Reserve Force Pension Plan Regulations

Reserve Force Pension Plan Regulations The Treasury Board, on the recommendation of the Minister of National Defence, pursuant to paragraph 50(1)(a)a and sections 59.1b and 82c of the Canadian Forces Superannuation Act and paragraph 7(2)(b) of the Financial Administration Act, hereby makes the annexed Reserve Force Pension Plan Regulations. S.C. 2003, c. 26, s. 23 S.C. 2003, c. 26, s. 41(1) S.C. 2003, c. 26, s. 36 Definitions The following definitions apply in these Regulations Act means the Canadian Forces Superannuation Act. (Loi) Fund means the Reserve Force Pension Fund established under section 84. (caisse) member means a member of the reserve force. (membre) pensioner means a member or former member who is entitled to an annuity or annual allowance under Division 1 of Part 2. (pensionné) Earnings For the purposes of these Regulations, earnings means pay earned by a member of the Canadian Forces at the rates prescribed or established under the National Defence Act for their rank, together with earned premiums in lieu of leave; a member who is exempted from training and duty under article 9.09 or 9.10 or was granted leave for maternity or parental purposes under article 16.26 or 16.27 of the Queen’s Regulations and Orders for the Canadian Forces is deemed to be in receipt of earnings, during each week for which the member is exempted or granted leave, equal to the weekly rate of pay calculated in accordance with instruction 205.461 of the Compensation and Benefits Instructions for the Canadian Forces established under section 35 of the National Defence Act; and in respect of a period in the reserve force before April 1, 1999, where records of the Canadian Forces or the Department of National Defence permit the verification of the rank of a member and the duration of the period but not the ascertainment of the member’s earnings, the member is deemed, for each day of the period, to have been in receipt of earnings equal to ¼ of the standard basic daily rate of pay, applicable to their rank for that day, prescribed or established under the National Defence Act. Establishment of Reserve Force Pension Plan The Reserve Force Pension Plan is established. Interpretation For the purposes of this section and section 5, Monthly Earnings Threshold, in respect of any month, means 1/12 of the Year’s Maximum Pensionable Earnings, within the meaning of subsection 2(1) of the Canada Pension Plan, for the calendar year in which the month falls, the result rounded to the nearest cent; and Annual Earnings Threshold, in respect of any period of 12 months, means the total of the Monthly Earnings Thresholds for that period. Initial participation A member becomes a participant in the Reserve Force Pension Plan on March 1, 2007 if, during each of any two consecutive periods of 12 months beginning on or after April 1, 1999 and ending no later than March 1, 2007, the earnings that they were entitled to receive were equal to or greater than 10 per cent of the Annual Earnings Threshold, if the member already was or became a member of the Canadian Forces during the first month of the first period and remained a member of the Canadian Forces, without any interruption of more than 60 days, until March 1, 2007; or in any other case, on the first day of the month following two consecutive periods of 12 months — the second of which shall end after March 1, 2007 — during each of which the earnings that they were entitled to receive were equal to or greater than 10 per cent of the Annual Earnings Threshold, if the member already was or became a member of the Canadian Forces during the first month of the first period and remained a member of the Canadian Forces without any interruption of more than 60 days throughout those two periods. Subsequent participation A pensioner or the former participant referred to in section 55 becomes a participant on the day in respect of which they are again entitled to receive earnings as a member. Exception A member shall not become a participant if they were considered to be a member of the regular force on March 1, 2007 under paragraph 8.1(1)(a) of the Canadian Forces Superannuation Regulations or if, under Part I of the Act, they, as a contributor, are in receipt of an annuity or an annual allowance; are entitled to a deferred annuity or an annual allowance; or are a person in respect of whom the payment of a transfer value has been effected. Member ceasing to be a participant A member ceases to be a participant: on the day on which the member ceases to be a member; on the day before the day on which the member is required to contribute to the Canadian Forces Pension Fund; or on the last day of a period of 12 months, as a participant, in respect of which they were not entitled to receive earnings. Member shall not cease to be a participant A member who has to their credit less than two years of pensionable service is deemed not to have ceased to be a participant if the member ceased to be a participant by ceasing to be a member and the member has again become a member within 60 days, in which case, for the purpose of these Regulations, the member is deemed not to have ceased to be a member; or the member is entitled to receive earnings equal to or greater than 10 per cent of the Annual Earnings Threshold in respect of each of the two consecutive periods of 12 months ending at the end of the first month following the month during which the member would have ceased to be a participant, if at the end of that month the member reached that minimum entitlement of earnings, or, if not, the end of the second month following that month. Rate of contributions The contribution of a participant to the Fund shall be the following percentage of the participant’s earnings: 4.3 per cent in respect of 2007, 4.6 per cent in respect of 2008, 4.9 per cent in respect of 2009, and 5.2 per cent in respect of 2010 and each subsequent year; or 1 per cent of the participant’s earnings, if the participant has to their credit 35 years of pensionable service. Limits A participant shall not contribute to the Fund in respect of any portion of the participant’s rate of pay in a calendar year that is in excess of the product of 66 2/3 times the defined benefit limit determined for that year in accordance with the definition defined benefit limit in subsection 8500(1) of the Income Tax Regulations; or any of the participant’s earnings in a calendar year after the calendar year in which the participant reaches 71 years of age. Contribution on deemed earnings Reservations on account of contributions in respect of earnings that the participant is deemed to have received under paragraph 2(b) shall be equal to ½ of the amount of the participant’s contributions in respect of earnings after the period of exemption or leave. Reservations for subsequent periods Reservations on account of contributions in respect of earnings that the participant is deemed to have received in a subsequent period of exemption or leave shall commence after the contributions in respect of earnings for previous periods have been paid. Opting out The participant may opt not to contribute in respect of earnings that the participant is deemed to have received under paragraph 2(b) during a period of exemption or leave, before all of the contributions have been paid, and the contributions already paid shall be refunded. Recovery of unpaid contributions Any contribution that remains unpaid at the time that a pensioner commences to receive an annuity or annual allowance under Division 1 of Part 2 shall be recovered by reservation from the monthly benefits payable to the pensioner under Divisions 1 and 3 of that Part in amounts equal to 10 per cent of those benefits. Pensionable earnings There shall be counted as pensionable earnings the earnings in respect of which the participant is required to make the contribution to the Fund set out in paragraph 6(1)(a); and subject to subsections 11(3), 26(1) and 32(1), the earnings in respect of which the participant makes an election to count as pensionable earnings. Not pensionable earnings There shall not be counted as pensionable earnings those earnings in respect of which the participant has opted, under section 8, not to contribute; the member was entitled to a return of contributions, within the meaning of section 38; the payment of a transfer value has been effected in accordance with section 61; or an amount is charged to the Fund and credited to the Canadian Forces Pension Fund under section 83. Election A participant is entitled to make an election, once only in respect of each type of earnings in each period during which the participant is a participant, to count past earnings and transfer value earnings as pensionable earnings. Past earnings Past earnings are the earnings, up to the product calculated under paragraph 6(2)(a), in respect of any period in the reserve force, including any period before March 1, 2007, during which the participant was not a participant except any period that the participant is counting as pensionable service for the purposes of, or in respect of which the payment of a transfer value or a commuted value has been effected under, the Public Service Superannuation Act or the Royal Canadian Mounted Police Superannuation Act, or in respect of which the payment of a transfer value has been effected in accordance with section 61; any period in the reserve force in respect of which the participant was entitled to a return of contributions within the meaning of section 38; and any period in the regular force in respect of which the participant was entitled to a cash termination allowance or a return of contributions. Most recent earnings A past earnings election is for all of the past earnings. However, there shall be counted as pensionable earnings, starting with the most recent, only those that would result in a maximum of 35 years of pensionable service to the credit of the participant. Transfer value earnings Transfer value earnings are those earnings in respect of which the payment of the last transfer value was effected in accordance with section 61. When entitled to elect A participant may make a past earnings election no earlier than two years after the day on which the participant became a participant. Former participant If the participant had formerly been a participant, they may make the election as soon as they again become a participant. Participant since March 1, 2007 A participant, who becomes a participant on March 1, 2007 and remains a participant without interruption, may make the election beginning on the day after the first day, on or after March 1, 2007, in respect of which they are entitled to receive earnings but no earlier than the first day of the 25th month following the two periods referred to in paragraph 4(2)(a). A participant who has ceased to contribute to the Fund by virtue of paragraph 6(2)(b) is not entitled to make a past earnings election. Election period ends The participant shall make the past earnings election no later than the later of one year after the date of the written notice advising the participant that they have become entitled to make the election and March 1, 2011. Deferment of entitlement A participant who ceases to be a participant before the expiry of the period for making a past earnings election shall, on again becoming a participant, be entitled to make the election until the end of one year after the date of the written notice advising them that they have again become entitled to make it. Amount to be paid A participant who makes an election to count past earnings as pensionable earnings shall pay the full amount to count all of those past earnings that can be counted as pensionable earnings or a lesser amount for which the participant opts at the time of making the election. Determination of full amount The full amount shall be the total of all amounts — plus interest at seven per cent compounded annually and calculated from the middle of the calendar year until the day of the election — determined for each calendar year by the following formula applied to those past earnings that can be counted as pensionable earnings that relate to any period in that year: is the contribution rate set out in paragraph 6(1)(a) on the date of the election or, if the participant has remained a participant since March 1, 2007, 4.3 per cent; and is the amount that would be calculated as the updated pensionable earnings under subsection 37(2), for the calendar year if (a)the participant’s past earnings that can be counted as pensionable earnings for that calendar year were their pensionable earnings for that calendar year, and the participant’s past earnings that can be counted as pensionable earnings for that calendar year were their pensionable earnings for that calendar year, and (b)the year in which the election is made or, if the participant has remained a participant since March 1, 2007, the year 2007, is the year that the participant ceased to be a participant. the year in which the election is made or, if the participant has remained a participant since March 1, 2007, the year 2007, is the year that the participant ceased to be a participant. Retroactive changes not included in calculations The calculation referred to in the description of B of the formula in subsection (2) shall not include any retroactive adjustments to the participant’s earnings made after the day on which they make the election referred to in subsection (1). Restriction The participant cannot modify the amount for which the participant has opted. If amount is not more than $500 If the amount to be paid is not more than $500, the participant shall pay it in a lump sum no later than 30 days after the day of the election, if the participant opted for an amount of not more than $500; or in any other case, the date of the notice advising the participant of the amount to be paid. Partial payment If the participant pays less than that amount, the participant is deemed to have opted, at the time of making the election, for the amount received by the Minister. If amount is more than $500 If the amount to be paid is more than $500, the participant shall pay it by way of monthly instalments. Instalments The instalments shall be payable in equal amounts that may not be less than $5.00, except the last one, and be calculated using the mortality rates set out in the Complete life table, Canada, 1995-97, published by Statistics Canada, and interest at four per cent compounded annually. When payable The instalments shall be payable on the first day of each month following the month of the election until the earlier of the end of the period chosen by the participant ending before the later of 20 years and the participant’s 65th birthday, and the death of the participant. Change in amount to pay When the amount shown in the notice advising the participant of the amount to be paid is larger than the amount on which the participant’s instalments are based, the participant is deemed to have chosen the period consistent with paragraph (2)(a) that would result in the lowest possible instalments not lower than the current instalments; and any arrears shall be paid by instalments on the first day of each month following the month of the notice, calculated in the manner referred to in subsection (1), except that the instalments may be for less than $5.00, until the end of the remainder of the period deemed to have been chosen or, if earlier, the death of the participant. Amending plan of instalments The participant may decrease the period of instalments by increasing the amount of the remaining instalments. Default A participant or pensioner who has been sent a notice of payment default shall pay the arrears by way of monthly instalments. Time and amount of payment The instalments shall be calculated in the manner referred to in subsection 18(1), except that they may be for amounts of less than $5.00; shall be payable on the first day of each month following the date of the notice, until the earlier of the end of the remainder of the period referred to in paragraph 18(2)(a) or (3)(a), or, if that remainder is less than five years, the end of a period, up to a maximum of five years, chosen by the participant or pensioner, and the death of the participant or pensioner; and after the period referred to in paragraph 18(2)(a) or (3)(a), shall be adjusted to be not less than the amount of the instalment before the last of those referred to in section 17 and the period shall be adjusted accordingly. Pre-payment A person may, at any time, pre-pay any amount that remains unpaid in respect of a past earnings election. Application of payment The amount paid shall be applied to the payment of any amount referred to in the notice referred to in subsection 20(1) and the person may direct that the remainder be applied towards future instalments; or that the remainder be applied to reduce the balance of the amount to be paid and that the period of instalments remain the same or be decreased. No direction Unless the person has given the direction no later than 30 days after the date of the payment, the remainder shall be applied to reduce the balance of the amount to be paid and the period of instalments shall be decreased in order that the amount of the instalments remains the same. Deemed option At the request of a participant or pensioner, they are deemed to have opted, at the time of making the election, for the total of the amounts received by the Minister as of the date of the request, if they establish that financial hardship will be caused if they are required to continue to pay the instalments; or at the commencement date of an annuity or annual allowance, the instalments are greater than the increase in the monthly amount of the benefits payable that results from the election. Reservation from annuity or annual allowance Instalments shall be reserved from a pensioner’s annuity or annual allowance when it commences. Election not made A past earnings election is deemed not to have been made in the case of an election to count earnings as pensionable earnings from a period after December 31, 1989, if the Minister of National Revenue refuses to issue a certification under paragraph 147.1(10)(a) of the Income Tax Act; at the request of the person who made the election if they received erroneous or misleading information in writing, with respect to the amount to be paid or the consequences of the election on their benefits, from a person whose normal duties include giving information about those matters, and, in making the election, they acted on that information; or if the person who made the election has not paid the amount to be paid under subsection 16(1) within the required period. Refund If a past earnings election is deemed not to have been made, any payments received from a plan, fund, or institution of a type referred to in paragraph 61(1)(a) shall be transferred to a plan, fund, or institution, of any type referred to in that paragraph, at the direction of the person who made the election. New election Despite the expiry of the period for making the election, the person may make an election no later than 90 days after the later of the day on which the election is deemed, under paragraph (1)(b), not to have been made; and the date of the notice informing the person of the refusal by the Minister of National Revenue. No election after second refusal In the case of another refusal, the person shall not make the election. Amount unpaid at death Any amount referred to in section 87 of the Act shall be recovered by reservation from the monthly benefits payable to the survivor or children under Division 2 of Part 2, in amounts equal to 10 per cent of those benefits. A person may, at any time, pre-pay any amount that remains unpaid. Crediting of earnings The past earnings shall be counted as pensionable earnings in respect of each day that the participant earned them and in the same proportion as the amount to be paid bears to the full amount. Date of crediting The past earnings shall come to the participant’s credit on the date of the election. A participant may make a transfer value earnings election commencing the day on which they again become a participant. The participant shall make the transfer value earnings election no later than one year after the date of the written notice advising the participant that they have become entitled to make the election. A participant who ceases to be a participant before the expiry of the period for making a transfer value earnings election shall, on again becoming a participant, be entitled to make the election until the end of one year after the date of the written notice advising the participant that they have again become entitled to make it. Amount to pay A participant who makes an election to count transfer value earnings as pensionable earnings shall pay an amount equal to the transfer value that was determined under section 56, together with interest. Interest to be paid Interest shall be calculated in accordance with the rates determined under subsection (3), compounded quarterly for the period beginning on the day on which the payment of the transfer value was effected and ending on the last day of the month preceding the month in which the election was made. Rate of interest The rate of interest in respect of each quarter is equal to the rate of return that existed in respect of the second quarter preceding the quarter for which interest is being calculated and set out in the table entitled “Balanced” on the line “Mercer Median” in the column entitled “3 Months” in the Summary of Investment Performance Survey of Canadian Institutional Pooled Funds, published by Mercer Investment Consulting, as amended from time to time. Zero interest If the amount of interest calculated under subsection (2) is negative, the amount of interest for the purpose of subsection (1) shall be zero. 90-day time limit In respect of a transfer value earnings election, only payments received no later than 90 days after the date of the written notice advising the participant of the amount to be paid will be taken into account. Payment received late Payments received no later than 120 days after the date of the notice will be taken into account if the participant establishes that they gave written instructions in a timely fashion to cause the payments to be received no later than 90 days after that date and that the payments were received after that time through no fault of the participant. The transfer value earnings shall be counted as pensionable earnings in respect of each day that the participant earned them and in the same proportion as the payments taken into account in respect of a transfer value earnings election bear to the amount required to be paid under subsection 30(1). The transfer value earnings shall come to the participant’s credit on the date of the election. A transfer value earnings election is deemed not to have been made if no payment is received by the Minister within the required time. Any payments received from a plan, fund, or institution of a type referred to in paragraph 61(1)(a) shall be transferred to a plan, fund, or institution, of any type referred to in that paragraph, at the direction of the person who made the election. Despite the expiry of the period for making the election, the person may make an election no later than 90 days after the date of the notice informing the person of the refusal by the Minister of National Revenue. In the case of another refusal, the person shall not make an election. Counting pensionable service There shall be counted as pensionable service any period during which a member is a participant; despite subsection (2), any period during which the participant has been deemed to have earnings in respect of which the participant has opted not to pay contributions under section 8; and any period that relates to earnings in respect of which an election was made under subsection 11(1). Not counted as pensionable service There shall not be counted as pensionable service any period that relates to earnings that are not counted as pensionable earnings. The pensionable service shall come to the participant’s credit on the date of the election. For the purposes of this Part, an individual is considered to be a child if the individual is a child or stepchild of — or an individual adopted either legally or in fact by — a participant or pensioner who, at the time of the participant’s or pensioner’s death, was dependent on that person for support; and an individual is considered to be a survivor if the individual is a person who was married to a participant or pensioner at the time of the death of the participant or pensioner, or a person who establishes that he or she was cohabiting in a relationship of a conjugal nature with a participant or pensioner for at least one year immediately before the death of the participant or pensioner. Deemed date of marriage When a participant or pensioner dies and, at the time of death, was married to a person with whom the participant or pensioner had been cohabiting in a relationship of a conjugal nature for a period immediately before the marriage, that person is deemed to have been married to the participant or pensioner on the day established as being the day on which the cohabitation began. Wage measure The wage measure is for a year prior to 2007, the corresponding rate of pay shown in the schedule; and for a year after 2006, the greater of the standard basic rate of pay for a period of duty or training of six hours or more — before any retroactive adjustment — that was prescribed or established under the National Defence Act to be paid, on October 1 of the preceding year, to a member at the rank of Corporal (A), and the wage measure of the previous year. Updated pensionable earnings The updated pensionable earnings, for a calendar year, are the lesser of an amount determined by the formula is the participant’s pensionable earnings for that year, and is the result of the following formula, rounded to the nearest fourth decimal point: is the average of the wage measures for five years consisting of the year the member most recently ceased to be a participant and the most recent years during which the member was a participant and, if necessary, the years preceding all of those years, and is the wage measure for that calendar year, and the product calculated under paragraph 6(2)(a) for the year the member most recently ceased to be a participant. Return of contributions A member who ceases to be a participant and has to their credit less than two years of pensionable service is entitled to a return of any amounts paid by the member into the Fund and remaining to the member’s credit, together with interest, if any, these amounts and the interest constituting a return of contributions. Entitlement extinguished This entitlement shall be extinguished if, before the return of contributions is paid, the member is required to contribute to the Canadian Forces Pension Fund. Interest calculation Interest shall be calculated, for every quarter following the first quarter during which the member makes contributions, up to and including the quarter preceding the quarter in which the return of contributions is made, on the total of amounts paid by the member into the Fund and remaining to the member’s credit as of the end of the quarter preceding the quarter in which the calculation is being made, and the interest calculated for all quarters preceding the quarter in which the calculation is being made. Setting of rate of interest The rate of interest is equal to the effective quarterly rate determined from the annual rate of return of the Canadian Forces Pension Fund published in the previous fiscal year’s annual report for the Public Sector Pension Investment Board as laid before each House of Parliament under subsection 48(3) of the Public Sector Pension Investment Board Act. Negative rate of return If the rate of return is negative, the rate of interest shall be zero per cent. Amount of annuity The amount of an annuity to which a member may become entitled is an amount equal to 1.5 per cent of the greater of the member’s total pensionable earnings and total updated pensionable earnings. Days of Canadian Forces service For the purposes of paragraph 43(1)(a), days of Canadian Forces service are in the regular force, days of service for which pay — excluding allowances provided under the Act — was authorized to be paid and days of leave for maternity or parental purposes granted under the Queen’s Regulations and Orders for the Canadian Forces; and in the reserve force, days of service for which pay — excluding allowances provided under the Act — was authorized to be paid, except that any day of service for which pay was authorized to be paid for a period of duty or training of less than six hours shall be considered to be ½ of a day, in the proportion determined under subsection (3), days in a period of exemption or leave as referred to in paragraph 2(b), and in the proportion of ¼ of a day for each day, days in a period before April 1, 1999, where the records of the Canadian Forces or the Department of National Defence permit the verification of the duration of the period but not the number of days of service for which pay — excluding allowances provided under the Act — was authorized to be paid. Augmentation Each day of service for which pay — excluding allowances provided under the Act — was authorized to be paid during which the member was on Class “A” Reserve Service within the meaning of article 9.06 of the Queen’s Regulations and Orders for the Canadian Forces shall count as 1 2/5 days of Canadian Forces service. Maternity or parental leave The proportion in which days in a period of exemption or leave referred to in paragraph 2(b) shall count as days of Canadian Forces service shall be determined by the formula is the number of the member’s days of Canadian Forces service in the 364 days prior to the period; and is the number of days in the 364 days that the member was a member of the Canadian Forces. Rounding up Any total number of days of Canadian Forces service that includes a fraction shall be rounded to the next higher multiple of a day. Immediate annuity A member who ceases to be a participant and has to their credit not less than two years of pensionable service is entitled to an immediate annuity, if they have completed not less than 9,131 days of Canadian Forces service; they have reached 60 years of age; they have reached 55 years of age and have to their credit not less than 30 years of pensionable service; they are disabled by reason of suffering from a physical or mental impairment that prevents the member from engaging in any employment for which the member is reasonably suited by virtue of education, training or experience, and can reasonably be expected to last for the remainder of the member’s lifetime; or they cease, otherwise than voluntarily, to be a member because of a reduction in the maximum number of officers or non-commissioned members authorized by the Governor in Council under subsection 15(4) of the National Defence Act, and they have reached 55 years of age and have to their credit not less than 10 years of pensionable service, or they have to their credit not less than 20 years of pensionable service. Commencement of immediate annuity The commencement date of the annuity is the day following the last day on which the member is a participant. Deferred annuity A member who ceases to be a participant and has to their credit not less than two years of pensionable service and is not entitled to an immediate annuity is entitled to a deferred annuity. Commencement of deferred annuity The commencement date of the annuity is the day on which the pensioner reaches 60 years of age. Annual allowance A pensioner who is entitled to a deferred annuity may opt for an annual allowance in place of the annuity. Commencement of annual allowance The commencement date of the annual allowance is the date of the option, if the pensioner is 50 or more years of age at that time, or the day on which the pensioner reaches 50 years of age, if the pensioner is less than 50 years of age on the date of the option. Amount of annual allowance The amount of the annual allowance is the amount determined by the formula is the amount of the deferred annuity; and is 60 minus the pensioner’s age in years, rounded to the nearest 1/10 of a year, at the time the allowance commences. Amount of annual allowance, at least 25 years of pensionable service If a pensioner is 50 years or more of age on the day on which they cease to be a participant and has to their credit not less than 25 years of pensionable service, the amount of the annual allowance is the greater of the amount determined by the formula set out in subsection (1), and an amount determined by the same formula but where B is the greater of 55 minus the pensioner’s age in years, rounded to the nearest 1/10 of a year, at the time the pensioner makes the option, and 30 minus the number of years, rounded to the nearest 1/10 of a year, of pensionable service to the pensioner’s credit. Bridge benefit A pensioner is also entitled to a bridge benefit. Commencement of bridge benefit The commencement date of the bridge benefit is the same date as that of the annuity or annual allowance. For the purpose of subsection (2), the bridge benefit earnings for a calendar year are the lesser of the participant’s pensionable earnings for that year, and the Year’s Maximum Pensionable Earnings for that year, within the meaning of subsection 2(1) of the Canada Pension Plan; and the updated bridge benefit earnings for a calendar year are the lesser of the participant’s updated pensionable earnings for that year, and the average of the Year’s Maximum Pensionable Earnings for five years consisting of the year the member most recently ceased to be a participant and the preceding four years. Amount of bridge benefit The annual amount of the bridge benefit is equal to 0.5 per cent of the greater of the pensioner’s total bridge benefit earnings and total updated bridge benefit earnings. Reduction If a pensioner opts for an annual allowance, the amount of the bridge benefit shall be the amount determined by the formula is the amount calculated under subsection (2); is the amount of the annual allowance; and is the amount of the deferred annuity to which the pensioner was entitled. Cessation of benefits on again becoming a participant A pensioner ceases to be entitled to an annuity or annual allowance on the day before the day on which they again become a participant. Conversion to immediate annuity on disability If a pensioner, not having reached 60 years of age but having become entitled under these Regulations to a deferred annuity or annual allowance, becomes entitled to a disability pension under the Canada Pension Plan or a provincial pension plan, the pensioner ceases to be entitled to the deferred annuity or annual allowance and becomes entitled to an immediate annuity, but shall not be entitled to a bridge benefit. Commencement of annuity The commencement date of the annuity is the day on which the pensioner becomes entitled to the disability pension. Benefit when entitlement to disability pension ceases If a pensioner, not having reached 60 years of age, has ceased to be entitled to the disability pension, the pensioner ceases to be entitled to the immediate annuity and becomes entitled to the deferred annuity or annual allowance and the bridge benefit to which the pensioner was previously entitled. Deduction calculation In the event that a pensioner ceases to be entitled to an annual allowance under section 49 or subsection 50(1), an amount, subject to subsections (2) and (3), determined by the following formula shall be deducted from any annuity or annual allowance payments that the pensioner receives on again ceasing to be a participant or on becoming entitled to an annuity under subsection 50(1): is five per cent of the sum of the annual allowance and the bridge benefit that the pensioner was receiving before again becoming a participant or before becoming entitled to a disability pension under the Canada Pension Plan or a provincial pension plan; and is the lesser of (a)the number of years, rounded to the nearest 1/10 of a year, during which the pensioner received the annual allowance; and the number of years, rounded to the nearest 1/10 of a year, during which the pensioner received the annual allowance; and (b)the value determined for B of either subsection 46(1) or paragraph 46(2)(b), which value was used in determining the amount of the annual allowance. the value determined for B of either subsection 46(1) or paragraph 46(2)(b), which value was used in determining the amount of the annual allowance. Minimum amount The deduction from the amount of those payments shall not result in the pensioner receiving less than the payments that the pensioner was receiving — before the pensioner again became a participant or the pensioner became entitled to the disability pension — minus the amount of the bridge benefit, if the pensioner is no longer entitled to it. Limit The total of the amounts to be deducted shall not exceed the total amount that was received as an annual allowance and a bridge benefit by the pensioner before the pensioner again became a participant or the pensioner became entitled to the disability pension. Terms of payment The annuity, annual allowance and bridge benefit shall be paid in equal monthly payments in arrears, in respect of the annuity or annual allowance, until the end of the month during which the pensioner dies; and in respect of the bridge benefit, until the earliest of the following: the day preceding the day on which the pensioner becomes entitled to a disability pension under the Canada Pension Plan or a provincial pension plan, the last day of the month in which the pensioner reaches 65 years of age, and the day that the annuity or annual allowance ceases to be paid. Arrears Any amount in arrears after the pensioner’s death shall be paid to the survivor who is entitled to an annual allowance under Division 2. If there is no survivor, it shall be paid to the pensioner’s estate or succession. Apportionment if two survivors If there are two survivors who are entitled to an annual allowance under Division 2, each survivor’s portion shall be determined in accordance with section 64 as if the reference to “death benefit” in that section were a reference to “amount in arrears”. Eligibility A pensioner who is entitled to a deferred annuity and has not reached 50 years of age may opt for the payment of a transfer value, and the making of the option extinguishes the entitlement to the deferred annuity. Time limit for opting A pensioner shall make an option for the payment of a transfer value no later than one year after the day on which they cease to be a participant. Option not made The option is deemed not to have been made if, before the transfer value has been paid, the former participant again is entitled to receive earnings as a member or is required to contribute to the Canadian Forces Pension Fund. Calculation of transfer value The transfer value is an amount, together with interest calculated in accordance with section 62, equal to the greater of the actuarial present value, on the date of the option, of the accrued pension benefits that would be payable to or in respect of the pensioner, and a return of contributions, calculated as of the date of the option as if the pensioner had been entitled to a return of contributions on that date. Pensionable earnings to pensioner’s credit The calculation of the accrued pension benefits shall be based on the pensionable earnings to the pensioner’s credit on the day after the day on which they cease to be a participant and for which they have paid or ought to have paid before the date of the option. Calculation rules The calculation of the actuarial present value of the accrued pension benefits is subject to the following rules: the indexing benefits referred to in Division 3 are to be increased to take into account the period beginning on the later of January 1 of the year in which the option was made and the day on which the pensioner ceased to be a participant and ending on the date of the option; and the possibility that the pensioner could receive an annual allowance is to be excluded. Actuarial valuation report For the purpose of subsection (2), the actuarial valuation report is the actuarial valuation report most recently laid before Parliament, under section 56 of the Act, before the date of the option or, if that report was laid before Parliament in the month in which the option was made or in the preceding month, the preceding report that was laid before Parliament, in each case with any terminological modifications that the circumstances require. Actuarial assumptions In determining the actuarial present value of the accrued pension benefits, the following actuarial assumptions are to be used: the mortality rates for pensioners and survivors are the mortality rates, including annual percentages of mortality reduction, in respect of contributors and survivors used in the preparation of the actuarial valuation report; the interest rates are the interest rates for fully indexed pensions — adjusted by the interest rates for unindexed pensions to take into account Division 3 — determined in accordance with the section entitled “Pension Commuted Values” of the Standards of Practice — Practice-Specific Standards for Pension Plans, published by the Canadian Institute of Actuaries, as amended from time to time; the probability that a pensioner will be survived by children is based on the rates regarding the average number, average age and eligibility status of children at the death of a pensioner, used in the preparation of the actuarial valuation report; the probability that a pensioner will become entitled to an annuity under subsection 50(1) is based on the rates of termination owing to disability (any occupation), in respect of contributors used in the preparation of the actuarial valuation report, taking into account the probability — as set out in that report — that there would be immediate eligibility for a disability pension under the Canada Pension Plan or a provincial pension plan; and the probability that a pensioner will have a survivor at death is based on the probability that a contributor will have a survivor at death and on the age difference between the contributor and the survivor that was used in the preparation of the actuarial valuation report. Deductions from payment There shall be deducted from the amount of the transfer value contributions remaining unpaid in respect of earnings that the pensioner is deemed to have received under paragraph 2(b); and arrears in respect of a past earnings election. Payment effected by transfer The payment of a transfer value is effected by transferring any portion that may, in accordance with section 8517 of the Income Tax Regulations, be transferred, at the direction of the former participant, to a pension plan that is registered under the Income Tax Act, if that pension plan so permits, a retirement savings plan or fund for the former participant that is of the kind prescribed for the purposes of section 26 of the Pension Benefits Standards Act, 1985, or a financial institution authorized to sell immediate or deferred life annuities, as defined in subsection 2(1) of the Pension Benefits Standards Regulations, 1985, for the purchase from that financial institution of such an annuity for the former participant; and by paying any excess to the former participant. Payment if former participant deceased If, after the option for the payment of the transfer value described in section 53 has been exercised but before that payment has been effected, the former participant dies, the following rules apply: the amount that may be transferred shall be paid accordingly and any excess shall be paid to the person who would have been entitled to an annual allowance as a survivor under Division 2 had the option for the payment of a transfer value not been exercised, or to the former participant’s estate or succession if there is no person who would have been entitled to the annual allowance as a survivor; or if no amount may be transferred, all of the transfer value shall be paid in accordance with subparagraphs (a)(i) and (ii) Apportionment If there are two persons who would have been entitled to an annual allowance under Division 2 as survivors had the transfer value option not been exercised, each of them shall be entitled to a portion determined in accordance with section 64 as if the reference to “death benefit” in that section were a reference to “excess” or “transfer value”, as the case may be. Calculation of interest Interest shall be calculated, in accordance with the rate determined under subsections (2) and (3), and converted to an effective annual rate, for the period beginning on the date of the option and ending on the last day of the month before the month in which the transfer value is paid or, if the former participant has not given the direction referred to in paragraph 61(1)(a), ending 90 days after the date of the option. The rate of interest is equal to the rate of return that existed in respect of the second quarter before the date of the option and set out in the table entitled “Balanced” on the line “Mercer Median” in the column entitled “3 Months” in the Summary of Investment Performance Survey of Canadian Institutional Pooled Funds, published by Mercer Investment Consulting, as amended from time to time. If the rate of return is negative, the rate of interest is 0.0%. Recovery of debit balances For the purposes of section 89 of the Act, any debit balance in the pay account of a former member of the reserve force shall be recovered from any return of contributions or a transfer value to which the former member is entitled, in a lump sum; or from any annuity or annual allowance to which the former member is entitled, by monthly instalments in an amount equal to 10% of their gross monthly annuity or allowance, or by monthly instalments in an amount equal to 50% of their gross monthly annuity or allowance, if they have been convicted of an offence under the Criminal Code or the National Defence Act that led, directly or indirectly, to the debit balance. Death benefits The survivor of a participant who has to their credit less than two years of pensionable service is entitled to a death benefit equal to the greater of a return of contributions and an amount determined by the formula is the participant’s pensionable earnings in the 12 months prior to the month of death; is the number of years of pensionable service to the participant’s credit; and is the lesser of 12 and the number of months of pensionable service to the participant’s credit . If two survivors are entitled to the death benefit, each survivor’s portion shall be determined by the formula is the amount of the death benefit; is the total number of years that the survivor cohabited with the participant while married to or in a relationship of a conjugal nature with the participant; and is the total number of years that the two survivors cohabited with the participant while married to or in a relationship of a conjugal nature with the participant. Rounding Years In determining the number of years, a part of a year shall be counted as a full year if the part is six or more months and shall not be counted if it is less.

Minimum benefit — no survivor If a participant, who has to their credit less than two years of pensionable service, dies leaving no survivor entitled to the death benefit, a death benefit equal to a return of contributions shall be paid to the estate or succession of the participant. Definition of basic allowance For the purpose of sections 67 and 68, basic allowance means an amount equal to one per cent of the greater of the pensioner’s total pensionable earnings and total updated pensionable earnings; or if the pensioner was in receipt of an annual allowance at the time of death, an amount determined by the formula is the amount calculated under paragraph (a), is the amount of the annual allowance, and Benefits to survivor of a pensioner The survivor of a pensioner is entitled to an annual allowance equal to the basic allowance or, if there are two survivors, to an amount determined by the formula is the amount of the basic allowance; is the total number of years that the survivor cohabited with the pensioner while married to or in a relationship of a conjugal nature with the pensioner; and is the total number of years that the two survivors cohabited with the pensioner while married to or in a relationship of a conjugal nature with the pensioner. Death of one of two survivors If one of the survivors dies, the remaining survivor’s annual allowance shall be equal to the basic allowance commencing the first day of the month following the death of the survivor. Course of study For the purposes of this section and sections 69 and 72, course of study means a course of training or instruction given by a school, college, university or other institution of an educational, professional or technical nature. Benefits to child of a pensioner Each child of a pensioner who, at the date of the pensioner’s death, is under 18 years of age or is 18 or more years of age but less than 25 years of age and enrolled in and pursuing a full-time course of study is entitled if the pensioner died leaving a survivor entitled to an allowance under this Division, to an annual allowance equal to ¼ of the basic allowance or, if there are more than two children, to an annual allowance equal to ½ of the basic allowance divided by the number of children; or if the pensioner died without leaving a survivor entitled to receive an allowance under this Division, and there are fewer than four children, to an annual allowance equal to ½ of the basic allowance, or there are more than three children, to an annual allowance equal to 1 ½ times the basic allowance divided by the number of children. Recalculation The proportion of the basic allowance that constitutes the annual allowance shall be revised when the number of children who are entitled changes. Continuing entitlement The child of a pensioner who, at the date of the pensioner’s death, was entitled to an annual allowance shall be entitled to the annual allowance for any period during which the child is enrolled in and pursuing a full-time course of study until the child reaches 25 years of age. Presumption A child, at the date of the pensioner’s death, is deemed to have been enrolled in and pursuing a full-time course of study if the child is again enrolled in and pursuing a full-time course of study, or dies, no later than the last day of the fifth month after the month in which the child ceased to be enrolled in and pursuing the full-time course of study; or is not again enrolled in and pursuing a full-time course of study within that period due to illness and is again enrolled in and pursuing a full-time course of study, or dies, no later than the last day of the twelfth month after the month in which the child ceased to be enrolled in and pursuing the full-time course of study. Scholastic break A child is deemed not to have ceased to be enrolled in and pursuing a full-time course of study if the child fulfils the conditions set out in paragraph (5)(a) or (b). Declaration The entitlement to an annual allowance of a child who is 18 or more years of age but less than 25 years of age and enrolled in and pursuing a full-time course of study is subject to the child submitting to the Minister, in respect of each period of enrolment, a declaration by a responsible officer of the relevant institution that the child is or was enrolled in a full-time course of study; and a declaration by the child that the child is or was pursuing a full-time course of study. Benefits to survivor and child of a participant The survivor and child of a participant, where the participant has to their credit not less than two years of pensionable service, are entitled to the annual allowances to which they would have been entitled under section 67 or 68 had the participant, immediately before death, become a pensioner. The commencement date of the annual allowance payable to the survivor or child is the day after the death. Recommencing studies In the case of a child who has ceased to be entitled and who again becomes so entitled, the commencement date is the first day of the month in which the child enrols in and pursues a full-time course of study. The annual allowance shall be paid in equal monthly payments in arrears, in the case of a survivor, until the end of the month during which the survivor dies; and in the case of a child, until the end of the month during which the earlier of the following occurs: the child reaches 18 years of age or dies, or if the child is enrolled in and pursuing a full-time course of study, the child ceases to be enrolled in and pursuing a full-time course of study or reaches 25 years of age. Any amount in arrears after the death of the survivor or child who has reached 18 years of age shall be paid to the estate or succession. Marriage or cohabitation after pensioner reaches 60 years A survivor is not entitled to an annual allowance in respect of a pensioner if, at the time the pensioner married the survivor or began to cohabit with the survivor in a relationship of a conjugal nature, the pensioner had reached 60 years of age unless, after that time, the pensioner again became a participant. Waiver by survivor A survivor may waive entitlement to an annual allowance if it results in an increase in the allowance payable to a child under section 68 or 70; or a payment under section 78. Time for waiver The survivor shall waive the entitlement no later than three months after the survivor is notified of their entitlement to the allowance. That waiver is to take effect as of the day after the death of the participant or pensioner. Child after pensioner reaches 60 years A person who becomes the child of a pensioner at a time when the pensioner was over 60 years of age is not entitled to an annual allowance, unless, after that time the pensioner again became a participant; or the child was born to the pensioner following a gestation period that commenced prior to the day when the pensioner reached 60 years of age or ceased to be a participant, whichever is the later. Death within one year after marriage If a participant or pensioner dies within one year after marriage, no annual allowance is payable to the survivor or a person who becomes a child of the participant or pensioner after the marriage unless it is established that the participant or pensioner was at the time of the marriage in such a condition of health as to justify the participant or pensioner in having an expectation of surviving for at least one year after the marriage. Saving provision Nothing in sections 75 and 76 shall be held to prejudice any right that a child of an earlier marriage of the participant or pensioner has to an allowance under section 68 or 70. Minimum benefit — no survivor or child If, on the death of a participant or pensioner who has to their credit not less than two years of pensionable service, there is no survivor or child to whom an annual allowance may be paid, or if the survivor or child to whom an annual allowance may be paid dies or ceases to be entitled to it and no other amount may be paid to them under this Division, an amount equal to the amount determined by the following formula shall be paid as a death benefit to the estate or succession of the participant or pensioner: is the greater of a return of contributions and an amount equal to five times the total of the annuity determined in accordance with section 41 plus the bridge benefit determined in accordance with section 48; and is the aggregate of all amounts paid to a survivor or child under this Division and to the participant or pensioner under Division 1. Survivor not to receive benefits A survivor is not entitled to receive any benefit under this Division in respect of the participant or pensioner if the survivor could not be found within one year after the Minister has been notified of the death of the participant or pensioner or the survivor is found criminally responsible for the death of the participant or pensioner. Indexing benefit The following persons are entitled to an indexing benefit: a pensioner who is in receipt of an annuity or annual allowance and who is receiving it under paragraph 43(1)(d) or subsection 50(1), has reached at least 55 years of age and whose combination of years of age and full years of pensionable service equals at least 85, or has reached 60 years of age; and a survivor or child who is in receipt of an annual allowance under Division 2. Retirement month or year For the purposes of this section, retirement month or retirement year means in respect of a pensioner, the month or year during which the pensioner most recently became entitled to an annuity or annual allowance under Division I of Part 2; and in respect of a survivor or child, the retirement month or retirement year of the pensioner, or the month or year of death of the participant, in respect of whom the annual allowance is payable. Calculation of indexing benefit The indexing benefit for a month in any year shall be calculated with reference to the retirement year and shall be equal to the amount of the supplementary retirement benefit that would be payable for that month in respect of the annuity or annual allowance and the bridge benefit of the pensioner, survivor or child under subsections 4(1) and (2) of the Supplementary Retirement Benefits Act if that Act applied to that person. Calculation of indexing benefit — year following retirement In respect of a month in the year following the retirement year, the indexing benefit is equal to the amount determined by the formula is the amount of the indexing benefit that would, but for this subsection, be payable to the pensioner, survivor or child for that month; and is the number of complete months that remained in the retirement year after the retirement month. The aggregate of the amount of the annuity or annual allowance and the bridge benefit, and of the indexing benefit that may be payable in respect of that amount, in any month of any year, shall not be less than the aggregate of the following amounts that were or may be payable for any month in the year before that year: the annuity or annual allowance and that portion of the indexing benefit that related to it; and if the pensioner continues to be entitled to the bridge benefit, that benefit and the portion of the indexing benefit that related to it. Manner of payment The indexing benefit shall be paid at the same time, in the same manner and in respect of the same period as the annuity, annual allowance and bridge benefit. Participants who become contributors When a former participant is required to contribute to the Canadian Forces Pension Fund and has pensionable earnings to their credit at that time, there shall be charged to the Fund and credited to the Canadian Forces Pension Fund an amount equal to the transfer value that would have been determined under section 56, excluding interest, if the former participant had had the right to opt for the payment of a transfer value and had done so. Rights and obligations extinguished The former participant’s rights and obligations, and those of any person to whom a benefit might have become payable in respect of that former participant, under these Regulations shall be extinguished on the day before the day on which the former participant is required to contribute to the Canadian Forces Pension Fund. Fund established The Reserve Force Pension Fund is established. Amounts to be deposited There shall be deposited into the Fund the amounts that participants are required to contribute under the Act and the amounts that they are required to pay, under these Regulations, in respect of elections made to count past earnings or transfer value earnings as pensionable earnings; and the income from the investment of any contributions and from amounts deposited into the Fund plus profits minus losses on the sale of the investments. When amounts to be deposited The time within which the amounts referred to in paragraph 59.3(a) of the Act are to be deposited into the Fund is no later than 30 days after the end of the month in which the contributions to which they relate are deposited. Exceptions Despite subsection (1), except for the period before the laying before Parliament of the first actuarial valuation report referred to in subsection 59.6(1) of the Act, a deposit may only be made, in respect of the benefits that have accrued in relation to the pensionable earnings referred to in paragraph 10(1)(a), during the period beginning with the laying before Parliament of an actuarial valuation report that does not show a non-permitted surplus and ending with laying of any actuarial report that shows a non-permitted surplus; and the time within which the arrears resulting from paragraph (a) are to be deposited into the Fund is no later than 30 days after the laying of the most recent actuarial report that no longer shows a non-permitted surplus. Non-permitted surplus A non-permitted surplus exists when the amount by which assets exceed liabilities in the Fund, as determined by the actuarial valuation report, is greater than the lesser of 20% of the amount of liabilities in respect of participants and pensioners as determined in that report, and the greater of twice the estimated amount, for the calendar year following the date of that report, of the total of the contributions that will be required of participants in respect of their earnings during that year, and the part of the amounts to be deposited under section 85 that is in respect of the benefits that have accrued in relation to the pensionable earnings referred to in paragraph 10(1)(a), and 10% of the amount of liabilities in respect of participants and pensioners as determined in that report. Deposit of estimated amounts based on actuarial report If, following the laying before Parliament of any actuarial valuation report under subsection 59.6(1) of the Act, an amount not previously subject to an estimate under paragraph 59.3(a) of the Act is estimated under that paragraph to be required to meet the cost of benefits payable under these Regulations, the time within which this amount is deposited to the Fund is 15 years after the laying of the report. Equal annual instalments That amount shall be deposited in equal annual instalments, with the first instalment to be paid in the fiscal year in which the report is laid before Parliament. Adjustments If, after the laying of a subsequent report, the amount that is estimated is less than the amount that was estimated following the immediately preceding report, the amount of each remaining instalment shall be reduced accordingly. Transfer of amounts The amounts deposited to the Fund shall be transferred to the Public Sector Pension Investment Board within the meaning of the Public Sector Pension Investment Board Act to be dealt with in accordance with that Act. Payment of benefits All amounts required for the payment of benefits payable under these Regulations and all necessary and reasonable costs for the administration of the Reserve Force Pension Plan shall be charged to the Fund and paid out of the assets of the Public Sector Pension Investment Board. Review date The review date referred to in subsection 59.6(2) of the Act is March 31, 2008. Annual report The annual report referred to in section 59.7 of the Act shall include: a statement showing the amounts paid into and out of the Fund during the fiscal year, by appropriate classifications, and the number of participants and the number of persons receiving benefits; and beginning with the fiscal year ending March 31, 2008, the financial statements of the Reserve Force Pension Plan for the fiscal year. Form and transmission of documents When any person makes an election, option or waiver, or gives a direction, it is valid only if it is made or given in writing, and signed and dated by the person making or giving it; and sent to the Minister within one week after the date that it bears. When made The election, option or waiver is made, and the direction is given, on the date that it bears, except that an option for an annual allowance or the payment of a transfer value made before or on the day on which the participant ceases to be a participant is made on the day after that day. Date of sending The date of the sending of the election, option, waiver or direction is the day on which it is delivered or, if it is sent by mail, the day on which it is mailed and the postmark is evidence of that day. Irrevocable The election, option or waiver is irrevocable. Coming into force These Regulations come into force on March 1, 2007.