R.S., 1985, c. 32 (2nd Supp.)

[1986, c. 40, assented to 27th June, 1986]

An Act respecting pension plans organized and administered for the benefit of persons employed in connection with certain federal works, undertakings and businesses

1. This Act may be cited as the Pension Benefits Standards Act, 1985.

2. (1) In this Act,

“additional voluntary contribution” under a pension plan means an optional contribution by a member that does not give rise to an obligation on the employer to make additional contributions;

“administrator”, in relation to a pension plan, means the administrator referred to in section 7, and includes the replacement administrator appointed under subsection 29.1(1);

“cessation of membership” in a pension plan has the meaning assigned by subsection (2);

“collective agreement” means an agreement in writing entered into between an employer and a bargaining agent containing provisions respecting terms and conditions of employment and related matters;

“common-law partner”, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year;

“common-law partnership” means the relationship between two persons who are common-law partners of each other;

“continuous”, in relation to membership in a pension plan or to employment, means without regard to periods of temporary interruption of the membership or employment;

“deferred pension benefit” means a pension benefit other than an immediate pension benefit;

“defined benefit plan” means a pension plan that is not a defined contribution plan;

“defined benefit provision” means a provision of a pension plan under which pension benefits for a member are determined in any way other than that described in the definition “defined contribution provision”;

“defined contribution plan” means a pension plan that consists of defined contribution provisions and does not contain defined benefit provisions, other than

(a) a defined benefit provision relating to pension benefits accrued in respect of employment before the effective date of the pension plan, or

(b) a defined benefit provision that provides for a minimum pension benefit whose additional value is not significant in the Superintendent’s opinion;

“defined contribution provision” means a provision of a pension plan under which pension benefits for a member are determined solely as a function of the amount of pension benefit that can be provided by

(a) contributions made by and on behalf of that member, and

(b) interest earnings and other gains and losses allocated to that member;

“designated province” means a province prescribed as a province in which there is in force a law substantially similar to this Act;

“employee” includes an officer;

“employer”, in relation to an employee, means the person or organization, whether incorporated or unincorporated, in respect of employment with which the employee receives his remuneration, and includes the successors or assigns of that person or organization;

“employment” means the performance by an employee of work for remuneration for an employer under an express or implied contract of service or apprenticeship, and includes the tenure of an office;

“former member”, in relation to a pension plan, means

(a) except in sections 9.2 and 24, a person who, on or after January 1, 1987, has either ceased membership in the plan or retired,

(a.1) in section 9.2, a person who has either ceased membership in the plan or retired and has not transferred their pension benefit credit under section 26 before termination of the plan, or

(b) in section 24, a person who, before, on or after January 1, 1987, has either ceased membership in the plan or retired;

“full-time basis”, in relation to an employee of a particular class, means engaged to work, throughout the year, all or substantially all of the normally scheduled hours of work established for persons in that class of employees;

“immediate pension benefit” means a pension benefit that is to commence within one year after the member becomes entitled to it;

“included employment” has the meaning assigned by section 4;

“joint and survivor pension benefit” means an immediate pension benefit that continues at least until the death of the member or former member or the death of the survivor of the member or former member, whichever occurs later;

“marriage” and “remarriage”[Repealed, 2000, c. 12, s. 254]

“member”, in relation to a pension plan, means a person who has become a member of the pension plan and has neither ceased membership in the plan nor retired;

“Minister” means the Minister of Finance;

“multi-employer pension plan” means a pension plan organized and administered for employees of two or more employers who contribute to the plan pursuant to an agreement, by-law or statute, where the pension plan provides pension benefits that are determined by periods of employment with any or all of the participating employers, but does not include a pension plan where more than ninety-five per cent of the plan members are employed by participating employers who are incorporated and are affiliates within the meaning of the Canada Business Corporations Act;

“office” means the position of an individual entitling that individual to a fixed or ascertainable stipend or remuneration, and includes the position of an officer or director of a corporation or other organization and of an agent acting for a principal, and “officer” means a person holding such a position;

“participating employer”, in relation to a multi-employer pension plan, means an employer who is required to contribute to that plan;

“part-time basis”, in relation to an employee, means engaged to work on other than a full-time basis;

“pension benefit” means a periodic amount to which, under the terms of a pension plan, a member or former member, or the spouse, common-law partner, survivor or other beneficiary or estate or succession of a member or former member, is or may become entitled;

“pension benefit credit”, in relation to any person, means the aggregate value at a particular time of that person’s pension benefit and other benefits provided under a pension plan, calculated in prescribed manner;

“pension fund”, in relation to a pension plan, means a fund maintained to provide benefits under or related to the pension plan;

“pension plan” has the meaning assigned by subsection 4(2);

“pensionable age”, in relation to a member, means the earliest age (taking into account the period of employment with the employer or the period of membership in the pension plan, if applicable) at which a pension benefit, other than a benefit in respect of a disability (as defined in the regulations), is payable to the member under the terms of the pension plan without the consent of the administrator and without reduction by reason of early retirement;

“prescribed” means prescribed by regulation;

“registered pension plan” means a pension plan that is registered and in respect of which a certificate of registration has been issued by the Superintendent under this Act;

“retire” has the meaning assigned by subsection (3);

“spouse”, in relation to an individual, includes a person who is party to a void marriage with the individual;

“standards for registration”[Repealed, 1998, c. 12, s. 1]

“Superintendent” means the Superintendent of Financial Institutions appointed pursuant to subsection 5(1) of the Office of the Superintendent of Financial Institutions Act;

“surplus” means the amount, determined in the prescribed manner, by which the assets of a pension plan exceed its liabilities;

“survivor”, in relation to a member or former member, means

(a) if there is no person described in paragraph (b), the spouse of the member or former member at the time of the member’s or former member’s death, or

(b) a person who was the common-law partner of the member or former member at the time of the member’s or former member’s death;

“termination”, in relation to a pension plan, means the cessation of crediting of benefits to plan members generally, and includes the situations described in subsections 29(1) and (2);

“winding-up”, in relation to a pension plan, means the distribution of the assets of a pension plan that has been terminated;

“Year’s Maximum Pensionable Earnings” has the same meaning as in the Canada Pension Plan.

(2) For the purposes of this Act, a member of a pension plan shall be deemed to cease membership in the plan

(a) in the case of a multi-employer pension plan, when no contributions have been made in respect of that member by any of the participating employers for a period of twenty-four months, or such shorter period as is provided under the plan, and the member is not in receipt of an immediate pension benefit;

(b) in the case of any other pension plan, when the member’s employment with the employer terminates and the member is not in receipt of an immediate pension benefit, whether or not contributions by the employer in respect of that member had ceased previously; or

(c) in any other prescribed circumstance.

(3) For the purposes of this Act, a member of a pension plan shall be deemed to retire on commencing to receive an immediate pension benefit, whether the member’s employment has terminated or not.

(4) Except in section 25, where a member or former member has a spouse from whom they are separated and a common-law partner with whom they are cohabiting, a reference to a “spouse or common-law partner” in respect of that member or former member means the common-law partner.

R.S., 1985, c. 32 (2nd Supp.), s. 2, c. 18 (3rd Supp.), s. 38; 1994, c. 24, s. 34(F); 1998, c. 12, s. 1; 2000, c. 12, s. 254; 2001, c. 34, s. 66.

3. The requirements of this Act and the regulations shall not be construed as preventing the registration or operation of a pension plan containing provisions that are more advantageous to members of the plan, former members or potential members or their spouses, common-law partners, beneficiaries, estates or successions.

R.S., 1985, c. 32 (2nd Supp.), s. 3; 2000, c. 12, s. 255.

4. (1) This Act applies in respect of pension plans.

(2) In this Act, “pension plan” means a superannuation or other plan organized and administered to provide pension benefits to employees employed in included employment (and former employees) and to which the employer is required under or in accordance with the plan to contribute, whether or not provision is also made for other benefits or for benefits to other persons, and includes a supplemental pension plan, whether or not the employer is required to make contributions under or in accordance with the supplemental pension plan, but does not include

(a) an employees’ profit sharing plan or a deferred profit sharing plan as defined in sections 144 and 147, respectively, of the Income Tax Act;

(b) an arrangement to provide a “retiring allowance” as defined in subsection 248(1) of the Income Tax Act; or

(c) any other prescribed arrangement.

(3) In subsection (2), “supplemental pension plan” means a pension plan for employees whose membership in another pension plan is a condition precedent to membership in the supplemental pension plan and that is an integral part of that other plan.

(4) In this Act, “included employment” means employment, other than excepted employment, on or in connection with the operation of any work, undertaking or business that is within the legislative authority of the Parliament of Canada, including, without restricting the generality of the foregoing,

(a) any work, undertaking or business operated or carried on for or in connection with navigation and shipping, whether inland or maritime, including the operation of a ship and transportation by ship anywhere in Canada;

(b) any railway, canal, telegraph or other work or undertaking connecting a province with another province or extending beyond the limits of a province;

(c) any line of steam or other ships connecting a province with another province or extending beyond the limits of a province;

(d) any ferry between a province and another province or between a province and a country other than Canada;

(e) any aerodrome, aircraft or line of air transportation;

(f) any radio broadcasting station;

(g) any bank or authorized foreign bank within the meaning of section 2 of the Bank Act;

(h) any work, undertaking or business that, although wholly situated within a province, is before or after its execution declared by the Parliament of Canada to be for the general advantage of Canada or for the advantage of two or more provinces; and

(i) any work, undertaking or business outside the exclusive legislative authority of provincial legislatures, and any work, undertaking or business of a local or private nature in Yukon, the Northwest Territories or Nunavut.

(5) In this Act, “excepted employment” means

(a) employment by Her Majesty in right of Canada; and

(b) any employment that is excepted from included employment by any regulation made under subsection (6).

(6) The Governor in Council may make regulations excepting from included employment

(a) employment by an agent of Her Majesty in right of Canada; and

(b) any other employment if the Governor in Council, on a report of the Minister, is satisfied that

(i) provision has been made for the coverage of employees employed in that employment under the terms of a pension plan that is organized and administered for the benefit primarily of employees employed in other than included employment and that is required to be registered under the law of a designated province, or

(ii) in any other case, the exception of that employment is warranted having regard to the existence of other arrangements for the safeguarding of any benefits that are or may become available to employees or other persons in respect of that employment, or having regard to such other circumstances as the Governor in Council deems relevant.

R.S., 1985, c. 32 (2nd Supp.), s. 4; 1993, c. 28, s. 78; 1999, c. 28, s. 172, c. 31, s. 244(F); 2002, c. 7, s. 226.

5. (1) The Superintendent, under the direction of the Minister, has the control and supervision of the administration of this Act and has the powers conferred by this Act.

(2) The Superintendent may

(a) collect information to determine the extent to which inflation adjustments and other adjustments to pension benefits are provided;

(b) conduct studies, surveys and research programs and compile statistical and other information relating to pension plans and their operation; and

(c) disclose information gathered under paragraph (a) or (b) or filed under section 10, 10.1 or 12 to any government agency or regulatory body.

R.S., 1985, c. 32 (2nd Supp.), s. 5; 1998, c. 12, s. 3.

6. (1) The Minister, with the approval of the Governor in Council, may

(a) enter into agreements with the appropriate authority of a designated province respecting

(i) the administration, application and enforcement of pension legislation, and

(ii) the establishment and operation in Canada of an association of pension supervisory authorities;

(a.1) enter into agreements with the appropriate authority of a designated province with respect to any pension plan that is required to be registered under this Act and is registered in the designated province in order to

(i) make applicable the pension law of the designated province, or any part of that law, with such modifications as the Minister deems necessary, in respect of the pension plan, and

(ii) limit the application of this Act and the regulations to the pension plan;

(b) authorize the appropriate authority of a designated province, or the association referred to in subparagraph (a)(ii), to exercise such powers on behalf of the Superintendent or otherwise under this Act as the Minister may determine;

(c) authorize the Superintendent to exercise or perform such powers and duties on behalf of the appropriate authority of a designated province, or on behalf of the association referred to in subparagraph (a)(ii), as the Minister may determine; and

(d) designate an agency for the purposes, among others, of receiving, holding and disbursing pension benefits and pension benefit credits under this Act.

(2) The Minister shall cause a notice of every agreement entered into under paragraph (1)(a.1) to be published in the Canada Gazette.

R.S., 1985, c. 32 (2nd Supp.), s. 6; 1998, c. 12, s. 4.

7. (1) The administrator of a pension plan shall be

(a) in the case of a multi-employer pension plan established under one or more collective agreements, a board of trustees or other similar body constituted in accordance with the terms of the plan or the collective agreement or agreements to manage the affairs of the plan;

(b) in the case of a multi-employer pension plan not described in paragraph (a), a pension committee constituted in accordance with the terms of the plan, subject to section 7.1, to manage the affairs of the plan; or

(c) in the case of a pension plan other than a multi-employer pension plan,

(i) the employer, or

(ii) if the plan is established under one or more collective agreements and the terms of the plan or the collective agreement or agreements to manage the affairs of the plan provide for the constitution of a board of trustees or other similar body, that body.

(2) In the case of a simplified pension plan, the administrator of the pension plan shall be the prescribed person or body.

R.S., 1985, c. 32 (2nd Supp.), s. 7; 1998, c. 12, s. 5.

7.1 A pension committee must

(a) if a majority of the pension plan members so requests, include a representative of the plan members; and

(b) if the pension plan has fifty or more retired members and a majority of the retired members so requests, include a representative of the retired members.

1998, c. 12, s. 5.

7.2 (1) An employer who is the administrator of a pension plan may establish a pension council but, if the pension plan has fifty or more members and a majority of the members so requests, the employer shall establish a pension council.

(2) A pension council must include a representative of the pension plan members and, if the plan has fifty or more retired members and a majority of the retired members so requests, the council must include a representative of the retired members.

(3) The functions of a pension council are the following:

(a) to promote awareness and understanding of the pension plan among members and potential members;

(b) to review, at least once every year, the financial, actuarial and administrative aspects of the plan;

(c) to perform the prescribed administrative functions; and

(d) to perform any other functions that are specified by the pension plan or the employer.

(4) The employer shall provide a pension council with any information that is necessary to enable it to carry out its functions.

1998, c. 12, s. 5.

7.3 Pension plan members and retired members shall choose their representatives for the purposes of section 7.1 and subsection 7.2(2), directly or indirectly, in the prescribed manner.

1998, c. 12, s. 5.

7.4 (1) The administrator of a pension plan shall, in accordance with this Act and the regulations, administer the pension plan and the pension fund and file the required documents.

(2) An employer who is not the administrator of its pension plan shall provide the administrator with the information that is required by the administrator in order to comply with the terms of the plan and discharge the duties under subsection (1).

(3) The administrator of a pension plan shall, within thirty days after being constituted or becoming the administrator, inform the Superintendent of

(a) the administrator’s name and address; or

(b) the names and addresses of the persons who together constitute the body that is the administrator.

The administrator shall inform the Superintendent of any change to this information within thirty days after the change.

1998, c. 12, s. 5.

7.5 (1) An administrator shall hold a meeting, within the period specified by the Superintendent, to consider any matters set out in a written notice from the Superintendent requiring the administrator to hold a meeting.

(2) The Superintendent may

(a) participate in the meeting;

(b) require the administrator to invite members, former members or any other persons entitled to pension benefits or refunds under the pension plan to attend the meeting; and

(c) require any other interested persons to attend the meeting.

1998, c. 12, s. 5.

8. (1) An employer shall ensure, with respect to its pension plan, that

(a) the moneys in the pension fund,

(b) an amount equal to the aggregate of the prescribed payments that have accrued to date, and

(c) all

(i) amounts deducted by the employer from members’ remuneration, and

(ii) other amounts due to the pension fund from the employer

that have not been remitted to the pension fund

are kept separate and apart from the employer’s own moneys, and shall be deemed to hold the amounts referred to in paragraphs (a) to (c) in trust for members of the pension plan, former members, and any other persons entitled to pension benefits or refunds under the plan.

(2) In the event of any liquidation, assignment or bankruptcy of an employer, an amount equal to the amount that by subsection (1) is deemed to be held in trust shall be deemed to be separate from and form no part of the estate in liquidation, assignment or bankruptcy, whether or not that amount has in fact been kept separate and apart from the employer’s own moneys or from the assets of the estate.

(3) The administrator shall administer the pension plan and pension fund as a trustee for the employer, the members of the pension plan, former members, and any other persons entitled to pension benefits or refunds under the plan.

(4) In the administration of the pension plan and pension fund, the administrator shall exercise the degree of care that a person of ordinary prudence would exercise in dealing with the property of another person.

(4.1) The administrator shall invest the assets of a pension fund in accordance with the regulations and in a manner that a reasonable and prudent person would apply in respect of a portfolio of investments of a pension fund.

(5) Without limiting the generality of subsection (4), an administrator who in fact possesses, or by reason of profession or business ought to possess, a particular level of knowledge or skill relevant to the administration of a pension plan or pension fund shall employ that particular level of knowledge or skill in the administration of the pension plan or pension fund.

(5.1) An administrator is not liable for contravening subsection (4), (4.1) or (5) if the contravention occurred because the administrator relied in good faith on

(a) financial statements of the pension plan prepared by an accountant, or a written report of the auditor or auditors of the plan, that have been represented to the administrator as fairly reflecting the financial condition of the plan; or

(b) a report of an accountant, an actuary, a lawyer, a notary or another professional person whose profession lends credibility to the report.

(6) A person shall not accept an appointment to a body referred to in paragraph 7(1)(a) or (b) or subparagraph 7(1)(c)(ii) if there would be a material conflict of interest between that person’s role as a member of that body and that person’s role in any other capacity.

(6.1) For the purposes of subsection (6), merely being entitled to a pension benefit or having an interest in a pension benefit credit does not constitute a conflict of interest.

(7) A person described in subsection (6) shall, within ninety days after becoming aware that a material conflict of interest exists,

(a) eliminate that conflict of interest; or

(b) resign as a member of that body.

(8) A document issued by a board of trustees or other similar body or a pension committee is valid notwithstanding a material conflict of interest of a member thereof.

(9) If a person contravenes subsection (6) or (7), the Superintendent or any other interested person may apply to a court of competent jurisdiction for an order that that person be replaced, and the court may make an order on such terms as it considers appropriate.

(10) If there is a material conflict of interest between the role of an employer who is an administrator, or the role of the administrator of a simplified pension plan, and their role in any other capacity, the administrator

(a) shall, within thirty days after becoming aware that a material conflict of interest exists, declare that conflict of interest to the pension council or to the members of the pension plan; and

(b) shall act in the best interests of the members of the pension plan.

(11) If an administrator contravenes subsection (10), a court of competent jurisdiction may, on application by the Superintendent or any other interested person, make any order on such terms as the court considers appropriate.

R.S., 1985, c. 32 (2nd Supp.), s. 8; 1998, c. 12, s. 6.

9. (1) A pension plan shall provide for funding, in accordance with the prescribed tests and standards for solvency, that is adequate to provide for payment of all pension benefits and other benefits required to be paid under the terms of the plan.

(2) In the case of an actuarial report required pursuant to subsection 12(3), where the Superintendent is of the opinion that the report has not been prepared

(a) on the basis of actuarial assumptions or methods that are adequate and appropriate, and

(b) in accordance with the standards of practice adopted by the Canadian Institute of Actuaries, except as otherwise specified by the Superintendent,

the Superintendent shall notify the administrator in writing of this opinion and shall direct the administrator to cause the appropriate changes to be made to the report, and the administrator shall forthwith comply with such a direction.

(3) A pension plan shall be funded in accordance with the report referred to in subsection (2) as amended pursuant to any direction of the Superintendent under that subsection.

(4) to (6) [Repealed, 1998, c. 12, s. 8]

R.S., 1985, c. 32 (2nd Supp.), s. 9; 1998, c. 12, s. 8.

9.1 (1) The administrator of a pension plan shall notify in writing the holder or custodian of the pension fund of all amounts that are to be remitted to the pension fund and the expected date of the remittance.

(2) If a payment to a pension fund is not remitted within thirty days after the date referred to in subsection (1),

(a) the administrator of the pension plan shall immediately notify the Superintendent in writing; and

(b) a holder or custodian of the pension fund shall, if the administrator is the employer, immediately notify the Superintendent in writing.

1998, c. 12, s. 9.

9.2 (1) If an actuarial report filed under subsection 12(3) indicates that there is a surplus, no part of that surplus may be refunded to the employer unless

(a) the employer establishes that

(i) it is entitled to the surplus, or part of it, under the pension plan, or

(ii) it has a claim to the surplus, or part of it, under this section;

(b) the requirements of the regulations made under paragraph 39(h.1) are met; and

(c) the Superintendent consents to the refund.

(2) In deciding whether to consent to a refund, the Superintendent shall recognize the claim of the employer to the surplus, or part of it, established under this section.

(3) An employer has a claim to the surplus, or part of it, if, after being notified of the employer’s proposal for a refund of that surplus or part of it, at least two thirds of the persons in each of the following categories notify the employer that they consent to the proposal:

(a) members of the pension plan; and

(b) former members of the plan and any other persons within a prescribed class.

(4) Subject to subsection (5), if more than one half but fewer than two thirds of the persons in each of the categories referred to in subsection (3) consented to the proposal, the employer may, or if the pension plan is terminated shall, submit the proposal to arbitration. The employer shall notify the Superintendent and the persons in those categories if the proposal is to be submitted to arbitration.

(5) The employer’s claim to the surplus, or part of it, shall be submitted to arbitration within eighteen months after the termination of the pension plan, or any further period specified by the Superintendent, if

(a) the employer has not established a claim to the surplus;

(b) the plan is terminated; and

(c) the employer is winding up or is in the process of being liquidated.

The employer shall notify the Superintendent and the persons in the categories referred to in subsection (3) that the claim will be submitted to arbitration.

(6) If a proposal or claim is submitted to arbitration, the employer and all interested persons are deemed to have agreed to have the employer’s claim determined by the arbitration.

(7) The arbitrator shall be chosen by the employer and the persons in the categories set out in subsection (3). If they cannot agree on an arbitrator within the prescribed period, the Superintendent shall choose the arbitrator.

(8) The arbitrator is not bound by any legal or technical rules of evidence in conducting any matter that comes before the arbitrator, and shall deal with it as informally and expeditiously as the circumstances and considerations of fairness and natural justice permit.

(9) An arbitrator may retain any experts that the arbitrator considers necessary.

(10) Subject to the provisions of the pension plan, the parties to an arbitration shall pay its costs in the amount, subject to the approval of the Superintendent, and in the proportion that the arbitrator determines.

(11) The arbitrator shall issue a written decision with reasons, file them with the Superintendent within ten days after issuing them and make them available for inspection by any interested person.

(12) In respect of a claim submitted to arbitration under subsection (5), the arbitrator may impose a scheme of division of the surplus, or of part of it, between the parties to the arbitration.

(13) An arbitrator’s decision is final and binding on the parties and on any other person affected by it.

(14) All notifications to unionized members under this section must also be made to the executive of their union.

(15) Unless otherwise provided by the relevant collective agreement, the executive of a union shall represent its members, other than former members of the plan, for the purposes of this section.

1998, c. 12, s. 9; 2001, c. 34, s. 67(F).