Additional Benefits on Downsizing
Applicability of Downsizing Rules
(2) For the purposes of this section,
(a) a downsizing program is an approved downsizing program if the Minister has approved in writing the application of this section in respect of the program;
(b) subject to subsection (2.1), an individual is a qualifying individual in relation to an approved downsizing program if
(i) the employment of the individual is terminated while the downsizing program is in effect,
(ii) the individual was not, at any time before the termination of employment, connected with the employer from whom the individual terminated employment, and
(iii) the Minister has approved in writing the application of this section to the individual; and
(c) the specified day is, in respect of an approved downsizing program,
Qualifying Individual — Exclusion
(2.1) An individual whose employment is terminated under an approved downsizing program is not a qualifying individual in relation to the program if, at the time the individual’s employment is terminated, it is reasonable to expect that
(a) the individual will become employed by, or provide services to,
(b) a corporation with which the individual is connected will provide services to a person or body of persons referred to in paragraph (a) and the individual will be directly involved in the provision of the services,
except that this subsection does not apply with respect to an individual where
(c) it is reasonable to expect that
(i) the individual will not be employed or provide services, or
(ii) if paragraph (b) is applicable, the corporation will not provide services,
for a period exceeding 12 months, and
(d) the Minister has waived the application of this subsection with respect to the individual.
Additional Lifetime Retirement Benefits
(3) Lifetime retirement benefits (in this section referred to as “special retirement benefits”) that do not comply with the condition in paragraph 8503(3)(a) may be provided under a defined benefit provision of a pension plan to a member of the plan who terminates employment after attaining 55 years of age where the following conditions are satisfied:
(a) the special retirement benefits are provided pursuant to an approved downsizing program;
(b) the member is a qualifying individual in relation to the downsizing program;
(c) under the terms of the provision,
(d) the amount (expressed on an annualized basis) of special retirement benefits payable to the member for a particular calendar year does not exceed the amount that is determined by the formula
A × B × C
- is the lesser of
(i) 2 per cent of the member’s highest average compensation (computed under subsection 8504(2)) for the purpose of the provision, indexed to the calendar year (in this paragraph referred to as the “year of commencement”) in which retirement benefits commence to be paid under the provision to the member, and
(ii) the defined benefit limit for the year of commencement,
- is the lesser of 7 and the amount, if any, by which 65 exceeds the member’s age (expressed in years, including any fraction of a year) at termination of employment, and
- is the greatest of all amounts each of which is the ratio of
(i) the average Consumer Price Index for a calendar year not earlier than the year of commencement and not later than the particular year
(ii) the average Consumer Price Index for the year of commencement;
(e) [Repealed, SOR/95-64, s. 12]
(f) the plan
(g) lifetime retirement benefits that are permissible only by reason of this subsection are not provided to the member under any other defined benefit provision, unless this condition has been waived by the Minister.
(a) a member of a pension plan becomes an employee of a participating employer after lifetime retirement benefits that are permissible only by reason of subsection (3) have commenced to be paid under a defined benefit provision of the plan to the member, and
(b) payment of the member’s retirement benefits under the provision is suspended while the member is so employed,
the condition in paragraph (3)(d) is applicable in respect of benefits payable under the provision to the member after the suspension as if
Early Retirement Reduction
(4) Where a member of a pension plan is a qualifying individual in relation to an approved downsizing program, the terms of a defined benefit provision of the plan that determine the amount by which the member’s lifetime retirement benefits under the provision are reduced because of the early commencement of the benefits may, under the downsizing program, be modified in such a way that the benefits do not comply with the condition in paragraph 8503(3)(c) but would so comply if the member’s benefits were provided in respect of employment in a public safety occupation.
Exception for Future Benefits
(5) Subsection (4) does not apply with respect to benefits that are provided to an individual in respect of a period that is after the day on which the individual’s employment was terminated under an approved downsizing program.
Alternative CPI Indexing
(6) Special retirement benefits provided to a member under a defined benefit provision of a pension plan shall be deemed to comply with the condition in paragraph (3)(d) where they would so comply if the amount C in that paragraph were replaced by a substantially similar measure of the change in the Consumer Price Index.
Exclusion from Maximum Pension Rules
(7) For the purpose of determining whether retirement benefits provided under a defined benefit provision of a pension plan comply with the conditions in subsections 8504(1) and (5), lifetime retirement benefits that are permissible only by reason of subsection (3) shall be disregarded.
Exemption from Past Service Contribution Rule
(8) Subsection 8503(15) does not apply in respect of a contribution that is made in respect of benefits provided to a qualifying individual pursuant to an approved downsizing program.
- NOTE: Application provisions are not included in the consolidated text;
- see relevant amending regulations. SOR/92-51, s. 7;
- SOR/94-686, s. 79(F);
- SOR/95-64, s. 12.
- Date modified: