If you are a retired member of the Canada Pension Plan or Quebec Pension Plan and marry after retirement, your spouse is NOT entitled to a survivor pension in the event of your death. However, you may choose to provide your spouse with a pension at the time of your death, by having your pension reduced. You must apply for this option within one year from the date of your marriage or one year from the date your pension starts, whichever is later.
The indexing rate for 2018 in Canada is 1.6%.
The indexing of public service pension plan benefits is governed by two pieces of legislation; the Public Service Superannuation Act (PSSA) and the Supplementary Retirement Benefits Act (SRBA).
Pension increases for retired members and their survivors are calculated each year using Consumer Price Index (CPI) data published by Statistics Canada. In accordance with the SRBA, the increase is based on a comparison of the twelve-month average of the monthly CPI for the year just ended, to the twelve-month average of the monthly CPI for the previous year. The SRBA specifies that the twelve-month period from October 1 to September 30 is to be used to calculate the increase payable the following January. The index used for the calculation is the CPI for Canada for all items (not seasonally adjusted).
Ontario’s Pension Benefit Act Amended to Impose Administrative Monetary Penalties Effective January 1, 2018
Ontario’s Pension Benefit Act (PBA) was amended to give the Superintendent of Financial Services the authority to impose Administrative Monetary Penalties for breaches of the PBA.
In September 2017, the Ontario government finalized the amendment to Regulation 909 under the PBA to come into force effective January 1, 2018. The new administrative penalties suggest the importance of regulatory compliance in Ontario for plan sponsors, administrators and third-party providers.
The Superintendent shall levy a general or summary administrative penalty on a person (such as the plan sponsor or plan administrator). General Administrative Penalties are imposed on more severe violations of the PBA, such as failure to administer a plan in accordance to its plan document. Summary Administrative Penalties are imposed on more procedural violations, such as late filings of the Annual Information Return. Both general and summary administrative penalties are subject to maximum penalty limits of $10,000 against a person/individual, and $25,000 against a corporation or other legal entity. Administrative penalties cannot be paid from the pension fund.
In order for the Superintendent to impose the penalty, there are a number of safeguards that must be considered, which are dependent on the type of penalty. General administrative penalties require the Superintendent to give notice of the intention to levy the administrative monetary penalty, allowing the person 15 days to request a hearing. Summary administrative penalties require the Superintendent to issue the order allowing the person 15 days to appeal.
With the Administrative Monetary Penalty provision coming January 1, 2018, pension plan sponsors, administrators and third-party providers should do what they can to prepare for the new regime. Those involved in pension plan administration should ensure they understand the new regime, confirm that compliance and procedures are in accordance to the PBA, be aware of filing deadlines, and review third party contracts regarding liability for errors.
For additional information on Administrative Monetary Penalties, please visit FSCO’s website.
On November 1st, Canada Revenue Agency announced that the maximum pensionable earnings for 2018 will be $55,900, up from $55,300 in 2017.
Contributors who earn more than $55,900 in 2018 are not required or permitted to make additional contributions to the Canada Pension Plan.
The basic exemption amount for 2018 remains $3,500.
The 2018 contribution rate for employees and employers remain unchanged at 4.95%.
The 2018 contribution rate for self-employed will also remain unchanged at 9.9%.
The 2018 maximum employer and employee contribution to the plan will be $2,593.80, up from $2,564.10 in 2017.
The 2018 maximum self-employed contribution will be $5,187.60, up from $5,128.20 in 2017.
Robert Brown, a fellow with the Canadian Institute of Actuaries, wonders in this post (see link below) how the recent expansion to the Canada Pension Plan will impact various levels of beneficiaries.
One would expect, based on the press and government messaging at the time, that dramatically increasing benefits would benefit everyone (a rising tide lifts all boats, after all).
Not in this case, it appears. The lower income Canadians will basically see little benefit and in fact might even do worse under the new formula. Here is the article (click to open):
As of January 1, 2016, all occupational defined benefit pension plans in Ontario are required to disclose any environmental, social and governance (ESG) factors that are incorporated in the pension fund’s investment policies and procedures.
This requirement is a first for Canada and was approved by the Ontario legislature in late 2014, after first being proposed in 2011. The UK, Germany, Sweden, France and Belgium also have similar regulations.
The amendment to the Ontario Pension & Benefits Act is supported by Ontario’s largest pension funds including the Ontario Teacher’s Pension Plan and OMERS, both of which have actively disclosed ESG since the 2000’s.
This new regulation is not prescriptive and does not require pension plans to adopt or promote any special ESG policies, but we expect that pension trustees will consider ESG investments more closely as a result of this requirement, as has happened in other jurisdictions. Several other provinces in Canada including BC, Alberta and Nova Scotia are considering following suit.
That’s right, there is now another filing for Canadian pension plan sponsors, this time having to do with American tax rules.
American citizens, unlike citizens of most other countries, are required to pay taxes on all income worldwide, regardless of where it is earned and regardless of where the citizen was living at the time. To track and enforce compliance, Uncle Sam passed the Foreign Account Tax Compliance Act (FATCA) as of July 1, 2014, which requires financial institutions worldwide to report on investment income credited to any of their clients who are US citizens.
As an aside, many financial institutions in Europe and elsewhere find this requirement so onerous that they have actually closed the accounts of US customers. Fortunately, registered pension plans in Canada are exempt from the requirement, but they are NOT exempt from filing exemption forms with EACH financial institution holding pension fund assets, where that institution is itself a “foreign financial institution” under FATCA.
Pension plan administrators must file Form W-8BEN-E with each such financial institution, including financial institutions located outside of Canada (such as investment managers based in France, for example). In addition, if any of the filing information changes, the plan administrator must notify all financial institutions where it has filed Form W-8BEN-E of any such changes within 30 days.
Because the pension plan administrator is certifying required information, we strongly advise that pension plan sponsors confer with their counsel to ensure they have met the requirements of FATCA. Contact Penad for more information on how to ensure you are in compliance with this requirement.
The Canada Revenue Agency announced on November 2nd that the maximum pensionable earnings for 2016 will be $54,900—up from $53,600 in 2015.
Contributors who earn more than $54,900 in 2016 are not required or permitted to make additional contributions to the CPP.
The basic exemption amount for 2016 remains $3,500.
The employee and employer contribution rates for 2016 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.
The maximum employer and employee contribution to the plan for 2016 will be $2,544.30 each and the maximum self-employed contribution will be $5,088.60. The maximums in 2015 were $2,479.95 and $4,959.90
For a breakdown of these and other rates check out our website
In British Columbia, the new Pension Benefits Standards Act, SBC 2012, c.30, (the New Act), as amended by Bill 10-2014, the Pension Benefits Standards Amendment Act, will come into force on September 30, 2015. The New Act is largely based on the recommendations of the Joint Expert Panel on Pension Standards (JEPPS).
The New Act has significant changes. For example,
• the administrator of a pension plan will be responsible to develop a governance policy regarding the structures and processes for overseeing, managing and administering the plan. This governance policy will help define the responsibilities of, among others, the plan sponsor, the plan administrator, and participating employers. See Section 50 of the new regulation for details.
• any record pertaining to a pension plan, or a copy thereof, MUST be retained in Canada. See Section 34.
• the duties and obligations of the various parties involved in a pension plan, including administrators, are spelled out in detail. Section 35 addresses the responsibilities of the administrator. Sections 45-48 describe employer responsibilities, and Section 51 addresses fundholders.
Please contact your Penad administrator for more information on these changes.
Click the links below for direct access to the documents in question:
Have you heard about the changes happening in Quebec, where Bill 34 amends the Supplemental Pension Plans Act (SPPA)?
There are significant changes to MEPPS (multi-employer pension plans).
In addition, Bill 57, “an Act to amend the Supplemental Pension Plans Act mainly with respect to the funding of defined benefit pension plans” was introduced just last month, on June 11.
You can find a very good synopsis of the changes at McCarthy Tetreault. CLICK HERE FOR FULL ARTICLE …