Regulations Amending the Canada Pension Plan Regulations: SOR/2018-281

Canada Gazette, Part II, Volume 152, Number 26

Registration
SOR/2018-281 December 17, 2018

CANADA PENSION PLAN

P.C. 2018-1570 December 14, 2018

Her Excellency the Governor General in Council, on the recommendation of the Minister of Employment and Social Development, pursuant to subsection 55(9), paragraph 55.2(11)(a)^{footnote a} and subsection 89(1)^{footnote b} of the Canada Pension Plan^{footnote c}, makes the annexed Regulations Amending the Canada Pension Plan Regulations.

Regulations Amending the Canada Pension Plan Regulations

Amendments

1 Section 41 of the Canada Pension Plan Regulations^{footnote 1} is replaced by the following:

41 (1) For the purposes of clause 53(1)(b)(ii)(A) of the Act, the salary and wages on which a base contribution has been made for the year 2019 and each subsequent year by a contributor under a provincial pension plan is an amount equal to the aggregate of all base contributions required to be made by the contributor in that year under the provincial pension plan in respect of salary and wages, multiplied by 100 and divided by one half of the base contribution rate for that year under the provincial pension plan.

(2) For the purposes of clause 53.1(1)(b)(ii)(A) of the Act, the salary and wages on which a first additional contribution has been made for the year 2019 and each subsequent year by a contributor under a provincial pension plan is an amount equal to the aggregate of all first additional contributions required to be made by the contributor in that year under the provincial pension plan in respect of salary and wages, multiplied by 100 and divided by one half of the first additional contribution rate for that year under the provincial pension plan.

(3) For the purposes of clause 53.2(1)(b)(ii)(A) of the Act, the salary and wages on which a second additional contribution has been made for the year 2024 and each subsequent year by a contributor under a provincial pension plan is an amount equal to the aggregate of all second additional contributions required to be made by the contributor in that year under the provincial pension plan in respect of salary and wages, multiplied by 100 and divided by one half of the second additional contribution rate for that year under the provincial pension plan.

2 (1) Subsection 43(1) of the Regulations is replaced by the following:

43 (1) An application for a benefit, for a division of unadjusted pensionable earnings under section 55 or 55.1 of the Act or for an assignment of a portion of a retirement pension under section 65.1 of the Act shall be made by submitting it to the Minister in writing.

(2) Paragraph 43(1.1)(a) of the Regulations is replaced by the following:

• (a) in writing to the Minister; and

3 Subsections 46.2(2) and (3) of the Regulations are replaced by the following:

(2) If an applicant for a disability pension is in receipt of a retirement pension and they are deemed to have become disabled for the purpose of entitlement to the disability pension before the month in which the retirement pension became payable, the application for the disability pension is deemed to be a request for the cancellation of the retirement pension.

(2.1) Despite subsection (1), if an applicant for a benefit under a provincial pension plan that is comparable to a disability pension is in receipt of a retirement pension and they are deemed to have become disabled for the purpose of entitlement to the benefit before the month in which the retirement pension became payable, the applicant may request cancellation of the retirement pension by submitting a written request to the Minister within the period beginning on the day of commencement of payment of the retirement pension and ending 90 days after the day on which the applicant receives notice of the decision deeming them to be disabled.

(2.2) An applicant referred to in subsection (2) may request cancellation of the disability pension and reinstatement of the retirement pension by submitting a written request to the Minister within 60 days after receipt of notice of their entitlement to the disability pension.

(3) The Minister shall grant a request submitted in accordance with subsection (1), (2.1) or (2.2) or deemed to be made under subsection (2).

4 The portion of subsection 64(1) of the Regulations before paragraph (a) is replaced by the following:

64 (1) If paragraph 71(2)(a) of the Act applies or the estate of a deceased contributor has not applied for the death benefit within 60 days after the contributor’s death, or if the amount of the death benefit is less than two thirds of 10% of the Year’s Maximum Pensionable Earnings for the year in which the contributor died, in the case of a death that occurred before January 1, 1998, or less than $2,387, in the case of a death that occurred after December 31, 1997 and before January 1, 2019, a direction under subsection 71(2) of the Act may, subject to subsections (2) and (3), be given for payment of the death benefit

5 The heading before section 71 of the Regulations is replaced by the following:

Request for Reinstatement of Disability Pension, Post-Retirement Disability Benefit or Disabled Contributor’s Child Benefit

6 Subsection 71(1) of the Regulations is replaced by the following:

71 (1) A request for reinstatement of a disability pension or a post-retirement disability benefit under section 70.1 of the Act shall be made by submitting it to the Minister in writing.

7 (1) Subsection 72(1) of the Regulations is replaced by the following:

72 (1) The determination as to whether a person is entitled to have a disability pension or a post-retirement disability benefit reinstated shall be made by the Minister on the basis of the information and the evidence provided to the Minister under subsection (2).

(2) Paragraph 72(2)(b) of the Regulations is replaced by the following:

• (b) the month in which the applicant ceased to receive the disability pension or post-retirement disability benefit;

(3) Paragraph 72(2)(e) of the Regulations is replaced by the following:

• (e) the statement of a person qualified to practise medicine confirming that the applicant has a severe and prolonged mental or physical disability that is the same as, or is related to, the disability that entitled the applicant to receive the disability pension or post-retirement disability benefit that is the subject of the request;

8 The portion of subsection 76.1(1) of the Regulations before paragraph (a) is replaced by the following:

76.1 (1) For the purposes of subsection 65(3) of the Act, the Minister may deduct an amount as described in that subsection from a benefit payable to a person under paragraph 44(1)(b) or (h) of the Act and pay that amount to an administrator approved by the Minister if

Coming into Force

9 These Regulations come into force on the latest of

• (a) January 1, 2019,
• (b) the day on which subsection 372(4), section 377, subsections 378(2) and 379(2), sections 387, 390 and 391 and subsection 399(1) of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, come into force, and
• (c) the day on which these Regulations are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Canada Pension Plan (CPP) is a social insurance program funded by the contributions of employees, employers and self-employed persons, and by the revenue earned on CPP investments. It covers virtually all employed and self-employed persons in Canada, excluding Quebec, which operates its own comprehensive plan, the Quebec Pension Plan (QPP).

The intent of the CPP is to provide contributors and their families with minimum income replacement upon the retirement, disability or death of a wage earner. The amount of benefits payable is generally based on a wage earner’s contributions to the CPP and the length of their contributory period. However, while the CPP is primarily a retirement plan, it also provides supplementary benefits such as the disability pension and survivor benefits which reflect the insurance nature of the CPP.

Both the federal and provincial governments share joint stewardship of the CPP. While the CPP is administered by the federal government, the legislation includes specific provisions which stipulate that major amendments require the approval of the federal government and the governments of at least two thirds of the provinces with at least two thirds of the population.

CPP reform issues

Major reforms to the CPP and the QPP were recently introduced.

The CPP enhancement/QPP enhancement

In June 2016, Canada’s Ministers of Finance reached a historic agreement in principle to enhance the CPP. Legislative amendments were introduced through An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, which received royal assent on December 15, 2016. The CPP enhancement effectively created new tranches of contributions and benefit amounts, known as the “additional CPP.” These are distinguished from the “base CPP,” which is the current CPP in place since 1966. On February 22, 2018, the Quebec National Assembly approved An Act to enhance the Quebec Pension Plan and to amend various retirement-related legislative provisions, which enhances the QPP in a way that mirrors the CPP enhancement.

The CPP triennial review

As joint stewards of the CPP, the federal and provincial Ministers of Finance review the CPP every three years to ensure it continues to respond to the needs of retirees, workers and employers. At their December 2017 meeting, federal and provincial Ministers of Finance agreed to a package of reforms to the CPP, to conclude the 2016–2018 Triennial Review. Legislative changes are contained in the Budget Implementation Act, 2018, No. 1 (BIA 2018), which received royal assent of June 21, 2018. Consequential amendments to the CPP Regulations are needed to ensure the CPP reforms go ahead as planned.

BIA 2018 makes provision for the coordination of the enhanced portions of the CPP and the QPP. Such coordination affects “dual contributors”: those who have contributed to both the CPP and — because they work in Quebec — the QPP, during their working lives. This coordination allows for the portability of contributions and benefits between the plans. BIA 2018 also creates a post-retirement disability benefit. This new benefit will assist retirement pension beneficiaries between ages 60 and 65 who are disabled and are unable to cancel their retirement pension in favour of the disability pension, by providing them a benefit on top of their retirement pension. Finally, BIA 2018 converts the death benefit to a flat-rate payment of $2,500 for all eligible contributors. Consequential amendments to the CPP Regulations are needed to support the CPP/QPP coordination, as well as the post-retirement disability and the death benefit provisions.

Housekeeping issues

In addition to and outside the reforms, the CPP Regulations included a requirement that CPP applications be filed at “any office” of Employment and Social Development Canada (ESDC), which created an impediment to electronic filing.

Lastly, under the CPP Regulations, CPP retirement pension recipients determined to be disabled had to cancel their retirement pension within 60 days of receipt of a notice of eligibility for a disability pension, in order to benefit from the more advantageous disability pension. This requirement was burdensome and was frequently overlooked.

Objectives

• (1) Support implementation of CPP reform initiatives.
• (2) Remove impediments to the electronic filing of applications for CPP benefits.
• (3) Reduce the administrative burden on disabled CPP retirement pension recipients.

Description

(1) The Regulations Amending the Canada Pension Plan Regulations make consequential amendments to support implementation of CPP reform initiatives as follows:

• (a) BIA 2018 fixes the amount of the death benefit at $2,500. Under certain conditions prescribed in the CPP Regulations, the death benefit can be paid to persons or bodies other than the estate. The CPP Regulations are amended because one of those conditions — if the amount of the benefit to be paid is less than $2,387 — will no longer apply as of January 1, 2019, when the death benefit becomes a flat-rate benefit of $2,500.
• (b) The CPP Regulations provided for the QPP contribution rates for the years 1992 to 1996. The CPP Regulations are amended to take into account the current QPP contribution rate and the new contribution rates introduced under the QPP Enhancement.
• (c) BIA 2018 creates the new post-retirement disability benefit. Some provisions of the CPP Regulations which apply to the disability pension will also apply to the new post-retirement disability benefit and the CPP Regulations are amended accordingly.

(2) Remove impediments to the electronic filing of applications for CPP benefits:

• The CPP Regulations are amended to eliminate any impediment to the electronic filing of applications, by removing the requirement to file applications “at any office” of ESDC.

(3) Reduce the administrative burden on disabled CPP retirement pension recipients:

• To ensure that there is no longer a burden placed on retirement pension recipients to submit a written request to cancel their retirement pension for a disability pension, and prevent them from losing out on the disability pension if they fail to do so within the 60-day time limit, the CPP Regulations are amended to deem the disability pension application to also be a request to cancel the retirement pension. It can be reasonably inferred that an individual who submits an application for a disability pension after their retirement pension has started would prefer to cancel their retirement pension in favour of, in most cases, a higher disability pension.
• There will be, however, an exception to this provision. It will apply in rare circumstances to individuals in receipt of a CPP retirement pension who apply for a disability pension under the QPP. In these circumstances, they will need to submit a written request to cancel this CPP retirement pension within 90 days of receiving a notice of entitlement to a QPP disability pension.

“One-for-One” Rule

The “One-for-One” Rule does not apply to the amendments, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to the amendments, as there are no costs on small business.

Consultation

No consultations were conducted specifically for this reform package. However, most of the regulatory changes are consequential to legislative amendments agreed upon by the federal and provincial governments. These legislative amendments already went through the parliamentary process. This includes hearings before the Standing Committee on Finance. Such committees regularly invite private citizens, experts, representatives of organizations, public servants and ministers to appear before them in order to elicit information (receive evidence) relevant to the study under consideration. These consultations allowed witnesses to set out and clarify their points of view.

Rationale

The amendments are necessary to enable implementation of the changes made to the CPP by the recent reform initiatives.

The proposal also introduces two technical amendments. One removes any impediment to the electronic filing of CPP applications, which supports the government’s commitment to offer digital services. The second technical amendment removes a burden to ensure that individuals eligible for a CPP disability pension obtain their benefit.

Contact

Marianna Giordano
Director
Canada Pension Plan Policy and Legislation
Seniors and Pensions Policy Secretariat
Income Security and Social Development Branch
Employment and Social Development Canada
Telephone: 819-654-1672