Third Session, 44th General Assembly

50 Elizabeth II, 2001

BILL 40

AN ACT TO AMEND THE UNIFORMED

SERVICES PENSIONS ACT, 1991

Received and Read the First Time

Second Reading

Committee

Third Reading

Royal Assent

HONOURABLE JOAN MARIE AYLWARD

Minister of Finance and President of Treasury Board

Ordered to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

Clause 1 of the Bill would amend

section 2 of the Uniformed Services Pensions Act, 1991 to include

definitions of "commuted value", "terminating employee" and "YMPE".

Clause 2 of the Bill would amend

section 6 of the Act to refer to the defined term "YMPE".

Clauses 3, 4, 5 and 7 of the Bill would amend the Act to provide for benefits upon termination of employment in compliance with the Pension Benefits Act, 1997 .

Clause 6 of the Bill would add

section 13.1 to the Act to provide for the portability of pension service between the Government Money Purchase Pension Plan and the Uniformed Services Pension Plan.

Clauses 8 and 9 of the Bill would amend the Act to provide for survivor benefits and the division of a pension upon marriage breakdown in compliance with the Pension Benefits Act, 1997 , except for retirement compensation arrangements that are not subject to the Pension Benefits Act, 1997 .

A BILL

AN ACT TO AMEND THE UNIFORMED SERVICES PENSIONS ACT, 1991

Analysis

1. S.2 Amdt.

Definitions

2. S.6 Amdt.

Contributions by employees

3. S.9 Amdt.

Repayment of contributions

4. S.9.1 Added

Election upon termination with 5 years service

5. S.10 R&S

Purchase of prior service

6. S.13.1 Added

Transfer

7. S.22 Amdt.

Deferred pension

8. S.24 R&S

24. Survivor benefit

24.1 Death of employee

9. S.30 R&S

Marriage breakdown

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

SN1991 c19

as amended

(1) Section 2 of the Uniformed Services Pensions Act, 1991 is amended by adding immediately after paragraph (

b) the following:

(b.1) "commuted value" means commuted value as defined in the Pension Benefits Act, 1997 ;

(2) Section 2 of the Act is amended by striking out the word "and" at the end of paragraph (

w) and adding immediately after that paragraph the following:

(w.1) "terminating employee" means an employee who terminates his or her employment or whose employment is terminated for reasons other than disability and who is not entitled to immediately receive a pension under sections 15, 16 or 17;

(3) Section 2 of the Act is amended by striking out the period at the end of paragraph (

x) and substituting a semicolon and the word "and" and by adding immediately after that paragraph the following:

(y) "YMPE" means the year's maximum pensionable earnings as defined under the Canada Pension Plan.

Section 6 of the Act is amended by striking out the words "Year's Maximum Pensionable Earnings as defined by the Canada Pension Plan" wherever they occur and substituting the term "YMPE".

3. (1) Subsection 9(1) of the Act is repealed and the following substituted:

Repayment of contributions

(1) A terminating employee with less than 5 years of pensionable service may elect to receive a refund of contributions made by that employee, with interest at a rate prescribed.

(1.1) Where an employee with less than 5 years of pensionable service dies, the contributions made by that employee, with interest at a rate prescribed, shall be paid to the estate of the employee.

(2) Subsection 9(2) of the Act is amended by deleting the word and figure "subsection (1)" and substituting the word and figure "subsection (1.1)".

4. The Act is amended by adding immediately after

section 9 the following:

Election upon termination with 5 years service

9.1

(1) A terminating employee with at least 5 years of pensionable service may elect within 180 days after termination

(

a) a transfer of the commuted value of the pension entitlement of the employee, in accordance with paragraph 40(1)(

a) of the Pension Benefits Act, 1997 ;

(

b) a deferred pension in accordance with

section 22; or

(

c) a return of the contributions made by that employee, with interest at a rate prescribed, for periods of pensionable service credited

(

i) before January 1, 1987, and

(ii) before January 1, 1997 where the employee has less than 10 years of pensionable service and is less than 45 years of age,

and a transfer of the commuted value of his or her pension entitlement based on the remaining periods of pensionable service, under paragraph (1)(a).

(2) In default of an election under subsection (1) the employee is considered to have elected to receive a deferred pension.

(3) An employee who elects or is considered to have elected under subsection (2) to receive a deferred pension may only revoke that election to transfer his or her contributions to a pension plan included in the

Schedule to the Portability of Pensions Act .

(4) A transfer under paragraph (1)(

a) which is not to another pension plan or deferred life annuity shall, regardless of when the pensionable service was credited, be to a retirement arrangement approved for this purpose by the Superintendent of Pensions.

(5) The transfer under paragraph (1)(

a) shall not be less than the contributions made by the employee with interest at a rate prescribed.

(6) Where the transfer under paragraph (1)(

a) would be greater than the maximum amount permitted under the Income Tax Act (Canada), the excess shall be paid to the employee.

(7) Where the annual pension payable is less than 4% of the YMPE for the calendar year in which the employment is terminated, the employee or former employee is entitled to receive a lump sum payment instead of the deferred pension under

section 22.

(8) Where the commuted value of a deferred pension benefit is less than 10% of the YMPE for the calendar year in which employment was terminated, the employee or former employee is entitled to receive a lump sum payment instead of the deferred pension under

section

Section 10 of the Act is repealed and the following substituted:

Purchase of prior service

(2) Where a person, who was covered under a pension plan established under this Act or a predecessor of this Act, ceased to be employed and had not received a payment or transfer on termination and later becomes an employee, that person may be credited with all pensionable service that accrued immediately before the employee's termination.

6. The Act is amended by adding immediately after

section 13 the following:

Transfer

7. (1) Subsection 22(3) of the Act is repealed.

(2) Section 22 of the Act is amended by adding immediately after subsection (5) the following:

(6) A former employee with at least 5 years pensionable service whose employment terminated before this Act comes into force and who did not receive a refund of contributions may, before becoming eligible to receive a pension under this Act, make the same election as a terminating employee under

section 9.1.

Section 24 of the Act is repealed and the following substituted:

Survivor benefit

(1) A principal beneficiary of

(

a) a pensioner;

(

b) a deferred pensioner; or

(

c) an employee with at least 5 years of pensionable service,

is entitled on the death of the pensioner, deferred pensioner or employee to a survivor benefit equal to 60% of the pension entitlement of the pensioner, deferred pensioner or employee.

(2) A deferred pensioner's entitlement is the pension he or she would have received had he or she been 65 years of age on the date of death.

(3) The survivor benefit shall be paid to the surviving principal beneficiary for life and shall commence on the first day of the month following the month in which the pensioner or employee dies.

(4) Where the principal beneficiary dies while in receipt of a survivor benefit, the survivor benefit shall be paid to or for the benefit of the surviving children of the pensioner, deferred pensioner or employee while they are under the age of 18 years, or under the age of 24 years while they are in full-time attendance at a recognized school or post-secondary institution.

(5) Where a pensioner, deferred pensioner or employee referred to in subsection (1) dies leaving no surviving principal beneficiary, the survivor benefit shall be paid to or for the benefit of his or her surviving children while they are under the age of 18 years, or under the age of 24 years while they are in full-time attendance at a recognized school or post-secondary institution.

(6) Where for any reason a survivor benefit ceases to be payable and no one remains to whom a benefit is payable, the amount by which the employee's contributions, together with interest to the date the benefit commenced at a rate prescribed by the minister, exceed all benefits received from the registered plan, shall be paid to the person whose benefit ceased or to that person's estate.

(7) Notwithstanding subsection (1), for the purpose of this section, a survivor benefit in respect of a deceased RCA employee shall be 55% of the total of the employee's pension and RCA benefit.

Death of employee

24.1

(1) Where an employee or deferred pensioner dies before receiving a pension and a survivor benefit is payable under

section 24, the surviving principal beneficiary may elect

(

a) to receive the survivor benefit; or

(

b) to receive in a lump sum

(

i) the commuted value of the survivor benefit, or

(ii) the commuted value of the employee's pension,

whichever is greater.

(2) Where an employee or deferred pensioner with at least 5 years of pensionable service dies before receiving a pension and there is no survivor benefit payable under

section 24, the commuted value of the employee's pension, calculated as of the date of death, shall be paid to the estate of the employee and subsections 9(2), (3) and (4) apply to the transfer.

Section 30 of the Act is repealed and the following substituted:

Marriage breakdown

(1) Where

(

a) a court has made an order for the division of matrimonial property under the Family Law Act or a similar order has been made by a court outside the province; or

(

b) an employee has entered into a separation agreement within the meaning of the Family Law Act to divide matrimonial property,

a right under this Act shall be divided in accordance with the court order or separation agreement and

Part VI of the Pension Benefits Act, 1997 applies with the necessary changes.

(2) Calculations under this Act respecting maximum contributions and years of service shall be done as if there had been no division under this section.

©Earl G. Tucker, Queen's Printer