Vol. 149, No. 14 — July 15, 2015

Registration

SOR/2015-172 June 23, 2015

PUBLIC SERVICE SUPERANNUATION ACT

Regulations Amending the Supplementary Death Benefit Regulations

P.C. 2015-1024 June 23, 2015

His Excellency the Governor General in Council, on the recommendation of the President of the Treasury Board, pursuant to paragraph 61(1)(b) of the Public Service Superannuation Act (see footnote a), makes the annexed Regulations Amending the Supplementary Death Benefit Regulations.

REGULATIONS AMENDING THE SUPPLEMENTARY DEATH BENEFIT REGULATIONS

AMENDMENT

1. Schedule III to the Supplementary Death Benefit Regulations (see footnote 1) is amended by repealing the following:

COMING INTO FORCE

2. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Atomic Energy of Canada Limited (AECL) employees are currently covered by the commercial death benefit policy held by Canadian Nuclear Laboratories Limited (CNL), a wholly-owned subsidiary of AECL. It is not possible for this arrangement to continue after CNL’s transition to a government-owned contractor-operated management model, which is anticipated to occur in the fall of 2015. To ensure that AECL employees will have continued coverage, a replacement death benefit plan must be put in place for AECL employees before their current coverage lapses.

Participation in the legislated supplementary death benefit plan established under Part II of the Public Service Superannuation Act (the Act) is considered the best option to provide AECL employees with death benefit coverage going forward. In order to achieve this, AECL must be removed from Schedule III of the Supplementary Death Benefit Regulations (the Regulations).

Background

The designated beneficiary of every employee who is a member in the public service pension plan is, by default, entitled to a supplementary death benefit under Part II of the Act, in the event of the employee’s death while he/she is employed in the public service. The maximum amount of the benefit is two times the employee’s final salary. Both Crown corporations and their employees are required to pay premiums towards the supplementary death benefit at legislated rates of $0.04 and $0.15, respectively, for every $1,000 of coverage.

Employees of Crown corporations or public boards may be excluded from application of the legislated supplementary death benefit; in order to do so, the organization must be listed in Schedule III of the Regulations. AECL employees have been excluded from Part II of the Act since April 1, 1990. At the time, AECL sought exclusion in order to provide its employees with coverage under a private and commercially available death benefit plan.

On May 30, 2014, as part of its strategy to restructure AECL, the Government of Canada incorporated CNL to operate AECL’s Nuclear Laboratories. Virtually all of AECL’s 3 400 employees were reorganized into CNL on November 3, 2014. In addition, CNL became the policy holder of the commercial death benefit plan which covers not only those employees reorganized into CNL, but also remaining AECL employees on a temporary basis.

AECL will maintain approximately 50 employees on an ongoing basis to monitor and oversee the contract with the CNL’s private sector operator. Once CNL is managed by a private sector company, it will manage human resources independently from AECL. In this context, it will not be permissible for AECL employees to continue their participation in CNL’s death benefit plan.

AECL has determined that purchasing a separate commercially available death benefit policy with similar benefits would not be cost effective for such a small complement of employees. It has also determined that commercially-provided insurance would impose restrictions on the level of death benefit coverage which would be different from those under the current death benefit policy. Therefore, AECL has concluded that the best approach would be to participate in the legislated supplementary death benefit plan under Part II of the Act.

Objectives

The objective of this regulatory amendment is to ensure that AECL employees and their beneficiaries continue to receive death benefit coverage similar to the coverage they currently have, and which is identical to the coverage received by the majority of federal public service employees. This will contribute to the Government of Canada’s overall objective of ensuring that the reorganization of AECL does not unduly impact affected employees.

Description

The Regulations are amended to remove AECL from Schedule III of the Regulations. With the coming into force of this amendment, Part II of the Act will apply to AECL.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this amendment because it does not impose administrative burden on business.

Small business lens

The small business lens does not apply to this amendment, as there is no impact on small business.

Consultation

Consultations have occurred throughout the restructuring process with affected stakeholders. In particular, AECL management has engaged its employees throughout the process to inform them on how the process will affect them. Employees are expected to welcome participation in the supplementary death benefit plan as it will ensure they continue to receive comparable death benefit coverage to the one they currently receive.

Rationale

This amendment carries no incremental costs to the Government of Canada. AECL will pay required employer premiums from its existing funding levels. Implementation and ongoing administration costs are negligible and will be managed within Public Works and Government Service Canada’s existing funding levels.

Extending the supplementary death benefit plan to AECL employees will ensure that they will receive uninterrupted death benefit protection. This amendment will also ensure that the level of death benefit coverage AECL employees receive is comparable to the coverage they currently receive and identical to the coverage received by the majority of public service employees.

The removal of AECL from Schedule III of the Regulations is the only way to extend participation in the legislated supplementary death benefit plan to AECL employees.

Contact

Kimberley Gowing
Senior Director
Pension Policy and Stakeholder Relations
Pensions and Benefits Sector
Treasury Board of Canada Secretariat
Ottawa, Ontario
K1A 0R5
Telephone: 613-952-3121