Retirement Services - British Columbia Pension Legislation
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Pension Benefits Standards Act
Original: January 1, 1993
Reform: N/A
Year last amended: 2001 (NoTitle)
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Index
Benefit Splitting
Cash Availability at Termination of Employment
Definition of Spouse
Early Retirement
Eligibility
Employee Excess Contributons
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 Entitled to 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 of pension benefit entitlement.
- Benefits splitting may take place only on the date at which the member becomes eligible to retire or on the date when he retires and begins receiving pension benefits (defined benefit plans); benefits splitting takes place following the breakdown of marriage or conjugal relationship (defined contribution plans).
Benefits are locked-in to the same extent as for the member’s benefits.
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Cash Availability at Termination of Employment
Plan must provide for refund of: commuted value of pension is less than 1/12 of 10% of YMPE or if commuted value of pension if monthly pension is less than 20% of YMPE.
Defined contribution plans only: annuitants age 65 and older may commute their pension rights (including LIF & locked-in RRSP funds) if total value is less than 40% of YMPE (spousal consent required, where applicable).
- Members, former members, their spouses or surviving spouses may commute locked-in pension funds held under pension plans (if plan permits), locked-in RRSP’s and LIFs, if absent from Canada for 2 years or more and have become non-resident (spousal consent required, where applicable).
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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 and who is not living separate and apart from the member for more than 2 years immediately prior to the relevant time; or if the above definition does not apply:
The person who, at the relevant time, was living and cohabitating with the member in a marriage-like relationship, including a marriage-like relationship between persons of the same gender, and who have been living and cohabitating in that relationship for a period of at least 2 years immediately preceding the relevant time.
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Early Retirement
Age 55.
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Eligibility
Full-time and 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
- Used to increase pension or to purchase a deferred life annuity
- Transferred to: another pension plan, an RRSP or a RRIF
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Flexible Pension Plan
Plan text must specify how optional ancillary contributions (OACs) will be invested. Members may be given investment discretion over OACs.
Plan text must specify method of conversion of OACs into benefits. OACs are not subject to the 50% minimum employer contribution rule.
Locking-in applies to post-’92 OACs and benefits. Plan may require forfeiture of unused OACs.
Detailed information on flexible benefit provision is required to be provided to members in the member’s summary booklet, annual member’s statement and termination statement.
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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: prohibited for years of service after 1992.
Reduction on account of the CPP/QPP: pro-rata formula required (35 years).
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Minimum Employer Contribution – 50% Rule
(Defined Benefit Plans)
- At least 50% of commuted value of pension benefits accrued from January 1, 1993
- Not applicable to Optional Ancillary Contributions
- Applicable on date Defined Contribution Plan converts to Defined Benefit (i.e., a settlement of excess contributions has to be made at that time)
- Applicable to past service benefit improvements
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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
At the age or date (in relation to a prescribed age) determined by pension plan provisions.
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Options Available on Pre-Retirement Death
Spouse
- Not locked-in funds: cash, RRP, RRSP, RRIF
- Locked-in funds: RRP, LI-RRSP, LIF, Annuity
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
Defined Benefit Plans: Available before reaching age 55.
- Transfer out of defined benefit plans may be required by plan rules, subject to value of benefits being less than 20% of YMPE.
Defined Contribution Plans: available at all ages.
Options: -Transfer to: another pension plan, a locked-in RRSP, a LIF.
- Purchase of a life annuity contract.
Portability must be offered to a member affected by a business successorship where the predecessor employer does not wind up the plan.
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Post-Retirement Death Benefits
Joint pension at 60% after death of either spouse. Possibility to waive joint pension by spouse within 90 days of pension commencement.
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Postponed Retirement
(At the latest December 31 of the year in which the member reaches age 69)
Membership may continue except if the member is receiving a pension.
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Pre-Retirement Death Benefits
Defined Benefit Plan:
Pre-1993 member’s contributions with interest + the greater of 60% of commuted value of post-1992 vested benefits + value of member’s excess contributions paid after 1992 and value of member’s contributions paid after 1992 with interest. Locked-in, if death benefit is payable to surviving spouse and deceased member’s right to a deferred pension was vested and locked-in.
Defined Contribution Plan:
The sum of: 60% of value of post-1992 vested employer’s contributions with interest; and value of member’s contributions with interest. Locked-in, if death benefit is payable to surviving spouse and deceased member’s right to a deferred pension was vested and locked-in. If no surviving spouse, the death benefit is payable to the designated beneficiary or failing that, to the estate (not locked-in). Locked-in benefits may be commuted if the surviving spouse had been absent from Canada for 2 years or more and has become non-resident.
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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 1993: discrimination prohibited.
Years of service after 1992: discrimination prohibited.
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Vesting and Locking-In
(Excluding voluntary contributions and optional ancillary contributions)
- 2 years of plan membership with respect to all years of membership.
- Locking-in applies to post-1992 benefits only.
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Vesting at Normal Retirement Date
Entitlement to a pension vests at normal retirement date with respect to all years of membership regardless of whether the 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 jurisidiction prevails over this summary. While every effort has been made to ensure the accuracy of the information, no warranty 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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