2013 YMPE Announced

The Canada Revenue Agency (CRA) recently announced the 2013 limit for yearly maximum pensionable earnings (YMPE).

  • For 2013 the YMPE has been set at $51,100 up from $50,100 in 2012.
  • RRSP Maximum limits were also increased for 2013 to $23,820 compared to the 2012 limit of $22,970.
  • The basic exemption amount  will remain the same as the 2012 limit for 2013 ($3,500).

 

For more rates  check out our rates section

 

 

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Canadian Government Pre-Publishes Second and Final Tranche of PRPP REGULATIONS

The Canadian Government has pre-pubslished, for public comment the second and final tranche of regulatory proposals to address provisions of the Pooled Registered Pension Plans Act (Bill C-25).  Minister of State (Finance), Ted Menzies was quoted as saying that “As soon as this last package of regulations is finalized, the federal Pooled Registered Pension Plans Act (PRPP Act) and regulations will be brought into force,”

The proposed regulations will address provisions of the PRPP Act respecting:

  • General requirements with respect to providing information;
  • The circumstances in which a member may withdraw funds from their PRPP account;
  • The circumstances in which a member may receive variable payments from the funds in their account;
  • The transfer options available to members and the conditions on the vehicles to which a member’s funds may be transferred;
  • The use of electronic means to satisfy requirements under the Act for communications with plan members; and
  • Other technical rules related to the implementation of the framework

A detailed review of the changes can be found here

 

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Alberta Temporary Funding Relief

The Alberta Treasury and Finance Board issued EPPA Update 12-01 “Defined Benefit Funding Relief Provisions”.    The amendment is meant to introduce short term funding relief provisions to assist plan sponsors with the financial pressures associated with funding a defined benefit pension plan.  It is important to note that this relief option is only applicable to pension plans which are not specified multi-employer pension plans (SMEPPs).

The amendment permits plan administrators, on written application to the Superintendent of Pensions, to consolidate all existing pension plan solvency deficiencies into one new solvency deficiency. The regulation amendment then further allows for that solvency deficiency to be amortized over a period not exceeding a maximum of 10 years (rather than the usual 5 year amortization).

Plan administrators are permitted to make only one application for the consolidation of solvency deficiencies and extension of the amortization period. The application may be made in respect of any actuarial valuation report that has a review date between December 31, 2011 and December 31, 2012, inclusive.  To view the full EPPA Update click here

The amendment no doubt comes as welcome news to plan sponsors who continue to battle an investment environment of low interest rates and volatile investment returns which affects the overall funding ratios for a vast majority of defined benefit plan sponsors.

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Pooled Registered Pension Plans (PRPP) Regulations

The Government of Canada has pre-published regulatory proposals to address provisions of the Pooled Registered Pension Plans Act (Bill C-25), according to Minister of State (Finance) Ted Menzies.

The proposed regulations will address provisions of the Pooled Registered Pension Plans Act respecting:

  • the licensing conditions for a potential administrator of a Pooled Registered Pension Plan (PRPP);
  • the management and investment of funds in members’ accounts;
  • details with respect to the investment options offered to members;
  • criteria against which the requirement to provide low-cost PRPPs can be assessed;
  • conditions under which a PRPP member is allowed to set his or her contribution rate to 0%; and
  • information that plan administrators must disclose to plan members, employers and the Superintendent of Financial Institutions.

The proposed regulations will be pre-published in the Canada Gazette on August 11 for a 30-day public comment period, prior to final consideration by the Government. A second package of regulations under the PRPP Act will follow at the earliest opportunity.

PRPPs will be available across Canada once federal tax legislation is passed and the provinces implement their PRPP legislation.

To see the full proposed regulations go to click here

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New Changes to the Ontario Pension Benefits Act

On June 21st, 2012, the Ontario Government proclaimed  a number of Sections under Bills 120 and 236  which amended various Sections of the Ontario Pension Benefits Act to take effect 01-Jul-2012. The major changes that affect benefits payable and day to day administration are:

  1. All Ontario employees terminating after 01-Jul-2012 will be immediately vested 100%. This means there is no longer a 2 year membership requirement to vest in your pension. It is now immediate. This has been expected and it follows the lead of Quebec and Manitoba.
  2. The “small pension rule” has been increased to a level consistent with most other provinces. With effect from 01-Jul-2012, if an annual pension benefit on termination, death or retirement is under 4% of the Y.M. P. E. (Yearly Maximum Pensionable Earnings under the CPP. In 2012 this is $50,100), or if the commuted value of the pension benefit is under 20% of the YMPE, the benefit is not considered to be locked-in and if the pension plan provides for it, the plan can provide that the benefit must be taken in cash. This is a welcome change as finally Ontario is catching up with the other provinces and raising this limit. This means employees terminating in 2012 with pensions less than $2,004.00 p.a. or commuted values less than $10,020 will be eligible to receive cash lump sums.
  3. The biggest change by far for Plan Sponsors will be the new “grow-in” provisions to be applied to terminations of employment brought about by the Employer. “Grow-In” provisions were provided previously upon total or partial plan wind-ups in Ontario. Since partial plan wind ups have been eliminated from 01-Jul-2012, the government has decided to provide “grow-in” to eligible terminated employees after 01-Jul-2012. Any Ontario employee whose age and employment service total 55 or more and whose employment was terminated by the employer after 01-Jul-2012 is eligible. “Grow-In” means that no matter how old an employee is at termination, if his age and service total 55 or more, he will be considered as eligible for any early retirement benefits under the Plan. The employee is assumed to “grow-in” to the eligibility for early retirement benefits. This will mean as a deferred member he will be entitled to retire early with the same early retirement reductions as active employees. This will also mean that the commuted value of their termination benefit must take this early retirement benefit into account. This will increase commuted values paid to these grow-in members. This is because the Canadian Institute of Actuaries Guidelines require that the commuted value in grow-in cases be calculated at the retirement date in the future that provides for the greatest commuted value. The exceptions to this are if the employee was terminated due to “willful misconduct”, “disobedience” or “willful neglect of duty by the member that is not trivial”. Reporting of terminations in Ontario after 01-Jul-2012 will have to take this new rule into effect.

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Penad’s 2010 Recipient of the Black Mariah Award

Annually, a worthy Penad staff member is selected to receive the prestigious Penad Black Mariah award.  The Award was first created in 1989 to acknowledge the Penad staff member who had broken the most computers or peripheral equipment throughout the year.

There were many candidates considered for the 2010 and 2011 honor but in the end it was awarded to  Louise Price, President  Penad Pension Services.  Below is a photo of Louise receiving the award from our Directer of Information Technology  (Edward Blokland) at the annual Penad Christmas Party.

Congratulations Louise on your award.

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Proposed Pooled Registered Pension Plans (PRPP)

Finance Minister Jim Flaherty  has released (December 16, 2010)  a draft framework for the creation of Pooled Registered Pension Plans (PRPP’s) to Provincial Finance Ministers.  He proposes an all-new pension system in Canada aimed at helping small businesses and their employees who do not have corporate plans save for retirement.

The proposed PRPP is described in a nine-page draft report prepared by the federal Finance Department and released Thursday morning. It comes ahead of a Sunday and Monday gathering of federal, provincial and territorial finance ministers in Kananaskis, Alta.  The new option would pool contributions from workers across multiple companies, or self employed workers who would otherwise not have access to a private defined-contribution pension plan. While each individual company would track their own retirement funds, the money would be pooled with contributions from other companies. That would allow small- and medium-sized companies to take advantage of the “economies of scale” investment advantages of large pension funds.

Below please find the the complete 9 page draft. Penad Pension Services will continue to monitor this as well as other proposed reform measures. If you have any questions please do not hesitate to contact us.

Framework for Pooled Registered Pension Plans

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New Government limits for 2011

Canada Revenue Agency published the new YMPE & DB limits yesterday. The new YMPE for 2011 is $48,300 and the new maximum DB pension limit is $2,552.22 p.a.

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Summit bridges the Atlantic with double client win

London, 14 September 2010 – Summit Global Investor Services (Summit) announces its appointment by the Church in Wales and Anglican Church of Canada
The investment fund for the Cardiff-based Representative Body of the Church in Wales has over £300,000,000 in assets under management. This diversified fund, which employs multiple asset managers, will be using the online Zenith Reports system for accounting and reconciliation purposes, to provide independent third-party monitoring of their investment activity, for performance measurement and to aid in the production of committee and trustee reports.
David Holloman, Head of Finance at the Church in Wales comments, “With Summit and their online Zenith software, we realised that we could automate and improve certain internal processes, such as reconciliation and report generation. This will undoubtedly free up some of our time to allow us to pursue new initiatives and enhance our governance.”
The Pension Office Corporation of The Anglican Church of Canada is located in Toronto, Ontario and manages over 5000 members and assets of $500,000,000. This is a well-established DB scheme with a mix of pooled and segregated funds across its nine asset managers. The fund chose Zenith Reports for a combination of breadth and depth of analytical services – it augments the conventional services of performance, attribution and risk measurement with additional analysis such as buy-and-hold, transaction cost, FX rates and custodian monitoring.
Judy Robinson, Executive Director for the fund, remarks, “Our aim in working with Summit is to improve our traditional analytics with something that is more cost efficient and user-friendly. The online system will not only provide us with faster delivery of information but improve reporting to the point where our trustees and management team can access their own bespoke reports online and perform ad hoc analysis whenever needed.”
Andrew Caird, Managing Director of Summit Global Investor Services says, “Each of these clients is a significant win for our company. Both funds are early adopters in their respective markets and, due to the nature of their organisations and stakeholders, any appointment follows extensive due diligence. To have gone through this process with both organisations and achieved this outcome is a great milestone in Summit’s development.”

Summit Global Investor Services is a Penad Global Alliance Partner.

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New Website

Penad Pension Services Limited is pleased to announce the launch of our new website (www.penad.ca).  Make sure to sign up for our RSS, Twitter and blog so that you can stay up to date.

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