Registered Plans Directorate technical manual

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• 11 8503(4) to 8503(26) – Additional Conditions
• 11.1 8503(4)(a) – Member Contributions
• 11.1.1 8503(4)(a)(i) – Contribution Limit
• 11.1.2 8503(4)(a)(ii) – Periods of Disability, Reduced Pay or Temporary Absence
• 11.1.3 8503(4)(a)(iii) – Past Service Contributions
• 11.2 8503(4)(b) – Pre-payment of Member Contributions
• 11.3 8503(4)(c) – Reduction in Benefits and Return of Contributions
• 11.4 8503(4)(d) – Undue Deferral of Payment
• 11.5 8503(4)(e) & (f) – Evidence of Disability
• 11.6 8503(5) – Waiver of Member Contribution Condition
• 11.7 8503(6) – Pre-retirement Death Benefits
• 11.8 8503(7) – Commutation of Lifetime Retirement Benefits
• 11.9 8503(7.1) – Bridging Benefits and Elections
• 11.10 8503(8) – Suspension or Cessation of Pension
• 11.11 8503(9) – Re-employed Member
• 11.12 8503(10) – Re-employed Member - Rules not Applicable
• 11.13 8503(11) – Re-employed Member - Anti-avoidance
• 11.14 8503(12) – Limits Dependent on Consumer Price Index
• 11.15 8503(13) – Statutory Plans – Special Rules
• 11.16 8503(14) – Artificially Reduced Pension Adjustment
• 11.17 8503(15) – Past Service Employer Contribution
• 11.18 8503(16) Definitions for the purpose of phased retirement benefits
• 11.19 8503(17) Bridging benefits payable on a stand-alone basis
• 11.20 8503(18) Rules of application
• 11.21 8503(19) Benefit accruals after pension commencement
• 11.22 8503(20) Redetermination of benefits
• 11.23 8503(21) Rules of application
• 11.24 8503(22) Anti-Avoidance
• 11.25 8503(23) Cross-plan rules
• 11.26 8503(24) and (25) Associated defined benefit provisions

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11 8503(4) to 8503(15) – Additional Conditions

11.1 8503(4)(a) – Member Contributions

11.1.1 8503(4)(a)(i) – Contribution Limit

Some plans have provided that members must continue to contribute even after they have ceased accruing a benefit. Usually this was after the 35th year of service. The contributions are used to fund increased benefits due to higher earnings in later years, and indexing. No pension credits are generated unless the indexing is in excess of CPI.

This will be permissible under subparagraph 8503(4)(a)(i) of the Regulations, only to the extent that it meets the 9% of remuneration and 70% of pension credit plus $1,000 requirements. Since there will be no pension credits in the year, the limit will be $1,000 or 9% of remuneration, if less.

Plan Text:

The member contribution rate cannot be higher than 9%. If it is higher than 9%, it is possible to request a waiver of this requirement under subsection 8503(5) of the Regulations.

A plan must state that the general contribution limit of paragraph 8503(4)(a) is reduced to the lesser limit of clause 8503(2)h)iii)B) (50% in lieu of 70%) where the members are entitled to a return up to two times contributions at termination and/or death.

We will require a clause in all contributory DB plans, even those that have a member contribution rate of less than 9%, that the member current service contributions will not exceed the limits set out in subparagraph 8503(4)(a)(i). A general reference to the prescribed ceiling under the Act would be acceptable as well. If the plan administrator is not willing to add this stipulation because it will not apply to all plan members, they may request a waiver under subsection 8503(5) of the Regulations.

SMEPs:

SMEPs are exempted from this rule by paragraph 8510(6)(c) of the Regulations.

Cross References:

Flexible Pension Plans – 147.1(5)

Waiver - Member Contribution Condition – 8503(5)

Lump Sum Payments on Termination – 8503(2)(h)

Lump Sum Payments on Death – 8503(2)(j)

11.1.2 8503(4)(a)(ii) – Periods of Disability, Reduced Pay or Temporary Absence

Plans may provide that employees will fund up to 100% of the cost of benefits accrued during periods of disability and during leaves that fall within the definitions of an eligible period of reduced pay or temporary absence. The prescribed compensation rules will limit the length of time that will qualify.

SMEPs:

SMEPs are exempted from the restrictions in this rule by paragraph 8510(6)(c).

Cross References:

Definition of “Eligible Period of Temporary Absence” – 8500(1)

Definition of “Eligible Period of Reduced Pay” – 8500(1)

Definition of “Disabled” – 8500(1)

Definition of “Period of Disability” – 8500(1)

Eligible Service – 8503(3)(a)(iii) & (iv)

Prescribed Compensation – 8507

11.1.3 8503(4)(a)(iii) – Past Service Contributions

Plans may give members the right to purchase past service benefits, as long as it is eligible service in accordance with paragraph 8503(3)(a). The limits on deductibility for years of service before 1990 will be restricted by paragraphs147.2(4)(b) and (c). Contributions in respect of post-1989 years are limited to the amount reasonably necessary to fund these post 1989 benefits. These contibutions may be further restricted by the PSPA rules or the prescribed compensation rules of section 8507 if the past service is a period of reduced services.

Example 1: In 2007 Jim decides to buy back 5 years of eligible post 1989 service. This would require the plan administrator to file a certified PSPA on Jim's behalf. However, Jim has no RRSP room in 2007 as he has always contributed the maximum to his RRSP. Jim does not want to touch his RRSP plan and therefore does not want to make either a qualified withdrawal or a qualified transfer. In this case the PSPA rules would prevent Jim from purchasing the service, and therefore the contribution limit would be nil. Therefore, if Jim were to make a contribution to the plan it would not be deductible and the plan would become revocable.[Footnote 1]

Example 2: Don decides to buy back 3 years of post-1989 service. The cost to fund the benefits is $45,000. The PSPA calculated by the plan administrator is $21,000 and Don presently has $24,000 of unused RRSP room. An agreement is made between Don and his employer to each fund 50% of the cost. In this case the PSPA would be able to be certified as Don has sufficient RRSP room. The contribution by Don would also be deductible as it does not exceed the amount reasonably necessary to fund these post 1989 benefits.[Footnote 1]

SMEPs:

SMEPs are exempted from the restrictions in this rule by paragraph 8510(6)(c).

11.2 8503(4)(b) – Pre-payment of Member Contributions

Member contributions are not permitted prior to the year in which they relate. It will not be necessary for plans to stipulate this.

Grandfathered Plans:

Plans that allowed members to pre-fund their benefits must be amended to disallow this with effect from January 1, 1992.

11.3 8503(4)(c) – Reduction in Benefits and Return of Contributions

DB plans, other than legislated plans, have to contain a stipulation that allows:

• the plan to be amended to reduce benefits; and
• a contribution to be refunded to the contributor, to avoid revocation of the plan.

The stipulation can be qualified to make the amendment or the refund subject to the approval of the authority administering the PBSA or PBA, as applicable.

Where a plan is experiencing a severe solvency deficiency, the employer(s) may choose to submit an amendment that retroactively reduces benefits already accrued by the members, rather than funding the deficiency. If this case arises, it should be referred to the Technical Services Section of the Policy & Communications Division.

Grandfathered Plans:

Grandfathered plans are exempt from having to contain this stipulation.

Cross Reference:

Stipulation Not Required for Pre-1992 Plans – 8509(10.1)

11.4 8503(4)(d) – Undue Deferral of Payment

One year from the date of the member's death is considered "as soon as practicable". If the payments are not made within the year, it should be questioned, and the reason for the delay should be determined to see if it was impracticable to pay it sooner.

Plan Text:

We will allow plans to be silent on this issue or to state the one-year limit or to use the wording of the Regulations.

Grandfathered Plans:

Grandfathered plans that contravene the requirement to pay lump sum death benefits as soon as practicable must be amended with effect from January 1, 1992.

Cross References:

Lump Sum Payments on Death Before Retirement – 8503(2)(i)

Refund of Member Contributions after Death – 8503(2)(j)

Commutation of Death Benefits – 8503(2)(n)

11.5 8503(4)(e) & (f) – Evidence of Disability

Evidence of total and permanent disability is required by the plan administrator before increased or additional lifetime retirement benefits (i.e. a disability pension) can be paid out. This is not a requirement that has to be detailed in the plan text. However, if mention of evidence of total and permanent disability is part of the terms of the plan, ensure that the requirements of paragraph 8503(4)(e) are not contravened.

Evidence of disability is required by the plan administrator if a period of disability is to be recognized as pensionable service. This is not a requirement that has to be detailed in the plan text. However, if the evidence of disability is part of the terms of the plan, ensure that the requirements of paragraph 8503(4)(f) are not contravened.

Cross References:

Early Retirement – 8503(3)(c)

Increased Benefits for Disabled Member – 8503(3)(d)

Period of Disability – 8503(3)(a)(iv)

Evidence of Totally & Permanently Disabled – 8503(4)(e)

Evidence of Disabled – 8503(4)(f)

Newsletter No. 94-2, Technical Questions and Answers

11.6 8503(5) – Waiver of Member Contribution Condition

Where it is clear from the plan text that paragraph 8503(4)(a) is not met (e.g. member required contributions are 10% of remuneration), or where we are advised that paragraph 8503(4)(a) will not be met for every member, the plan administrator may request a waiver under this subsection. A demonstration that, on a long-term basis, member contributions will not fund more than half of the benefit, must be submitted.

Cross Reference:

Member Contributions – 8503(4)(a)

11.7 8503(6) – Pre-retirement Death Benefits

Subsection 8503(6) of the Regulations allows members who were eligible to receive a pension to be treated as though they had already retired. As a result, the spouse or common-law partner or beneficiaries could receive an annuity based on a maximum of a 15 year guarantee basis, as would be permitted under paragraph 8503(2)(c) of the Regulations, if the member had already retired.

Plan Text:

This clause may only be applied when a member is eligible to have retirement benefits paid under the plan terms, but has not actually started to receive them. Plans may state that, in that event, they will be treated as having commenced their benefit for death benefit purposes.

11.8 8503(7) – Commutation of Lifetime Retirement Benefits

A plan can be designed to minimize or eliminate the amount that may have been required to be paid to a member in cash. In other words, the plan can allow partial commutation of benefits where the commuted value of all benefits would exceed the amount that can be transferred tax-free under subsection 147.3(4) of the Act, i.e. the prescribed amount of section 8517. This is because the prescribed amount is based on the amount of post-age 64 lifetime retirement benefits that are commuted. In accordance with subsection 8503(7), it is permissible for a plan to allow the commutation of all or a portion of a member's LRBs after a particular age, while allowing the remaining non-commuted benefits to be paid out of the plan in the normal manner or to be provided through the purchase of an annuity.

Example 1

The plan may provide for full commutation of a member's LRBs (pre-65 and post-64 LRBs), while allowing the bridge benefit to remain payable out of the plan. In this case, paragraph 8503(7)(a) waives the condition under subparagraph 8503(2)(b)(i) that would otherwise require payment of the bridging benefit not to commence unless LRBs have also commenced to be paid.

The only limits on non-commuted benefits are those already imposed by the plan's terms and required by the legislation. So, for example, at the time of partial commutation, assume total benefits had a value of $100,000 and the commuted benefits had a value of $80,000. There is no requirement for the value of the non-commuted benefits, when they are eventually paid out, to be capped by $20,000, i.e. the difference between $100,000 and $80,000.

Example 2

The commuted value of a member's LRBs is $350,000 and the commuted value of the bridge benefit is $50,000, for a possible aggregate lump sum payment $400,000. This is $24,000 in excess of the prescribed/transferable amount of $376,000, based on full commutation of the post-age 64 benefits. If the plan provides for it, the member can commute the LRBs in full and transfer the commuted value to an RRSP, leaving the bridge benefit to be paid out of the plan in the normal manner.

The plan could also provide for a partial commutation of LRBs, for example the post-age-64 portion, while allowing for payment of the pre-age-65 benefits out of the plan in the normal manner (or through the purchase of an annuity), i.e. periodic payments to age 65. Were it not for paragraph 8503(7)(b), the pre-age-65 LRBs would by definition be a bridge benefit and, therefore, subject to the limits imposed on bridge benefits. However, because of paragraph 8503(7)(b), the pre-age-65 LRBs retain their character as LRBs.

Example 3

The commuted value of LRBs and ancillary benefits is $400,000. This is $24,000 in excess of the prescribed/transferable amount of $376,000, based on full commutation of the post-age 64 benefits. The actuary determines the commuted value of the post-age-64 LRBs to be $310,000, the pre-age-65 LRBs to be $60,000, and the bridge benefit to be $30,000. If the plan provides for it, in addition to transferring to an RRSP the commuted value of the post-age-64 benefits, the member can commute other benefits having a value of up to $66,000 ($376,000 - $310,000) for purposes of a transfer to an RRSP. These other benefits having a value of up to $66,000 can consist of either all or a portion of the pre-age-65 LRBs, all or a portion of the bridging benefit, or a combination of these benefits. The benefits that the member elects not to commute can be paid out of the plan in the normal manner.

Even if no pre-age 65 benefits are commuted, the commuted value of the post-age 64 benefits might still exceed the prescribed amount. If this is the case, the excess must be paid out of the plan in cash. It cannot be "reconfigured" to provide a bridge or any other benefit.

Example 4

The commuted value of all benefits under a plan is $500,000. The prescribed amount, based on a full commutation of post-age 64 LRBs, is $360,000. The actuary determines the commuted value of the post-age 64 LRBs to be $400,000 and the pre-age 65 retirement benefits (including bridge benefits) to be $100,000. If the plan provides for it, the member can elect not to commute the pre-age 65 retirement benefits, but rather have these benefits paid out of the plan in the normal manner. If the post-age 64 lifetime retirement benefits are commuted, the member cannot transfer more than $360,000 to an RRSP. The excess amount of $40,000 ($400,000 - $360,000) must be paid out of the plan.

Note

Any decision not to commute the post-age 64 LRBs associated with the $40,000 excess will reduce the prescribed amount since the prescribed amount is based on post-age 64 benefits that are commuted.

Cross Reference:

Newsletter No. 94-2, Technical Questions and Answers

11.9 8503(7.1) – Bridging Benefits and Elections

Subsection 8503(7.1) of the Regulations applies when a member (or when a member dies their spouse or common-law partner or former spouse or common-law partner) elects to receive bridging benefits in lieu of benefits that would be payable to the member. The terms of the plan must permit this election.

Paragraph 8503(7.1)(a) allows a member to fully convert their lifetime retirement benefits into a bridging benefit, subject to the limits of paragraph 8503(2)(l). This is also permitted for the members' spouse or common-law partner or former spouse or common-law partner, to convert their survivor benefits into a bridge benefit, subject to the limits of 8503(2)(l.1) of the Regulations.

Paragraph 8503(7.1)(b) allows a member or their spouse or common-law partner to disregard the election in determining if the retirement benefits provided under paragraph 8503(2)(c), (d) and (k) are acceptable.

11.10 8503(8) – Suspension or Cessation of Pension

It is permissible for plans to state that pension benefits will be suspended for a certain period of time after which they will recommence at their previous level with no increases. This would usually occur where a member is re-employed after a period of retirement, in order not to contravene the rule in paragraph 8503(3)(b) that pension benefits may not accrue after the day on which retirement benefits commence to be paid.

It is also permissible for plans to provide that a member's disability pension will cease (normally where the member has recovered from the disability).

Cross Reference:

Benefit Accruals After Pension Commencement – 8503(3)(b)

11.11 8503(9) – Re-employed Member

If a member is re-employed after commencing to receive retirement benefits, the plan may provide for the suspension of the member's pension. When the member retires for the second time, the pension can be redetermined to include:

• additional benefits for the period of re-employment.
• a recalculation of the early retirement reduction factor.
• an adjustment to account for any benefits foregone after age 65.
• additional benefits for the period of disability, if the member was totally and permanently disabled at the initial retirement.
• an adjustment to take into account the member's remuneration during the re-employment period. This is only permitted when the member's subsequent pension does not reflect cost-of-living adjustments for the period of re-employment.

Plan Text:

Plans that provide for any of these increases on re-employment must state that the pension will be suspended during any periods of employment with a participating employer.

Conflict with British Columbia legislation

Section 22.1 of the Pension Benefits Standards Regulation of British Columbia (PBSR) permitted multi-employer plans to suspend and re-determine benefits on re-employment with a non-participating employer within the same trade. This conflicted with subsection 8503(9) of the Act, which permits the suspension and re-determination of benefits on re-employment with a participating employer.

The Pension Benefits Standards Regulation of British Columbia has advised us that section 22.1 of the PBSR came into effect December 17, 1999, and was repealed effective September 11, 2001. They have contacted plan administrators within the jurisdiction of British Columbia, and have confirmed that no members had their pension suspended under section 22.1 of the PBSR.

Cross Reference:

Benefit Accruals After Pension Commencement – 8503(3)(b)

Suspension or Cessation of Pension – 8503(8)

Re-employed Member, Special Rules Not Applicable – 8503(10)

11.12 8503(10) – Re-employed Member - Rules not Applicable

If a plan allows for:

• accruals during periods of re-employment;
• re-determination of the pension based on lower early retirement reduction factors; or
• actuarial increases where the member is over 65 when the pension recommences.

It must stipulate that the increases as a result of the re-employment will not be provided if the member has received pension payments while an employee of a participating employer.

It would be acceptable for a plan to state simply that pension payments will be suspended if the member is in employment with a participating employer.

11.13 8503(11) – Re-employed Member - Anti-avoidance

Subsection 8503(11) is an anti-avoidance rule for the purpose of preventing a member of being re-employed for a short-period of time in order to be able to redetermine the member's pension. We will not require any specific wording in plan texts on this issue.

11.14 8503(12) – Limits Dependent on Consumer Price Index

We will accept CPI-based indexation that is not calculated exactly as stated in 8503(2)(b)(ii), 8503(2)(e)(vi) and 8503(3)(d)(ii) as long as the results are substantially the same over the long term.

11.15 8503(13) – Statutory Plans – Special Rules

Paragraph 8503(13)(a) provides that benefit accruals after retirement can be made in the case of a pension plan that is established under the Public Service Superannuation Act and retirement benefits are being paid out of the Canadian Forces Superannuation Act or the Royal Canadian Mounted Police Superannuation Act.

Paragraph 8503(13)(b) allows for the early retirement reduction factor to not be considered in determining the lifetime retirement benefit of a member under a pension plan of the Canadian Forces Superannuation Act, subject to the plan terms.

11.16 8503(14) – Artificially Reduced Pension Adjustment

The artificial reduction of a member's PA is the deliberate manipulation of pensionable earnings such that a member's PA does not adequately reflect the lifetime retirement benefits that are eventually payable. When this occurs, the member whose PAs were artificially reduced is deemed to be a connected person for the purposes of the maximum pension rule of subsection 8504(1) of the Regulations.

Example 1

If bonus pay is excluded from pensionable earnings, arranging for bonuses to be a large share of total remuneration for a number of years and then replacing bonuses by regular pensionable earnings for a sufficient period to achieve a high pension level under a final or best average DB provision would result in PAs during the years that do not properly reflect the true level of benefits earned under the DB provision. As a result of the low PAs, the plan member would be able to make RRSP contributions that are excessive in light of the benefits actually provided under the plan.

Example 2

LRBs are determined by the formula: 1.5% x final average earnings x years of service. For a number of years, earnings are defined as T4 earnings. With the knowledge that basic salary will not increase (or may even decrease), the definition of earnings is amended to exclude bonuses, which have been and are expected to continue to be substantial. Also, the LRB formula is amended to read: 1.5% x best average earnings x years of service. This too may be a case of artificially reduced PAs.

Cross References:

Appropriate PAs – 8502(l)

Increase in Accrued Benefits – 8503(3)(h)

Increase in Accrued Benefits – Part-Time Members – 8503(3)(i)

Conditions Applicable to Amendments – 8511(1)(a)

11.17 8503(15) – Past Service Employer Contribution

Employer contributions made to the provision in those circumstances are, in substance, employee contributions. Such an arrangement could avoid the limits on past service employee contributions in subsection 147.2(4) of the Act.

Where such a contribution is made, a registered pension plan becomes revocable and a deemed plan will fail to meet the condition for registration stated in paragraph 8501(1)(e). There is an exemption to this rule in subsection 8505(8) of the Regulations, for downsizing.

11.18 8503(16) Definitions for the purpose of phased retirement benefits

These definitions apply to benefits that are provided or payable after 2007.

“specified eligibility day”

This definition applies for the purposes of bridging benefits provided under subsection 8503(17).

A member's specified eligibility day under a defined benefit provision of a pension plan is generally the day the member turns 60 years of age. However, if a member is entitled to an unreduced pension before age 60, a member's specified eligibility day is the later of the day the member turns 55 years of age and the earliest day on which the member may commence to receive their lifetime retirement benefits under the provision without the plan imposing a reduction on account of early retirement.

“qualifying period”

This definition applies for the purposes of addition benefits provided under subsection 8503(19).

In general terms, a qualifying period of a member under a defined benefit provision of a pension plan is a period of post-pension commencement employment following the member's “specified eligibility day”.

[Footnote 2]

11.19 8503(17) Bridging benefits payable on a stand-alone basis

Subject to meeting certain conditions, stand-alone bridging benefits may be paid under a defined benefit provision of a plan. This is an exception to subparagraph 8503(2)(b)(i), which requires that bridging benefits commence only after lifetime retirement benefits have commenced.

The conditions that apply are as follows:

• The bridging benefits do not commence to be paid before the member's specified eligibility date under the provision;
• The bridging benefits are payable only for calendar months in which the member is employed by a participating employer. Once employment ceases, bridging benefits may continue only on or after the date that the member's lifetime retirement benefits under the provision commence to be paid;
• The member was not at any time connected with a participating employer; and
• The plan is not a designated plan.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.20 8503(18) Rules of application

For the purpose of certain provisions that depend upon whether or not retirement benefits have commenced under the provision, the payment of stand-alone bridging benefits is to be disregarded.

Paragraph (a) is relevant where the member has commenced to receive stand-alone bridging benefits and dies before the commencement of lifetime retirement benefits under the provision. For example, this permits the guarantee period for survivor benefits to be determined without regard to the time that stand-alone bridging benefits were paid.

Similarly, paragraph (b) disregards stand-alone bridging benefits when determining benefits in Part LXXXIII (Section 8300 – pension adjustments, past service pension adjustments, pension adjustment reversals), paragraph 8503(2)(m) (commutation of benefits), and subsection 8517(4) (maximum transfer limit). This will ensure, for example, that the PSPA relief provided under paragraphs 8303(5)(f) to (f.2) for benefit increases arising from the increase in a plan's maximum pension limit will be available for members who are receiving stand-alone bridging benefits.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.21 8503(19) Benefit accruals after pension commencement

Subject to meeting certain conditions, additional benefits may be provided under a defined benefit provision of a plan while the member continues to receive a partial pension. This is an exception to paragraph 8503(3)(b), which prohibits the continued accrual of benefits under the defined benefit provision of a plan once a member's pension commences to be paid.

The conditions that apply are as follows:

• The additional benefits accrue only in respect of a “qualifying period” of the member;
• The amount of retirement benefits payable to the member for each month in the “qualifying period” does not exceed 60 per cent of the monthly amount of retirement benefits accrued to the member to the beginning of the month (determined without any early retirement reduction);
• The additional benefits accrue on a current service basis, unless the benefits would be exempt from certification under subsection 8306(1), if qualifying transfers were disregarded;
• The member was not at any time connected with a participating employer; and
• The plan is not a designated plan.

The 60 per cent limit does not apply to any month after which benefits cease to accrue to the member because of plan terms that restrict benefit accruals based on pensionable service (such as a 35-year cap), attainment of a certain age (such as age 71), or a combination of age and service.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.22 8503(20) Redetermination of benefits

Subject to the anti-avoidance rule in subsection (22), where the member's benefits are redetermined to include the additional accrual during the qualifying period, the bridging benefit limits in paragraph 8503(2)(b) and the maximum pension limits in section 8504 apply as if the member's benefits had commenced to be paid at the time of the re-determination. This would allow, for example, a recalculation of any bridging benefit reduction to take into account the member's age and service at the date of redetermination or a recalculation of the maximum pension limit to take into account the current defined benefit limit.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.23 8503(21) Rules of application

For the purpose of certain provisions that depend upon whether or not retirement benefits have commenced under the provision, the payment of the partial pension during a qualifying period is to be disregarded.

Paragraph (a) is relevant where the member dies during the qualifying period. It allows the plan to provide for benefits payable on the death of the member to be determined as if the partial pension had not been paid. For example, this permits the guarantee period for survivor benefits to be determined without regard to the time that the partial pension was paid.

Similarly, paragraph (b) disregards the payment of a partial pension when determining benefits in Part LXXXIII (Section 8300 – pension adjustments, past service pension adjustments, pension adjustment reversals), paragraph 8503(2)(m) (commutation of benefits), and subsection 8517(4) (maximum transfer limit). This will ensure, for example, that the PSPA relief provided under paragraphs 8303(5)(f) to (f.2) for benefit increases arising from the increase in a plan's maximum pension limit will be available for members who are receiving a partial pension. Paragraph (b) applies only during the qualifying period.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.24 8503(22) Anti-Avoidance

This is an anti-avoidance rule that denies the application of subsections 8503(20) and (21) where it can be shown that one of the main reasons for providing additional benefits was to enable the member to benefit from the special rules in those two subsections. This is intended, for example, to prevent the provision of nominal benefits to a member after pension commencement so that the amount of the member's accrued pension can be redetermined to reflect the current defined benefit limit or so that the guarantee period on the member's benefits can be extended.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.25 8503(23) Cross-plan rules

New subsection 8503(23) of the Regulations contains three rules that apply where an individual is entitled to benefits under two or more associated defined benefit provisions. The rules are relevant in determining whether certain conditions in subsection 8503(17) (stand-alone bridging benefits) and subsection 8503(19) (benefit accruals after pension commencement) are met in respect of benefits provided under a particular associated provision. In general terms, the rules treat the associated provisions as being a single provision. New subsection 8503(24) defines associated provisions for this purpose.

Paragraph 8503(23)(a) is relevant in determining whether the benefits payable to a member under a particular defined benefit provision comply with the 60 per cent limit in paragraph 8503(19)(b). It provides that all benefits payable to the member under associated defined benefit provisions are to be assumed to be payable under the particular provision.

Paragraph 8503(23)(b) provides that if a member under a particular defined benefit provision had previously commenced to receive their retirement benefits under an associated provision on or after the member's “specified eligibility day” under the associated provision, the member's “specified eligibility day” under the particular provision is assumed to be that earlier day.

The following example illustrates the application of paragraphs 8503(23)(a) and (b).

Example

Paragraph 8503(23)(c) provides that if one or more of the associated provisions is contained in a designated plan, it is assumed that all of the associated provisions are in designated plans.

This subsection applies to benefits that are provided or payable after 2007.

[Footnote 2]

11.26 8503(24) and (25) Associated defined benefit provisions

New subsection 8503(24) of the Regulations specifies when one defined benefit provision is considered to be associated with another defined benefit provision for the purpose of subsection (23).

Defined benefit provisions that are in the same pension plan are always associated. Defined benefit provisions in separate plans are associated if an employer who participates in one plan also participates, or does not deal at arm's length with an employer who participates, in the other plan.

Where a defined benefit provision (“Provision A”) is associated with another defined benefit provision (“Provision B”) under the normal rules in subsection 8503(24) but it is unreasonable to expect the benefits under Provision B to be coordinated with the benefits under Provision A, new subsection 8503(25) provides that the Minister of National Revenue may agree that Provisions A and B are not associated.

These subsections apply to benefits that are provided or payable after 2007.

[Footnote 2]

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Footnotes

[Footnote 1]
Addition made on April 27, 2007.

[Footnote 2]
Addition made on June 20, 2008.