether or not the pension benefit credit transferred pursuant to section 26 of the Act was varied according to the sex of the plan member.

• (4) A locked-in registered retirement savings plan shall provide that, where a physician certifies that owing to mental or physical disability the life expectancy of the holder of the plan is likely to be shortened considerably, the funds may be paid to the holder in a lump sum.

• (5) The contract or arrangement establishing a locked-in registered retirement savings plan shall set out the method of determining the value of the plan, including the valuation method used to establish its value on the death of the holder of the plan or on the transfer of assets from the plan.

• 20.1 (1) The contract or arrangement establishing a life income fund shall

  • (a) set out the method of determining the value of the life income fund, including the valuation method used to establish its value on the death of the holder of the life income fund or on the transfer of assets from the life income fund;

  • (b) provide that the holder of the life income fund shall, at the beginning of each calendar year or at any other time agreed on by the financial institution with whom the contract or arrangement was entered into, decide the amount to be paid out of the life income fund in that year;

  • (c) provide that in the event that the holder of the life income fund does not decide the amount to be paid out of the life income fund in a calendar year, the minimum amount determined in accordance with the Income Tax Act shall be paid out of the life income fund in that year;

  • (d) provide that, for any calendar year before the calendar year in which the holder of the life income fund reaches 90 years of age, the amount of income paid out of the life income fund shall not exceed the amount determined by the formula

    C/F

    where

    C

    is the balance in the life income fund

    • (i) at the beginning of the calendar year, or

    • (ii) if the amount determined in subparagraph (i) is zero, at the date when the initial amount was transferred into the life income fund, and

    F

    is the value, as at the beginning of the calendar year, of a pension benefit of which the annual payment is $1, payable on January 1 of each year between the beginning of that calendar year and December 31 of the year in which the holder reaches 90 years of age, established using an interest rate that

    • (i) for the first 15 years after January 1 of the year in which the life income fund is valued, is less than or equal to the monthly average yield on Government of Canada marketable bonds of maturity over 10 years, as published by the Bank of Canada, for the month of November before the beginning of the calendar year, and

    • (ii) for any subsequent year, is not more than 6%;

  • (d.1) provide that, for the calendar year in which the holder of the life income fund reaches 90 years of age and for all subsequent calendar years, the amount of income paid out of the life income fund shall not exceed the value of the funds held in the fund immediately before the time of the payment;

  • (e) provide that, for the calendar year in which the contract or arrangement was entered into, the amount determined under paragraph (d) or (d.1), as the case may be, shall be multiplied by the number of months remaining in that year and then divided by 12, with any part of an incomplete month counting as one month;

  • (f) provide that if, at the time the life income fund was established, part of the life income fund was composed of funds that had been held in another life income fund of the holder earlier in the calendar year in which the fund was established, the amount determined under paragraph (d) or (d.1), as the case may be, is deemed to be zero in respect of that part of the life income fund for that calendar year;

  • (g) provide that the funds in the life income fund may only be

    • (i) transferred to another life income fund or to a restricted life income fund,

    • (ii) transferred to a locked-in registered retirement savings plan, or

    • (iii) used to purchase an immediate life annuity or a deferred life annuity;

  • (h) [Repealed, SOR/2006-208, s. 1]

  • (i) provide that, on the death of the holder of the life income fund, the funds in the life income fund shall be paid to the survivor of the holder by

    • (i) transferring the funds to another life income fund or to a restricted life income fund,

    • (ii) using the funds to purchase an immediate life annuity or a deferred life annuity, or

    • (iii) transferring the funds to a locked-in registered retirement savings plan;

  • (j) provide that, subject to subsection 25(4) of the Act, the funds in the life income fund shall not be assigned, charged, anticipated or given as security and that any transaction purporting to assign, charge, anticipate or give the funds as security is void;

  • (k) state whether or not any pension benefit credit transferred pursuant to section 26 of the Act was varied according to the sex of the plan member;

  • (l) provide that, in the calendar year in which the holder of the life income fund reaches 55 years of age or in any subsequent calendar year, the funds may be paid to the holder in a lump sum if

    • (i) the holder certifies that the total value of all assets in all locked-in registered retirement savings plans, life income funds, restricted locked-in savings plans and restricted life income funds that were created as a result of a transfer of pension benefit credits under section 16.4 or 26 of the Act, a transfer under these Regulations or a transfer under section 50, 53 or 54 of the Pooled Registered Pension Plans Act or Pooled Registered Pension Plans Regulations, is less than or equal to 50% of the Year’s Maximum Pensionable Earnings, and

    • (ii) if the holder gives a copy of Form 2 and Form 3 of Schedule V to the financial institution with whom the contract or arrangement for the life income fund was entered into;

  • (m) provide that the holder of the life income fund may withdraw an amount from that fund up to the lesser of the amount determined by the formula set out in subsection 20(1.1) and 50% of the Year’s Maximum Pensionable Earnings minus any amount withdrawn in the calendar year under this paragraph — from any life income fund — or under paragraph 20(1)(d), 20.2(1)(e) or 20.3(1)(m)

    • (i) if the holder certifies that the holder has not made a withdrawal in the calendar year under this paragraph — from any life income fund — or under paragraph 20(1)(d), 20.2(1)(e) or 20.3(1)(m) other than within the last 30 days before this certification,

    • (ii) if, in the event that the value of M in subsection 20(1.1) is greater than zero,

      • (A) the holder certifies that the holder expects to make expenditures on medical or disability-related treatment or adaptive technology for the calendar year in excess of 20% of the holder’s total expected income for that calendar year determined in accordance with the Income Tax Act, excluding withdrawals in the calendar year under this paragraph — from any life income fund — or under paragraph 20(1)(d), 20.2(1)(e) or 20.3(1)(m), and

      • (B) a physician certifies that such medical or disability-related treatment or adaptive technology is required, and

    • (iii) if the holder gives a copy of Form 1 and Form 2 of Schedule V to the financial institution with whom the contract or arrangement for the life income fund was entered into; and

  • (n) provide that the holder of the life income fund who has ceased to be a resident of Canada for at least two years may withdraw any amount from that fund.

• (2) Where a pension benefit credit transferred to a life income fund was not varied according to the sex of the plan member, an immediate life annuity or a deferred life annuity purchased with the funds accumulated in the life income fund shall not differentiate as to sex.

• (3) A life income fund shall provide that, where a physician certifies that, owing to mental or physical disability, the life expectancy of the holder of the life income fund is likely to be shortened considerably, the funds in the life income fund may be paid to the holder in a lump sum.