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Amendments to the Retirement Compensation Arrangements (RCA) Regulations, No. 1

The purpose of this notice is to provide you with information regarding amendments to the Retirement Compensation Arrangements (RCA) Regulations, No. 1 pertaining to the transfer of pension credits under the Public Service Superannuation Act (PSSA) to an outside pension plan under a reciprocal transfer agreement (RTA) or a pension transfer agreement (PTA).

In 1994, the RCA Regulations, No. 1 were created to provide a vehicle to pay those pension benefits that could not be provided under a registered pension plan, due to the Income Tax Act (ITA) limits.

Prior to the amendments taking effect, individuals who transferred their PSSA pension credits under an RTA or PTA could not transfer out their RCA credits to a retirement compensation arrangement fund established by an outside employer.

Effective June 13, 2003, amendments were made to the RCA Regulations, No. 1 with the following consequential amendments to the Public Service Superannuation Regulations (PSSR) to provide for the transfer of an amount from the RCA account to a retirement compensation arrangement account established by an outside employer, in respect of an individual with an entitlement under RCA Regulations, No. 1, who chooses to transfer his PSSA pension credits under an RTA or PTA.

Plan members, who choose to transfer their PSSA pension credits to an employer with whom an RTA or a PTA exists, must also transfer out their RCA credits to a retirement compensation arrangement account established by that employer.

In cases where the amount transferred to the outside employer is less than the base amounts determined on an actuarial basis for vested members or on the basis of the amount of RCA contributions for non vested members, the difference will be paid to the plan member in a lump sum, taxable at source.

The amendments also provide for the payment of an amount from the RCA directly to a plan member if one of the following situations occur:

• if the outside employer has not established a retirement compensation arrangement to which the fund can be transferred; or
• if that employer has established such an arrangement, but is unwilling to provide benefits under it in respect of the individual's public service employment.

Before making a decision to transfer your PSSA pension credits to an outside employer's pension plan, it is strongly recommended that you carefully consider your overall situation. The retirement compensation arrangement established by outside employers may not necessarily provide the same type of benefit or the same amount of benefit that is provided under the RCA Regulations, No. 1.

You should consult with your compensation advisor to determine how these changes will impact your own situation.

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