Income Tax Regulations

• 8509 (1) The prescribed conditions for the registration of a grandfathered plan are, before 1992,

  • (a) the condition set out in paragraph 8502(a),

  • (b) the condition set out in paragraph 8502(c), but only in respect of benefits provided under a money purchase provision of the plan, and

  • (c) if the plan contains a money purchase provision, the condition set out in paragraph 8506(2)(a),

  and the following conditions:

  • (d) the benefits provided under each defined benefit provision of the plan are acceptable to the Minister and, for the purposes of this condition, any benefits in respect of periods before 1991 that become provided after 1988 with respect to a member who is connected with an employer who participates in the plan, or was so connected at any time before the benefits become provided, shall, unless the Minister is notified in writing that the benefits are provided with respect to the member, be deemed to be unacceptable to the Minister, and

  • (e) the plan contains such terms as may be required by the Minister.

Conditions Applicable after 1991 to Benefits under Grandfathered Plan

• (2) For the purpose of the condition in paragraph 8502(c) as it applies after 1991 in respect of a grandfathered plan,

  • (a) the condition in subparagraph 8503(2)(b)(ii) is replaced by the condition that the amount of bridging benefits payable to a member for a particular month does not exceed the amount that is determined in respect of the month by the formula

    (A × C × (E / F)) + (G × (1 - (E / F)))

    where

    A

    is the amount determined for A under subparagraph 8503(2)(b)(ii) with respect to the member for the month,

    C

    is the amount determined for C under subparagraph 8503(2)(b)(ii) with respect to the member for the month,

    E

    is the aggregate of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period ending before 1992 that is pensionable service of the member under the provision,

    F

    is the aggregate of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period that is pensionable service of the member under the provision, and

    G

    is the amount determined with respect to the member for the month by the formula set out in subparagraph 8503(2)(b)(ii);

  • (b) the conditions in paragraphs 8503(3)(c), (h) and (i) and 8504(1)(a) and (b) apply only in respect of lifetime retirement benefits provided in respect of periods after 1991; and

  • (c) for the purposes of the conditions in paragraphs 8504(1)(a) and (b),

    • (i) the aggregate that is determined under subparagraph 8504(1)(a)(i) does not include an amount in respect of 1991, and

    • (ii) the amount that is determined for G under subparagraph 8504(1)(a)(ii) is based only on periods of pensionable service after 1991.

Additional Prescribed Condition for Grandfathered Plan after 1991

• (3) The prescribed conditions for the registration of a grandfathered plan include, after 1991, the condition that all benefits provided under each defined benefit provision of the plan in respect of periods before 1992 are acceptable to the Minister.

Defined Benefits under Grandfathered Plan Exempt from Conditions

• (4) The Minister may, after 1991, exempt from the condition in paragraph 8502(c) the following benefits provided under a defined benefit provision of a grandfathered plan:

  • (a) benefits that are payable after the death of a member, to the extent that the benefits can reasonably be considered to relate to lifetime retirement benefits provided to the member in respect of periods before 1992; and

  • (b) bridging benefits in excess of bridging benefits that are permissible under paragraph 8503(2)(b), to the extent that the excess bridging benefits are vested in a member on December 31, 1991.

Benefits under Grandfathered Plan — Pre-1992 Disability

• (4.1) Where benefits are provided under a defined benefit provision of a grandfathered plan to a member of the plan as a consequence of the member having become, before 1992, physically or mentally impaired, the following rules apply:

  • (a) the conditions in this Part (other than the condition in paragraph (b)) do not apply in respect of the benefits;

  • (b) the prescribed conditions for the registration of the plan include the condition that the benefits are acceptable to the Minister; and

  • (c) subsections 147.1(8) and (9) of the Act do not apply to render the plan a revocable plan where those subsections would not so apply if the member’s pension credits under the provision were determined without regard to the benefits.

Conditions Not Applicable to Grandfathered Plan

• (5) Where a pension plan is a grandfathered plan,

  • (a) the conditions referred to in paragraph 8501(2)(b) do not apply before 1992 in respect of the plan;

  • (b) the condition in paragraph 8502(d) does not apply in respect of distributions that are made before 1992 under a defined benefit provision of the plan; and

  • (c) the conditions in paragraphs 8503(3)(a) and (b) do not apply in respect of benefits provided under a defined benefit provision of the plan in respect of periods before 1992.

PA Limits for Grandfathered Plan for 1991

• (6) Subsections 147.1(8) and (9) of the Act do not apply in respect of a grandfathered plan for a calendar year before 1992 if

  • (a) the plan does not contain a money purchase provision in that year; or

  • (b) no contributions are made in respect of that year under the money purchase provisions of the plan.

Limit on Pre-Age 65 Benefits

• (7) Where a pension plan is a grandfathered plan or would be a grandfathered plan if the references to “March 27, 1988” in the definitions existing plan and grandfathered plan in subsection 8500(1) were read as references to “June 7, 1990” and the references to “March 28, 1988” in the definition existing plan in that subsection were read as references to “June 8, 1990”,

  • (a) the conditions in paragraphs 8504(5)(a) and (b) apply only in respect of retirement benefits provided in respect of periods after 1991; and

  • (b) the amounts that are determined for B and D under paragraph 8504(5)(a) are based only on periods of pensionable service after 1991.

Benefit Accrual Rate Greater than 2 Per Cent

• (8) Where a pension plan is a grandfathered plan or would be a grandfathered plan if the references to “March 27, 1988” in the definitions existing plan and grandfathered plan in subsection 8500(1) were read as references to “July 31, 1991” and the references to “March 28, 1988” in the definition existing plan in that subsection were read as references to “August 1, 1991”,

  • (a) the condition in paragraph 8503(3)(g) applies only in respect of lifetime retirement benefits provided under a defined benefit provision of the plan in respect of periods after 1994; and

  • (b) subparagraph 8503(3)(h)(iv) is not applicable in respect of lifetime retirement benefits provided under a defined benefit provision of the plan to a member unless the formula for determining the amount of the member’s lifetime retirement benefits complies with the condition in paragraph 8503(3)(g) as that condition would, but for this subsection, apply.

Benefits under Plan other than Grandfathered Plan

• (9) The following rules apply in respect of the benefits provided under a defined benefit provision of a pension plan that is not a grandfathered plan:

  • (a) the condition in paragraph 8502(c) does not apply in respect of benefits provided with respect to an individual

    • (i) to whom retirement benefits have commenced to be paid under the provision before 1992, or

    • (ii) who has died before 1992; and

  • (b) the prescribed conditions for the registration of the plan include the condition that all benefits referred to in paragraph (a) are acceptable to the Minister.

Money Purchase Benefits Exempt from Conditions

• (10) The Minister may exempt from the condition in paragraph 8502(c) all or a portion of the benefits provided under a money purchase provision of a pension plan with respect to a member that may reasonably be considered to derive from contributions made before 1992 under a money purchase provision of a registered pension plan.

Stipulation Not Required for Pre-1992 Plans

• (10.1) The conditions in paragraphs 8503(4)(c) and 8506(2)(d) do not apply in respect of a pension plan

  • (a) that was a registered pension plan on December 31, 1991,

  • (b) in respect of which an application for registration was made to the Minister before 1992, or

  • (c) that was established to provide benefits to one or more individuals in lieu of benefits to which the individuals were entitled under another pension plan that is a plan described in paragraph (a) or (b) or this paragraph, whether or not benefits are also provided to other individuals.

Benefits Acceptable to Minister

• (11) For greater certainty, where benefits under a defined benefit provision of a pension plan are, by reason of paragraph 8503(3)(e) or subsection (3), subject to the condition that they be acceptable to the Minister, the provisions of this section shall not be considered to limit in any way the requirements that may be imposed by the Minister in respect of the benefits.

PA Limits — 1996 to 2002

• (12) Neither subsection 147.1(8) nor (9) of the Act applies to render a registered pension plan a revocable plan at the end of any calendar year after 1995 and before 2003 solely because a pension adjustment, a total of pension adjustments or a total of pension credits of an individual for the year (each of which is, in this subsection, referred to as a “test amount”) is excessive where the subsection would not apply to render the plan a revocable plan at the end of the year if each test amount were decreased by the lesser of

  • (a) the amount, if any, by which the lesser of

    • (i) the total of all amounts each of which is

      • (A) a pension credit under a defined benefit provision of a registered pension plan that is included in determining the test amount, or

      • (B) a pension credit under a money purchase provision of a registered pension plan or under a deferred profit sharing plan that is included in determining the test amount and that is taken into account, under paragraph 8302(2)(c), in determining a pension credit referred to in clause (A), and

    • (ii) $15,500

    exceeds the money purchase limit for the year, and

  • (b) the total of all amounts each of which is a pension credit referred to in clause (a)(i)(A).

Maximum Benefits Indexed Before 2005

• (13) Where

  • (a) a pension plan is a grandfathered plan or would be a grandfathered plan if the references to “March 27, 1988” in the definitions existing plan and grandfathered plan in subsection 8500(1) were read as references to “March 5, 1996” and the references to “March 28, 1988” in the definition existing plan in that subsection were read as references to “March 6, 1996”,

  • (b) under the terms of the plan as they read immediately before March 6, 1996, the plan provided for benefits that are benefits to which a condition in any of subsections 8504(1), (5) and (6) and paragraph 8505(3)(d) applies and, at that time, the benefits complied with the condition, and

  • (c) as a consequence of the change in the defined benefit limit effective March 6, 1996, the benefits would, if this Part were read without reference to this subsection, cease to comply with the condition,

  the following rules apply:

  • (d) for the purpose of determining at any time after March 5, 1996 and before 1998 whether the benefits comply with the condition, the defined benefit limit for each year after 1995 is deemed to be the amount that it would be if the definition money purchase limit in subsection 147.1(1) of the Act were applied as it read on December 31, 1995, and

  • (e) for the purpose of determining at any time after 1997 whether the benefits comply with the condition, the defined benefit limit for 1996 and 1997 is deemed to be the amount that it would be if it were determined in accordance with paragraph (d).