Vol. 150, No. 9 — May 4, 2016

Registration

SOR/2016-76 April 15, 2016

ROYAL CANADIAN MOUNTED POLICE SUPERANNUATION ACT

Former Members of Parliament Counting of Service Regulations

P.C. 2016-229 April 15, 2016

His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to paragraphs 26(a) (see footnote a), (d) (see footnote b) and (t) and subsection 27(2) (see footnote c) of the Royal Canadian Mounted Police Superannuation Act (see footnote d), makes the annexed Former Members of Parliament Counting of Service Regulations.

Former Members of Parliament Counting of Service Regulations

Election

Election

1 (1) A contributor may elect to count any period of service in respect of which they contributed to the Members of Parliament Retiring Allowances Account referred to in subsection 3(1) of the Members of Parliament Retiring Allowances Act as pensionable service for the purposes of Part I of the Royal Canadian Mounted Police Superannuation Act (the “Act”).

Time limit

(2) The contributor must make the election no later than the day on which they cease to be a member of the Force.

Condition

(3) In the case of a contributor who is entitled to a retirement allowance under the Members of Parliament Retiring Allowances Act in respect of the period of service, the election is conditional on the contributor surrendering that entitlement.

Form of election

2 (1) The contributor must make the election referred to in section 1 in writing and must sign and date the document.

Day of election

(2) The election is made on the day on which the document is signed.

Sending

(3) The contributor must send the document to the Commissioner of the Royal Canadian Mounted Police within one month after the day on which it is signed.

Sending date

(4) The document is sent on the day on which it is delivered or, if it is sent by mail, the day on which it is mailed, with the date of the postmark being evidence of that day.

Contributor no longer member of the Force

(5) Despite subsection 1(2), a contributor who is no longer a member of the Force who received, from an authorized advisor who normally gives information about these matters, erroneous or misleading information in respect of an election and who did not make the election while they were a member, may make the election within one year after the day on which the advisor sent them the corrected information or, if it is later, within one year after the day on which these Regulations come into force.

Revocation of election

(6) The contributor may revoke the election if they received, from an authorized advisor who normally gives information about these matters, erroneous or misleading information in respect of the election and

Same election

(7) A contributor who revokes the election is deemed to have made the same election on the day after the day on which they received the erroneous or misleading information.

Authorized advisor

(8) For the purposes of this section, authorized advisor has the same meaning as in section 2 of the Royal Canadian Mounted Police Superannuation Regulations.

Paragraph 8(2)(c) of Act

3 (1) Paragraph 8(2)(c) of the Act does not apply to an election referred to in section 1.

Annual rate of pay — full-time member

(2) A contributor who makes the election is deemed to have received, during the period of service in respect of which the election is made, the annual rate of pay that they were receiving on the day on which they most recently became a contributor, if they make the election within one year after that day, or the annual rate of pay that they are receiving on the day on which the election is made, in any other case.

Annual rate of pay — part-time member

(3) For the purpose of subsection (2), if the contributor was a part-time member on the day on which they most recently became a contributor or on the day on which the election was made, the annual rate of pay is to be the annual rate of pay that would have been authorized to be paid to them if they had been a full-time member at that time or, if they had then been engaged to work concurrently in more than one position, it is to be the aggregate of the amounts calculated for each position in accordance with the formula

A x B/C

where

Withdrawal Allowance

Payment to the Royal Canadian Mounted Police Pension Fund
Amount to be paid

4 A contributor who was paid a withdrawal allowance under the Members of Parliament Retiring Allowances Act and who makes an election referred to in section 1 must pay the following amount to the Royal Canadian Mounted Police Pension Fund:

Terms of payment

5 A contributor must pay the amount to be paid in monthly instalments or in a lump sum.

Payment in Monthly Instalments
When monthly instalments are payable

6 (1) Monthly instalments are payable on the first day of each month after the day on which the election referred to in section 1 is made until the earlier of

Calculation of instalments

(2) The instalments are payable in equal amounts that must not be less than $5.00, except the last one, and are calculated using the mortality rates used in the preparation of the actuarial valuation report that was most recently laid before Parliament, in accordance with section 30 of the Act, before the day on which the election is made or, if that report was laid before Parliament in the month in which that day falls or in the preceding month, of the report that was laid before Parliament immediately before that report, and bear interest, compounded annually, at a rate equal to the projected rate of return of the Royal Canadian Mounted Police Pension Fund that was used in the preparation of the report.

Prepayment

7 (1) A person may, at any time, do one or both of the following:

Partial prepayment

(2) A person who makes a partial prepayment may request that the period of instalments remain the same or be decreased.

Adjustment

(3) In all cases, the adjustment of the period of instalments and of the remaining instalments is to be made on the first day of the month after the day on which the request is made, in accordance with section 6, except that the actuarial valuation report is the one that was most recently laid before Parliament, in accordance with section 30 of the Act, before the day on which the request is made or, if that report was laid before Parliament in the month in which that day falls or in the preceding month, of the report that was laid before Parliament immediately before that report.

Payment default

8 (1) A contributor who does not pay an instalment before or on the day on which it is due is in default of payment.

Notice

(2) Notice is to be sent to the contributor as soon as feasible after the default.

Deferred notice

(3) However, if the contributor is on leave without pay or if they have ceased to be a member of the Force and are entitled to an annual allowance or a deferred annuity that has not yet become payable, the notice is to be sent to them as soon as feasible after the day on which they return to work or the payment of the allowance or annuity begins.

Time limit for payment

9 (1) The contributor must, within 30 days after the day on which the notice of default is sent,

Interest — arrears paid in lump sum

(2) Arrears that are paid in a lump sum bear interest, compounded annually, beginning on the day of the payment default and ending on the day on which the notice of default is sent, at a rate equal to the projected rate of return of the Royal Canadian Mounted Police Pension Fund that was used in the preparation of the actuarial valuation report that was most recently laid before Parliament, in accordance with section 30 of the Act, before the day on which the notice is sent or, if that report was laid before Parliament in the month in which that day falls or in the preceding month, of the report that was laid before Parliament immediately before that report.

Interest — arrears paid in monthly instalments

(3) Arrears that are paid in monthly instalments bear interest, compounded annually, beginning on the day of the payment default and ending on the day on which the payment is received by the Commissioner of the Royal Canadian Mounted Police, at a rate equal to the projected rate of return of the Royal Canadian Mounted Police Pension Fund that was used in the preparation of the actuarial valuation report that was most recently laid before Parliament, in accordance with section 30 of the Act, before the day on which the contributor exercises one of the options set out in subsection (1) or, if that report was laid before Parliament in the month in which that day falls or in the preceding month, of the report that was laid before Parliament immediately before that report.

When instalments are payable

(4) The instalments are payable on the later of

Failure to exercise option

10 A contributor who does not exercise one of the options set out in subsection 9(1) within the time limit must pay the arrears, together with interest calculated in accordance with subsection 9(2), in monthly instalments that are

Unpaid instalments when contributor no longer member of the Force

11 (1) The unpaid instalments referred to in subsection 8(6) of the Act are to be reserved

Reservations

(2) The reservations are to begin in the month in which the pension benefit begins.

Financial hardship

12 (1) A contributor who establishes that undue financial hardship, which was unforeseen at the time the election referred to in section 1 was made, will be caused if the contributor is required to continue to pay the instalments may triple the length of the period that was chosen under paragraph 6(1)(a), up to a maximum of 15 years.

Adjustment of instalments

(2) The remaining instalments are to be adjusted, in accordance with subsection 6(2), on the first day of the month after the day on which the request is made, except that the actuarial valuation report is the one that was most recently laid before Parliament, in accordance with section 30 of the Act, before the day on which the request is made or, if that report was laid before Parliament in the month in which that day falls or in the preceding month, of the report that was laid before Parliament immediately before that report.

Interest not payable

13 An amount does not bear interest if

Amount payable by reservation on contributor’s death

14 The unpaid amount referred to in subsection 8(7) of the Act is to be recovered, at the option of the recipient,

Medical examination

15 Despite section 5, a contributor who makes an election referred to in section 1 more than one year after the day on which they most recently became a contributor may opt to pay in monthly instalments only if they pass a medical examination.

Time limit

16 (1) A contributor must undergo a medical examination within six months before or after the day on which the election is made.

Extension

(2) If, through no fault on the part of the contributor, the contributor is unable to undergo the medical examination before the end of that period, the period is to be extended by six months.

Authorized physician

(3) The medical examination must be performed by any physician who is authorized to practise medicine in the jurisdiction in which the examination is performed.

Criterion for pass

(4) The contributor passes the medical examination if the physician certifies in writing that the contributor has a life expectancy of at least five years.

Lump Sum Payment
Lump sum payment

17 A contributor who opts to pay in a lump sum under section 5 or who does not pass the medical examination required under section 15 must ensure that the lump sum is received by the Commissioner of the Royal Canadian Mounted Police within 30 days after the day on which the notice that advises the contributor of the amount is sent.

Interest

18 The lump sum bears interest, compounded annually, beginning on the first day of the month after the day on which the election is made and ending on the last day of the month that precedes the day on which the payment is received, at a rate equal to the projected rate of return of the Royal Canadian Mounted Police Pension Fund that was used in the preparation of the actuarial valuation report that was most recently laid before Parliament, in accordance with section 30 of the Act, before the day on which the payment is received or, if that report was laid before Parliament in the month in which that day falls or in the preceding month, of the report that was laid before Parliament immediately before that report.

Service counted in full

19 (1) If the full lump sum is received by the Commissioner of the Royal Canadian Mounted Police within the time limit set out in section 17, the period of service in respect of which the election was made is to be counted as pensionable service.

Service counted in part

(2) If the full lump sum is not received by the Commissioner within the time limit, the period of service in respect of which the election was made is to be counted as pensionable service, beginning with the part that is most recent in point of time, in the same proportion as the amount that is received by the Commissioner within that time limit bears to the lump sum.

Retirement Allowance

Repayment of Certain Benefits
Partial repayment

20 (1) A contributor who is entitled to a retirement allowance under the Members of Parliament Retiring Allowances Act and who makes an election referred to in section 1 must repay to the Royal Canadian Mounted Police Pension Fund the amount that they received in respect of that allowance beginning in the 13th month after the day on which they most recently became a contributor.

Terms

(2) The repayment must be made in accordance with the terms set out in sections 6 to 14, except that the amount bears simple interest at 4% per year.

Election — section 10 of Members of Parliament Retiring Allowances Act

(3) A contributor who made an election under section 10 of the Members of Parliament Retiring Allowances Act must pay to the Royal Canadian Mounted Police Pension Fund, in accordance with the terms that are applicable to that election, the amount that they were required to pay into the Consolidated Revenue Fund in accordance with section 11 of that Act, less any amount already paid.

Transfer of Certain Amounts to the Royal Canadian Mounted Police Pension Fund
Amount to be transferred

21 All amounts that the contributor has paid into the Members of Parliament Retiring Allowances Account referred to in subsection 3(1) of the Members of Parliament Retiring Allowances Act and all amounts credited to that Account in respect of the contributor are to be transferred to the Royal Canadian Mounted Police Pension Fund.

Repeal

22 The Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 (see footnote 1) are repealed.

Coming into Force

Registration

23 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

The Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 set out the conditions under which a member of the Royal Canadian Mounted Police Pension Plan (the Plan) may elect to count prior service as a former member of the House of Commons or a former Senator as pensionable under the Plan.

The Standing Joint Committee for the Scrutiny of Regulations (the Committee) noted that the Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 lacked detail regarding medical examinations required, in certain circumstances, by members of the Royal Canadian Mounted Police who elect to buy back prior parliamentary service. Information was needed about the time period for undergoing the medical examination, the choice of physician and the criteria for passing the examination.

The Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 also lacked detail regarding the terms of payment for the election to buy back parliamentary service and contained numerous outdated references to the Members of Parliament Retiring Allowances Act.

Objectives

Given the extensive amendments that would be required to update the Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 and to address the concerns of the Committee, they are repealed and replaced by the Former Members of Parliament Counting of Service Regulations.

The Former Members of Parliament Counting of Service Regulations (the new Regulations) provide detail regarding the medical examination that must be undergone, in certain circumstances, by members of the Royal Canadian Mounted Police when they elect to buy back prior parliamentary service. The new Regulations set out the time limit for undergoing the medical examination, the choice of physician and the criteria for passing the examination.

The new Regulations also provide other details regarding the terms of payment for the election and replace a number of outdated references that appeared in the Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 (the repealed Regulations). The policy is essentially the same as in the repealed Regulations with some improvements that bring it into line with rules for elections for prior service with other Canadian pension plans.

Description

The Counting of Service by Former Members of the Senate or House of Commons Regulations, No. 2 are repealed and replaced by the Former Members of Parliament Counting of Service Regulations.

The Former Members of Parliament Counting of Service Regulations allow a member of the Royal Canadian Mounted Police to elect to count prior service as a former member of the House of Commons or a former Senator as pensionable service under the Royal Canadian Mounted Police Pension Plan.

The following provisions mirror the policy that applied under the repealed Regulations.

The member may elect to buy back prior pensionable service in respect of which they (1) received a withdrawal allowance; or (2) are entitled to a retirement allowance under the Members of Parliament Retiring Allowances Act. In the latter case, the member must surrender entitlement to the retirement allowance under that Act.

Although the member may choose not to count the prior parliamentary service as pensionable under the Royal Canadian Mounted Police Pension Plan, doing so may be more beneficial. The value of the prior service may be improved by having the future pension benefit calculated based on higher earnings, ancillary benefits (e.g. survivor benefits) may be increased or the individual may qualify for retirement at an earlier time.

The cost to buy back a period of service in respect of which a withdrawal allowance was received is equal to the amount of the pension contributions the member would have been required to pay based on the member’s salary either at the date of first becoming a contributor to the Royal Canadian Mounted Police Pension Plan (if the election is made within one year of becoming a contributor) or at the date of election (if the election is made later than one year of becoming a contributor).

For 2016, the Government matching rate is 1.32 times the amount the member is paying. This is the same matching rate that applies to contributions for current service with the Royal Canadian Mounted Police and to prior service elections for prior public service and service with the Canadian Forces in respect of which the member received a refund of pension contributions.

The member may pay in a lump sum or in monthly life-insured instalments. Instalments must be paid up within the later of 20 years from the day of the election and the contributor’s 65th birthday.

If the election to buy back service is made later than one year from the day of becoming a contributor to the Royal Canadian Mounted Police Pension Plan and if the contributor chooses to pay for the election by instalments, a medical examination must be passed.

In the case of a transfer of prior service in respect of which the member is entitled to a retirement allowance under the Members of Parliament Retiring Allowances Act, the member’s contributions are transferred from the Members of Parliament Retiring Allowances Account to the Royal Canadian Mounted Police Pension Fund.

The new Regulations require the contributor to repay any amount of the retirement allowance received after the individual has been a contributor to the Royal Canadian Mounted Police Pension Plan for one year. The repayment amount includes interest at 4% per year.

In addition to the preceding provisions that set out the same policies that existed under the repealed Regulations, the new Regulations contain the following improvements.

Details are provided regarding the medical examination that must be passed, in certain circumstances, by a member who chooses to pay for prior parliamentary service by monthly instalments. The member must undergo the medical examination within six months before or after the day the election is made. If they are unable to undergo the examination before the end of that period, it may be extended by six months. The examination must be performed by any physician who is authorized to practise medicine in the jurisdiction in which the examination is performed. The member passes the medical examination if the physician certifies in writing that they have a life expectancy of at least five years. A medical examination is no longer required if the member pays for the prior service in a lump sum.

A new provision is introduced to deem the prior service election to have been made on an earlier day that it was actually made by the member. This would occur in the limited circumstance where the member received incorrect information (regarding eligibility to elect, the cost of buying back the service, medical requirements, etc.) from an authorized advisor and as a result, failed to make the election at that time.

Once the error is discovered, the prior service election is deemed to have been made on the day after the day on which the member received the incorrect information. The cost of buying back service increases as time goes by, so deeming the election to have been made earlier results in a fair cost for the member.

“One-for-One” Rule

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

Small business lens

The small business lens does not apply to this proposal, as there are no costs on small business. This proposal does not apply to business.

Consultation

Consultations took place with the Office of the Chief Actuary, the Department of Justice Canada, and the Treasury Board Secretariat.

The Royal Canadian Mounted Police Pension Advisory Committee was also advised and supports the introduction of the Former Members of Parliament Counting of Service Regulations. This Committee has a statutory mandate to review matters respecting the administration, design and funding of the Royal Canadian Mounted Police Superannuation Act and to make recommendations to the Minister of Public Safety and Emergency Preparedness about those matters.

Rationale

The Royal Canadian Mounted Police Superannuation Act is the enabling authority for the Former Members of Parliament Counting of Service Regulations. The Act provides that (1) prior parliamentary service may be counted as pensionable to the extent and subject to the conditions prescribed by the Regulations; and (2) amounts in the Members of Parliament Retiring Allowances Account may be transferred to the Royal Canadian Mounted Police Pension Fund as prescribed by the Regulations. Consequently, there is no alternative to making the new Regulations.

The new Regulations address concerns of the Standing Joint Committee for the Scrutiny of Regulations and introduce enhancements that are in line with the rules under the Royal Canadian Mounted Police Superannuation Act for elections for prior service with other Canadian pension plans.

There is no increase in the actuarial liability of the Royal Canadian Mounted Police Pension Plan, no additional employer costs and no change in the current service cost as a result of these new Regulations. There is little to no risk associated with the Regulations, as the policies mirror existing rules under the Royal Canadian Mounted Police Pension Plan for elections for prior service with other Canadian pension plans. The anticipated number of contributors who will elect for prior parliamentary service is low.

Implementation, enforcement and service standards

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

Contact

Pierre LeBrun
Director General
National Compensation Services
Royal Canadian Mounted Police
Ottawa, Ontario
K1A 0R2
Telephone: 613-843-6243
Email: Pierre.LeBrun@rcmp-grc.gc.ca