Retirement Services - New Brunswick Pension Legislation
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Pension Benefits Act
Original: December 31, 1991
Reform: N/A
Year last amended: 2003
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Index
Benefit Splitting
Cash Availability at Termination of Employment
Definition of Spouse
Early Retirement
Eligibility
Employee Excess Contributions
Flexible Pension Plan
Indexing of Pensions
Integration with Governmental Plans
Minimum Employer Contribution – 50% Rule
Minimum Interest Rate on Employee Contributions
Normal Retirement
Options Available on Pre-Retirement Death
Portability at Termination of Employment for a Member with a Deferred Annuity
Post-Retirement Death Benefits
Postponed Retirement
Pre-Retirement Death Benefits
Sex Discrimination
Vesting and Locking-In
Vesting at Normal Retirement Date
Disclaimer
Benefit Splitting
(Breakdown of marriage or of conjugal relationship)
- Benefits may be split in accordance with a court order or with an agreement on assignment of pension benefit entitlement (maximum 50%).
- Rules of evaluation and devolution in accordance with the Pension Benefits Act and the Regulation.
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Cash Availability at Termination of Employment
Plan may provide for refund if the total investment value of a pension is less than 40% of the YMPE divided by 1.06 for each year that age of terminating member or retiring member precedes age 65.
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Definition of Spouse
On the date of the member’s retirement or on the day of the member’s death, if earlier:
The person who is married to the member; the person who is married to the member by a marriage that is voidable and has not been annulled by a declaration of nullity;
In good faith, the person who has gone through a form of marriage with the member that is void and who has cohabitated with the member within the preceding year; or
The person who is not married to the member, but who has cohabitated with the member within the preceding year and continuously for a least 3 years in a conjugal relationship, during which one was substantially dependent upon the other for support; or in a relationship of some permanence, where there is a child born of whom they are the natural parents.
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Early Retirement
Within 10 years of normal retirement date.
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Eligibility
Full-time employees: 2 years of continuous service.
Part-time employees: 2 years of continuous service and annual earnings of at least 35% of YMPE in each of 2 consecutive calendar years immediately preceding membership.
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Employee Excess Contributions
Reimbursed.
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Flexible Pension Plan
Plan administrator may amend plan text to offer this option.
Plan text must disclose the types of additional benefits tat may be financed and how they are priced.
Plan amendments are not permitted that increase the cost of additional benefits without written consent.
Refund of contributions permitted if not forfeited under the Federal Income Tax Act.
Adequate disclosure to be given to members before they purchase optional benefits in a “flex plan”. Information about “optional ancillary benefits” must be disclosed on annual statement.
Interest on the contributions credited at the fund rate except where the members are allowed to make investment choices.
Conversion of optional ancillary contributions to optional ancillary benefits must be done on the basis of actuarial assumptions that are appropriate and in accordance with accepted actuarial practice.
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Indexing of Pensions
(Defined Benefit Plans)
No requirement.
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Integration with Governmental Plans
(Defined Benefit Plans)
Reduction on account of the OAS: pre-rata formula required (35 years) for years of service before December 31, 1991. Prohibited for years of service after December 30, 1991.
Reduction on account of the CPP/QPP: pro-rata formula required (35 years) for years of service after 1965.
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Minimum Employer Contribution-50% Rule
(Defined Benefit Plans)
- According to plan, if plan is silent, at least 50% of commuted value of pension benefits accrued from December 31, 1991.
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Minimum Interest Rate on Employee Contributions
Defined Contribution Plan: fund rate of return based on market value of investments.
Defined Benefit Plan: fund rate of return or the average yield on personal 5-year term deposits with chartered banks over a recent period not exceeding 12 months.
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Normal Retirement
No later than 1 year following 65th birthday.
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Options available on Pre-Retirement Death
Spouse: cash, RRP, RRSP, RRIF
Dependent child/grandchild: cash, fixed term annuity to age 18.
Other beneficiary: cash
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Portability at Termination of Employment for a Member Entitled to a Deferred Annuity
More than 10 years before normal retirement date.
Options:
- transfer to: another pension plan, a LIRA, a LIF;
- purchase of a life annuity contract.
Transfer out of plan may be required by plan rules, if value of benefits is less than 10% of YMPE.
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Post-Retirement Death Benefits
Joint pension continues at 60% after death of either spouse. Possibility to waive joint pension by spouse or member within the year preceding pension commencement.
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Postponed Retirement
(At the latest December 31 of the year in which the member reaches age 69)
If allowed by plan, membership may continue except if the member is receiving a pension.
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Pre-Retirement Death Benefits
Applicable to all benefits:
- If surviving spouse, not less than 60% of commuted value of vested benefits (not locked-in)
- If no surviving spouse, not less than 60% of commuted value of vested benefits to the designated beneficiary, or failing that, to the estate (not locked-in).
- If not vested benefits, minimum payout is the refund of the member’s contributions with interest.
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Sex Discrimination
Sex discrimination required = annuity rate based on sex
Sex discrimination prohibited = unisex annuity rate
Sex discrimination allowed = annuity rate based on sex or unisex annuity rate
Years of service before 31/12/91: discrimination allowed.
Years of service after 30/12/91: discrimination prohibited.
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Vesting and Locking-In
(Excluding voluntary contributions and optional ancillary contributions)
Pre-December 31, 1991 benefits: no requirement.
Locking-in at the same time as vesting. Note: locking-in on 31/12/91 if entitled to a deferred pension before 31/12/91.
Post-December 30, 1991 benefits: 5 years of continuous service.
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Vesting at Normal Retirement Date
Entitlement to a pension vests at normal retirement date only if minimum vesting and locking-in requirements are met.
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Disclaimer
The information contained in this summary applies only to single employer Registered Pension Plans (RPPs). In addition, this information states the minimum rules provided under the pension legislation that governs RPPs. However it does not state the maximum rules under the Income Tax Act (Canada) and its Regulations that also apply to RPPs.
The legislation and the regulations of this jurisdiction prevails over this summary. While every effort has been made to ensure the accuracy of the information, no warranty or guarantee is expressed or implied as to the accuracy, adequacy or completeness of the information, and the CUMIS Life Insurance Company is not responsible for any errors, omissions, or from the results from the use of such information.
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