Registered Plans Directorate technical manual

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• 6 8303, 8308, 8401, 8402 & 8409 – Pension Adjustments, Reporting & Annual Information Returns
• 6.1 8303(6) – Qualifying Transfers
• 6.2 8303(7) – Deemed Payment
• 6.3 8303(10) – Benefits in Respect of Foreign Service
• 6.4 8308(7) – Loaned Employees
• 6.5 8401 – Pension Adjustment Reporting
• 6.6 8402 – Past Service Pension Adjustment Reporting
• 6.7 8409 – Annual Information Returns
• 6.8 8409(3) – Notification of Final Distribution of Plan Assets

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6 8303, 8308, 8401, 8402 & 8409 – Pension Adjustments, Reporting & Annual Information Returns

6.1 8303(6) – Qualifying Transfers

When a money purchase provision is replaced by/or converted to a defined benefit provision, subsection 8303(6) of the Regulations does not consider the money being transferred to the defined benefit provision as a qualifying transfer. Neither does the combination of paragraph 8502(k) of the Regulations and 147.3(2) of the Act allow the transferred money to be used for anything but funding and the payout of the defined benefit benefits.

Cross Reference:

Minister’s Powers – 8310(2)

6.2 8303(7) – Deemed Payment

On receipt of PSPA certification by the plan administrator, a qualifying transfer must occur within 90 days. However, if a request for PSPA certification is made simultaneous with/shortly after application is made for registration of the plan; a qualifying transfer must occur within 90 days after the later of receipt of PSPA certification and receipt of the letter of registration.

While transfers to deemed registered plans from RRSPs and DPSPs are permitted, the transfer is risky in that there is no mechanism to return the funds to a tax-sheltered vehicle if the final determination results in the recipient plan not being registered.

Cross Reference:

Deemed Registration – 147.1(3)

6.3 8303(10) – Benefits in Respect of Foreign Service

Subsection 8303(10) of the Regulations allows us to exclude past service benefits provided for a period of foreign service from PSPAs. The exclusion must be in writing and applies only to post-89 service (no PSPAs prior to 1990).

We will determine whether to exclude past service benefits from PSPA on a case-by-case basis. The following guidelines will be used in the determination:

• We will not approve the exclusion if the remuneration is included in "earned income" for RRSP purposes
• We will generally approve the exclusion if the remuneration is not included in earned income and the benefits are not designed to take advantage of the exemption, for example, higher benefits for periods of foreign service

The determination will be done for each individual requesting the exclusion.

6.4 8308(7) – Loaned Employees

Subsection 8308(7) of the Regulations contains special rules that allow benefits to accrue under the RPP of a lending employer to an employee who is on loan to a borrowing employer that does not participate in the plan. The borrowing employer is treated as a participating employer and the benefit accrual is based on remuneration with the borrowing employer.

A plan text may indicate that members can accrue service with an employer who does not contribute to the plan (an associated or affiliated company, for example). The intentions under the plan should be to loan the employee to the non-participating employer in order to render services to that non-participating employer.

Subsection 8507(5) permits a special calculation of the additional compensation fraction to ensure that the “5-year” limit on prescribed compensation is not used up by a period of loan under certain circumstances. Possible scenarios include:

• If the employer and the prescribed employer deal with each other at arm’s length, and such has been certified, in writing, by the plan administrator, the “5-year” limit on prescribed compensation is not used up by the period of loan;
• If the employer and prescribed employer are related, the period of loan would use up the member’s 5-year allotment of prescribed compensation.

Plan Text:

To comply with subsection 8308(7) of the Regulation a plan text must state that accruals under the plan include service with a corporation that is a prescribed employer pursuant to subsection 8308(7). We will also require a certified copy of the arrangement to lend employees submitted pursuant to Section 8512 of the Regulation.

Cross References:

Participating Employer – 147.1(1)

Eligible Service – 8503(3)(a)(i)

Additional Compensation Fraction – 8507(5)

6.5 8401 – Pension Adjustment Reporting

An employer or an administrator does not have to report an amended PA when the difference between the previously reported PA and the amended PA is less than $50, unless an employee wants his or her PA to be accurately reported or if the Agency asks that the amended PA be reported.

6.6 8402 – Past Service Pension Adjustment Reporting

An administrator does not have to report an amended PSPA when the difference between the previously reported PSPA and the amended PSPA is less than $50. Also, the administrator does not have to report an original PSPA if it is less than $50. However, this less-than-$50 tolerance is cumulative so it applies to the total of:

• The difference between a previously-reported PSPA and an amended PSPA; and
• PSPA(s) calculated since the last reported PSPA.

Once the tolerance is exceeded, a cumulative PSPA that captures the previously unreported amounts has to be reported. If the tolerance is exceeded because of a past service event, the cumulative PSPA is reported on a form T1004, Applying for the Certification of a Provisional PSPA , unless the conditions for exemption from PSPA certification are met. If these conditions are met, the cumulative PSPA is reported on a form T215, Past Service Pension Adjustment (PSPA) Exempt from Certification. If the tolerance is exceeded because a previously reported PSPA needs amending, the cumulative PSPA is reported the same way the PSPA was originally reported, using a form T215 or a T1004. This administrative tolerance for less-than-$50 amounts does not apply if an employee wants accurate reporting of his or her PSPA, or if the Agency wants the PSPA to be accurately reported.

6.7 8409 – Annual Information Returns

The plan administrator will have to file either:

• A joint annual information return by the date prescribed under the pension benefits legislation of a participating provincial pension supervisory authority; or
• For a non-participating province a form T244, Registered Pension Plan Annual Information Return, within 180 days of the plan's year-end.

Example

A plan's year-end can differ from the calendar year, or the taxation year of the plan sponsor. For example, the plan year-end can be March 30 of each year and the plan sponsor's taxation year can be September 30 of each year. In this example, the plan administrator would have to file either a joint return or form T244 after March 30 of each year and either:

• Within the time prescribed (joint return) under the pension benefits legislation of a participating provincial pension supervisory authority; or
• Within 180 days (Form T244) of March 30.

The following pension supervisory authorities are participating in the harmonized filing of joint returns:

• Pension Commission of Ontario;
• Superintendent of Pensions, Province of Nova Scotia;
• Superintendent of Pensions, Province of New Brunswick;
• Superintendent of Pensions, Province of Manitoba
• Superintendent of Pensions, Province of Ontario;
• Superintendent of Pensions, Province of British Columbia;
• Régie des rentes du Québec, Province of Quebec;
• Superintendent of Pensions, Province of Alberta
• Superintendent of Pensions, Province of Newfoundland
• Superintendent of Pensions, Province of Saskatchewan

Cross References:

Newsletter No. 03-1, Joint Annual Information Return – New Participating Pension Supervisory Authority

Newsletter No. 01-2, Joint Annual Information Return – New Participating Pension Supervisory Authority

Newsletter No. 96-2, Waiving the Requirement to File a Registered Pension Plan Annual Information Return for an Inactive Plan

Newsletter No. 95-4, New Filing Requirement for the Registered Pension Plan Annual Information Return

6.8 8409(3) – Notification of Final Distribution of Plan Assets

The plan administrator will have to notify the Agency within 60 days of the day the last of the plan's property/assets are paid or transferred out of an RPP. The notification can be in writing or by filing form T244, Registered Pension Plan Annual Information Return. Upon receipt of this written notification or a final form T244 we will terminate the plan's registration.

Inactive Plan

Under subsection 220(2.1) of the Act, we are waiving the requirement to file a form T244 for each plan year after the plan year an RPP became inactive. This waiver will harmonize our annual information filing requirements with those of both participating and non-participating provincial and federal pension supervisory authorities. Provincial and federal pension supervisory authorities usually do not require annual information returns to be filed for plan years after the plan year a plan became inactive.

A plan is inactive when the plan sponsor terminates the plan and does not pay or transfer out all of the plan's property or assets. A plan terminates when:

• The plan sponsor terminates it;
• There are no further current service contributions made to the plan; and
• There are no further benefit accruals.

An inactive plan can still receive past service contributions to fund any unfunded liability before we terminate the plan's registration.

Should a participating pension supervisory authority ask a plan administrator to file a joint return for an inactive plan, the plan administrator will also have to complete the Agency’s portion of the joint return and file the return with the particular participating pension supervisory authority.

Cross References:

Failure to Comply – 162(7)

Waiver of Filing Documents – 220(2.1)

Extension for Returns – 220(3)

Waiver of Penalty or Interest – 220(3.1)

Definition of “Taxation Year” – 249(1)

Newsletter No. 95-4, New Filing Requirement for the Registered Pension Plan Annual Information Return

Newsletter No. 96-2, Waiving the Requirement to File a Registered Pension Plan Annual Information Return for an Inactive Plan