SUPERANNUATION ADMINISTRATION MANUAL
SPECIAL BULLETIN: 2004-004

1

PURPOSE

1.1

The purpose of this bulletin is to provide compensation advisors with information concerning the changes to the transfer value (TV) calculation concerning the limits pertaining to survivor benefits under the Income Tax Act (ITA).

1.2

In this text, use of the masculine is generic and applies to both men and women.

2

POLICY

2.1

The ITA imposes limits on the amount of benefits payable to a survivor under a registered pension plan (RPP). Under a RPP, payments of survivor benefits are limited to 2/3 of the member's pension with respect to periods of service after December 31, 1991. In order to comply with the ITA, the Public Service Superannuation Regulations (PSSR) were amended on November 3, 1997, to limit the amount of survivor benefits payable under the Public Service Superannuation Act (PSSA) to that which is allowed under the ITA. Consequently, the Retirement Compensation Arrangement Regulations, No. 1 were amended on November 20, 1997, to allow for the payment of survivor benefits in excess of the ITA survivor limits. These limits also apply to lump sum benefits payable to the member which include survivor benefits, such as a TV. Consequently, any portion of the TV payment which falls outside the ITA limit as a result of the application of these survivor limits to post-1991 service will be paid out of the Retirement Compensation Arrangements Account.

3

PROCEDURES/INSTRUCTIONS

3.1

On December 1, 2003, the TV calculation program was modified to implement the ITA limits applicable to survivor benefits with respect to post-1991 service. Therefore, when providing TV estimates, compensation advisors should note that the calculation screen (SNTVC) will now display information in the "CPP/QPP 01/01/92" and "Benefit 01/01/92" fields. For all situations where the amount of survivor benefits exceeds the limits permissible under the ITA with respect to post-1991 service, the system will generate an amount payable under the retirement compensation arrangement (RCA). This amount will be shown in the "AMT RCA" and "TTL RCA" fields.

3.2

Please note that the application of the limits on the survivor benefits, with respect to post-1991 service, will not affect the total amount of the TV a plan member would be entitled to receive. However, should the amount of the PSSA benefit be reduced as a result of the ITA limits, the amount in excess of these limits would be payable from the Retirement Compensation Arrangements Account.

3.3

Please note that the TV calculation program will continue to calculate and display the RCA amount for those employees whose average salary is in excess of the salary threshold. You should also note that no changes were made to fields "AMT RCA" and TTL RCA". An RCA amount will be shown in those fields when an RCA benefit is generated as a result of the ITA limits on survivor benefits, when the average salary exceeds the salary threshold or the combination of both.

3.4

The Superannuation Administration Manual (SAM) will also be updated to provide additional information concerning the limits applicable to survivor benefits.

4

INQUIRIES

4.1

Any inquiries on the information contained in this document should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.