Canada Gazette, Part I, Volume 152, Number 42: Additional Canada Pension Plan Sustainability Regulations

October 20, 2018

Statutory authority
Canada Pension Plan

Sponsoring department
Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

For the Regulatory Impact Analysis Statement, see page 3475.

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to paragraph 101(1)(d.1) footnote a and subsection 113.1(11.144) footnote b of the Canada Pension Planfootnote c , proposes to make the annexed Additional Canada Pension Plan Sustainability Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Galen Countryman, Director General, Federal- Provincial Relations Division, Department of Finance, 90 Elgin Street, Ottawa, Ontario K1A 0G5 (email: fin.cppenhancement-bonificationdurpc.fin@canada.ca).

Ottawa, October 4, 2018

Jurica Čapkun
Assistant Clerk of the Privy Council

Additional Canada Pension Plan Sustainability Regulations

Interpretation

Definitions

1 The following definitions apply in these Regulations.

Act means the Canada Pension Plan. (Loi)

additional contribution rate ratio means the ratio — rounded to the nearest whole number or, if equidistant from two whole numbers, to the higher whole number — of the percentage specified in paragraph 46(1)(c) of the Act to the percentage specified in paragraph 46(1)(b) of the Act. (rapport du taux de cotisation supplémentaire)

benefits means the portions of benefits under the Act in respect of the additional Canada Pension Plan. (prestations)

legislated means

review period means any three-year period for which the Chief Actuary prepares a report for the purpose of subsection 115(1) of the Act. (période d'examen)

Application of Subsections 113.1(11.141) and (11.142) of Act

Range — paragraph 113.1(11.141)(a)

2 (1) For the purpose of paragraph 113.1(11.141)(a) of the Act, the range consists of

Range — paragraph 113.1(11.141)(b)

(2) For the purpose of paragraph 113.1(11.141)(b) of the Act, the range consists of

Range — paragraph 113.1(11.141)(c)

(3) For the purpose of paragraph 113.1(11.141)(c) of the Act, the range consists of

Range — paragraph 113.1(11.141)(d)

(4) For the purpose of paragraph 113.1(11.141)(d) of the Act, the range consists of

Changes to Contribution Rates and Benefits

Applicable provisions — surplus position

3 (1) If the applicable differences referred to in subsection 113.1(11.141) of the Act fall within a range described in subparagraph 2(1)(a)(i) or (b)(i), 2(2)(a)(i) or (b)(i), 2(3)(a)(i) or (b)(i) or 2(4)(a)(i) or (b)(i),

Applicable provisions — deficit position

(2) If the applicable differences referred to in subsection 113.1(11.141) of the Act fall within a range described in subparagraph 2(1)(a)(ii) or (b)(ii), 2(2)(a)(ii) or (b)(ii), 2(3)(a)(ii) or (b)(ii) or 2(4)(a)(ii) or (b)(ii),

Exception

(3) If the first additional contribution rates and second additional contribution rates specified in the most recent report prepared for the purpose of subsection 115(1) of the Act include temporary increases in the rates calculated under subparagraphs 115(1.1)(d)(ii) and (e)(ii) of the Act, respectively, and the applicable differences referred to in subsection 113.1(11.141) of the Act would not fall within a range referred to in subsection (2) if those temporary increases were excluded,

Benefit multiplier

4 (1) Subject to subsection (2), in these Regulations, benefit multiplier means the value determined under subsection 9(2) or (3) or 14(2) or (3).

Default

(2) If benefits have not been determined in accordance with these Regulations for a given year, the benefit multiplier for that year is equal to 1.

Actions When Rates in Surplus Position

No previous rate increase or reduction in benefits

5 If the first additional contribution rates and second additional contribution rates are equal to the corresponding legislated first additional contribution rates and second additional contribution rates and benefits are equal to or greater than the corresponding legislated benefits, a value for S2 and the period to which S2 is to apply are to be determined, for the purposes of sections 8 to 10, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rate calculated for the first year after the review period would be as close as possible to and no greater than the legislated first additional contribution rate for self-employed persons for that year minus 0.1:

(1 + S2) × (PIt / PIt–1) – S2

where

S2
is a multiple of 0.01 between 0 and 1,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Previous rate increase

6 If the first additional contribution rates and second additional contribution rates are greater than the corresponding legislated first additional contribution rates and second additional contribution rates and benefits are equal to the legislated benefits,

(1 + S2) × (PIt / PIt–1) – S2

where

S2
is a multiple of 0.01 between 0 and 1,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Previous reduction in benefits

7 (1) If benefits are lower than the legislated benefits,

(1 + S1) × (PIt / PIt–1) – S1

where

S1
is a multiple of 0.01 between 0 and 1 that would result in the benefit multiplier for the last year of the period to which S1 applies being greater than the benefit multiplier for the last year of the review period and less than or equal to 1,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Previous rate increase

(2) If the rates calculated under paragraph (1)(b) are less than the corresponding first additional contribution rates for self-employed persons, as adjusted in accordance with paragraph (a), if applicable, minus 0.0001, and the latter rates are greater than the corresponding legislated first additional contribution rates,

Increase in benefits

(3) If the rates calculated under paragraph (1)(b) are less than the corresponding legislated first additional contribution rates for self-employed persons minus 0.1, a value for S2 and the period to which S2 is to apply are to be determined, for the purposes of sections 8 to 10, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rate calculated for the first year after the review period would be as close as possible to and no greater than the legislated first additional contribution rate for self-employed persons for that year minus 0.1:

(1 + S1 + S2) × (PIt / PIt–1) – (S1 + S2)

where

S1
is the value for S1 determined under subsection (1), if applicable to that year,
S2
is a multiple of 0.01 between 0 and 1, if applicable to that year,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Target benefit multipliers

8 For the purposes of sections 9 and 10, the interim target benefit multiplier is the value determined by the following formula for the last year of whichever of the applicable periods determined under section 5, paragraph 6(b) or subsection 7(1) or (3) is the shortest and the final target benefit multiplier is the value determined by that formula for the last year of whichever of those periods is the longest:

BMt–1 × [(1 + S1 + S2) – (S1 + S2) × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year;
S1
is the value for S1 determined under subsection 7(1), if applicable to that year;
S2
is the value for S2 determined under section 5, paragraph 6(b) or subsection 7(3), if applicable to that year;
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act; and
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Determination of new benefits

9 (1) Benefits that become payable in a year are to be determined by multiplying the corresponding legislated benefits by the benefit multiplier for that year.

Benefit multiplier — no interim adjustment

(2) If the interim and final target benefit multipliers are equal, the benefit multiplier is equal to

(a) the value determined by the following formula, for each year for which that value is less than the interim and final target benefit multipliers:

BMt–1 × [(1 + S1 + S2) – (S1 + S2) × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S1
is the value for S1 determined under subsection 7(1),
S2
is the value for S2 determined under subsection 7(3),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year;

(b) the value determined by the following formula, for each year to which paragraph (a) does not apply and for which that value is less than the final target benefit multiplier:

BMt–1 × [(1 + S) – S × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S
is the value for S1 determined under subsection 7(1) or, if the period determined under subsection 7(3) is longer than the period determined under subsection 7(1), the value for S2 determined under subsection 7(3),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year; or

(c) for each subsequent year, the final target benefit multiplier.

Benefit multiplier — interim adjustment

(3) If the interim target benefit multiplier is less than the final target benefit multiplier, the benefit multiplier is equal to

(a) the value determined by the following formula, for each year for which that value is less than or equal to the interim target benefit multiplier:

BMt–1 × [(1 + S1 + S2) – (S1 + S2) × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S1
is the value for S1 determined under subsection 7(1),
S2
is the value for S2 determined under subsection 7(3),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year;

(b) the value determined by the following formula, for each year to which paragraph (a) does not apply and for which that value is less than the final target benefit multiplier:

BMt–1 × [(1 + S) – S × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S
is the value for S1 determined under subsection 7(1) or, if the period determined under subsection 7(3) is longer than the period determined under subsection 7(1), the value for S2 determined under subsection 7(3),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year; or

(c) for each subsequent year, the final target benefit multiplier.

Determination of other benefits

10 Benefits, other than those that become payable in a year, are to be determined, for each year to which paragraph 9(2)(a) or (3)(a) or (b) applies and for the first year to which paragraph 9(2)(b) or (3)(c) applies, by multiplying the previous year's benefits not by the ratio referred to in paragraph 45(2)(b) and subparagraphs 56(2)(c)(ii), 58(1.1)(b)(ii) and 59(c)(ii) of the Act, but by the value determined by the following formula, as the case may be:

(a) for each year to which paragraph 9(2)(a) or (3)(a) applies,

(1 + S1 + S2) × (PIt / PIt–1) – (S1+ S2)

where

S1, S2, PIt and PIt–1
have the same values as in the applicable paragraph;

(b) for each year to which paragraph 9(3)(b) applies,

(1 + S) × (PIt / PIt–1) – S

where

S, PIt and PIt–1
have the same values as in that paragraph; or

(c) for the first year to which paragraph 9(2)(b) or (3)(c) applies,

(FTBM / BM t–1) × (PIt / PIt–1)

where

FTBM
is the final target benefit multiplier,
BMt–1
is the benefit multiplier for the year before that year,
PIt
is the Pension Index for that year, and
PIt–1
is the Pension Index for the year before that year.

Actions When Rates in Deficit Position

No previous increase in benefits

11 (1) If benefits are less than or equal to the corresponding legislated benefits, a value for S4 is to be determined, for the purposes of sections 13 to 15, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rates calculated would be as close as possible to the corresponding first additional contribution rates for self-employed persons, excluding any past temporary increases in those rates resulting from the operation of these Regulations:

(1 + S4) × (PIt / PIt–1) – S4

where

S4
is a multiple of 0.01 between -0.4 and 0,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Deemed change to contribution rates

(2) If the rates calculated under subsection (1) exceed the corresponding first additional contribution rates for self-employed persons, excluding any past temporary increases in those rates resulting from the operation of these Regulations, by more than 0.0001,

Deemed temporary change to contribution rates

(3) For each year for which the first additional contribution rate calculated under subparagraph 115(1.1)(d)(ii) of the Act would include a temporary increase if benefits were determined in accordance with sections 14 and 15 and subsection 5(4) of the Calculation of Contribution Rates Regulations, 2018 did not apply,

Previous increase in benefits

12 (1) If benefits are greater than the legislated benefits, a value for S3 and the period to which S3 is to apply are to be determined, for the purposes of sections 13 to 15, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rates calculated would be as close as possible to the corresponding first additional contribution rates for self-employed persons, excluding any past temporary increases in those rates resulting from the operation of these Regulations:

(1 + S3) × (PIt / PIt–1) – S3

where

S3
is a multiple of 0.01 between -1 and 0 that would result in the benefit multiplier for the last year of the period to which S3 applies being greater than or equal to 1 and less than the benefit multiplier for the last year of the review period,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Decrease in benefits

(2) If the rates calculated under subsection (1) exceed the corresponding first additional contribution rates for self-employed persons by more than 0.0001, a value for S4 is to be determined, for the purposes of sections 13 to 15, such that if the Chief Actuary were to calculate the first additional contribution rates under paragraph 115(1.1)(d) of the Act assuming the following, the rates calculated would be as close as possible to the corresponding first additional contribution rates for self-employed persons, excluding any past temporary increases in those rates resulting from the operation of these Regulations:

(1 + S3 + S4) × (PIt / PIt–1) – (S3 + S4)

where

S3
is the value for S3 determined under subsection (1),
S4
is a multiple of 0.01 between -0.4 and 0, if applicable to that year,
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act, and
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Repetition

(3) If the sum of the values for S3 and S4 that are determined, respectively, under subsections (1) and (2) is less than -1, the application of those subsections is to be repeated, with the shortest period referred to in paragraph (1)(b) being lengthened by three years for each repetition, until the sum of those values is greater than or equal to -1. All references in these Regulations to the value for S3 determined under subsection (1), the value for S4 determined under subsection (2), the period determined under subsection (1) or the rate calculated under subsection (1) or (2) are to be read as that value, period or rate following the final application of those subsections.

Deemed change to contribution rates

(4) If the rates calculated under subsection (2) exceed the corresponding first additional contribution rates for self-employed persons, excluding any past temporary increases in those rates resulting from the operation of these Regulations, by more than 0.0001,

Deemed temporary change to contribution rates

(5) For each year for which the first additional contribution rate calculated under subparagraph 115(1.1)(d)(ii) of the Act would include a temporary increase if benefits were determined in accordance with sections 14 and 15 and subsection 5(4) of the Calculation of Contribution Rates Regulations, 2018 did not apply,

Target benefit multipliers

13 For the purposes of sections 14 and 15, the interim target benefit multiplier is the value determined by the following formula for the last year of whichever of the applicable periods referred to in paragraph 11(1)(a) or 12(2)(a) or determined under subsection 12(1) is the shortest and the final target benefit multiplier is the value determined by that formula for the last year of the applicable period referred to in paragraph 11(1)(a) or determined under subsection 12(1):

BMt–1 × [(1 + S3 + S4) – (S3 + S4) × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year;
S3
is the value for S3 determined under subsection 12(1), if applicable to that year;
S4
is the value for S4 determined under subsection 11(1) or 12(2), if applicable to that year;
PIt–1
is the Pension Index for the year before that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act; and
PIt
is the Pension Index for that year, based on the assumption of future inflation set out in the most recent report prepared for the purpose of section 115 of the Act.
Determination of new benefits

14 (1) Benefits that become payable in a year are to be determined by multiplying the corresponding legislated benefits by the benefit multiplier for that year.

Benefit multiplier — no interim adjustment

(2) If the interim and final target benefit multipliers are equal, the benefit multiplier is equal to

(a) the value determined by the following formula, for each year for which that value is greater than the interim and final target benefit multipliers:

BMt–1 × [(1 + S3 + S4) – (S3 + S4) × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S3
is the value for S3, if any, determined under subsection 12(1),
S4
is the value for S4, if any, determined under subsection 11(1) or 12(2),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year; or

(b) for each subsequent year, the interim and final target benefit multipliers.

Benefit multiplier — interim adjustment

(3) If the interim target benefit multiplier is greater than the final target benefit multiplier, the benefit multiplier is equal to

(a) the value determined by the following formula, for each year for which that value is greater than or equal to the interim target benefit multiplier:

BMt–1 × [(1 + S3 + S4) – (S3 + S4) × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S3
is the value for S3 determined under subsection 12(1),
S4
is the value for S4 determined under subsection 12(2),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year;

(b) the value determined by the following formula, for each year to which paragraph (a) does not apply and for which that value is greater than the final target benefit multiplier:

BMt–1 × [(1 + S3) – S3 × (PIt–1 / PIt)]

where

BMt–1
is the value of the benefit multiplier for the year before that year,
S3
is the value for S3 determined under subsection 12(1),
PIt–1
is the Pension Index for the year before that year, and
PIt
is the Pension Index for that year; or

(c) for each subsequent year, the final target benefit multiplier.

Determination of other benefits

15 Benefits, other than those that become payable in a year, are to be determined, for each year to which paragraph 14(2)(a) or (3)(a) or (b) applies and for the first year to which paragraph 14(2)(b) or (3)(c) applies, by multiplying the previous year's benefits not by the ratio referred to in paragraph 45(2)(b) and subparagraphs 56(2)(c)(ii), 58(1.1)(b)(ii) and 59(c)(ii) of the Act, but by the value determined by the following formula, as the case may be:

(a) for each year to which paragraph 14(2)(a) or (3)(a) applies,

(1 + S3 + S4) × (PIt / PIt–1) – (S3+ S4)

where

S3, S4, PIt and PIt–1
have the same values as in the applicable paragraph;

(b) for each year to which paragraph 14(3)(b) applies,

(1 + S3) × (PIt / PIt–1) – S3

where

S3, PIt and PIt–1
have the same values as in that paragraph; or

(c) for the first year to which paragraph 14(2)(b) or (3)(c) applies,

(FTBM / BM t–1) × (PIt / PIt–1)

where

FTBM
is the final target benefit multiplier,
BMt–1
is the benefit multiplier for the year before that year,
PIt
is the Pension Index for that year, and
PIt–1
is the Pension Index for the year before that year.

Coming into Force

S.C. 2018, c. 12

16 These Regulations come into force on the day on which subsections 401(1) and (2) of the Budget Implementation Act, 2018, No. 1 come into force, but if they are registered after that day, they come into force on the day on which they are registered.