Vol. 149, No. 13 — July 1, 2015
SOR/2015-158 June 17, 2015
CANADA PENSION PLAN
Regulations Amending the Canada Pension Plan Regulations
P.C. 2015-825 June 17, 2015
His Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to subsections 7(1) and 107(3) of the Canada Pension Plan (see footnote a), makes the annexed Regulations Amending the Canada Pension Plan Regulations.
REGULATIONS AMENDING THE CANADA PENSION PLAN REGULATIONS
1. The portion of paragraph 34.1(1)(a) of the Canada Pension Plan Regulations (see footnote 1) before subparagraph (i) is replaced by the following:
- (a) subject to paragraphs 6(2)(a) to (i), (j.1) and (k) of the Act, if by virtue of any of the circumstances described in an agreement entered into under subsection 107(1) of the Act the legislation of Canada applies to a person in any year, the employment of that person in those circumstances is included in pensionable employment for that year, if
2. Paragraph 1(b) of Schedule IV to the French version of the Regulations is replaced by the following:
- b) Emploi à titre de membres d’une agence, d’un conseil, d’une commission, d’un comité ou de tout autre organisme, doté ou non de la personnalité morale, nommés par Sa Majesté du chef de l’Ontario ou par un de ses mandataires, qui touchent une rétribution ou une autre rémunération à la journée, des avances, des honoraires ou des allocations mais qui ne sont pas employés à plein temps de Sa Majesté du chef de l’Ontario ou d’un de ses mandataires.
3. Schedule VII to the Regulations is amended by repealing items 2, 4, 14 and 16 to 19.
4. Schedule VIII to the Regulations is amended by repealing items 2, 4, 14 and 16 to 19.
COMING INTO FORCE
5. These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Inconsistency between French and English versions of the Regulations
On December 3, 2013, an amendment to Schedule IV to the Canada Pension Plan Regulations (the Regulations) was approved by the Governor in Council (SOR/2013-233), at the request of the Government of Ontario, to exclude from pensionable employment the employment of individuals in that province who are appointed, part-time members of agencies, boards, commissions, committees and unincorporated bodies of the province of Ontario or its agents.
Subsequent to the publication of the amendment in the Canada Gazette, Part II, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR) noted to the Canada Revenue Agency that the English version the amendment refers to employment of an individual who “is paid fees or other remuneration on a per diem basis, or a retainer or honorarium,” while the French version refers to an individual who is paid fees, a retainer, an honorarium, or other remuneration on a per diem basis. The SJCSR found that the English and French versions of the amendment do not have the same effect, as the wording of the amendment to the French version could be interpreted as stating that all forms of remuneration, including retainers and honoraria, are paid on a per diem basis, which is not the case. The intended wording is reflected in the English version.
In addition, during the review of this issue, it was noted that the word “allocation” should be added to the French version to reflect the wording used in the provincial legislation as a synonym of “honoraires.”
Locally-employed embassy workers
The Canada Pension Plan legislation is jointly administered by the Minister of National Revenue and the Minister of Employment and Social Development. The Minister of National Revenue is responsible for the administration and enforcement of Part I of the Canada Pension Plan (CPP) (sections 2–41) and Parts I, II, III, IV and VIII of the Regulations, which deal with the determination of pensionable service, the determination of the contributions payable, and the collection and enforcement of contribution and pensionable employment related matters. The Minister of Employment and Social Development is responsible for the administration and enforcement of Parts II and III of the CPP and Part V of the Regulations, which provide for the payment of pension and supplementary benefits and the administration of the Canada Pension Plan in general.
Determination of pensionable service
The CPP defines what type of employment is to be considered as “pensionable employment,” and what is excluded as pensionable employment. Exclusions include employment in Canada by the government of a country other than Canada or an international organization. Therefore, under this general rule, the employment of Canadian employees in Canada at a foreign mission (embassy) would not be pensionable employment for Canada Pension Plan purposes.
At the same time, the Regulations provide that employment in Canada by the government of a foreign country listed in Schedule VII of the Regulations, with whom Canada has entered into an agreement to recognize such employment as pensionable, is included in pensionable employment. The Regulations also provide that other types of employment with these foreign governments, as described in Schedule VIII to the Regulations, are not to be included in pensionable employment. The first of these agreements between the Minister of National Revenue and a foreign country to include locally-engaged staff in pensionable employment came into effect in 1966.
In addition to the agreements mentioned in the paragraph above, the Minister of Employment and Social Development has entered into reciprocal social security agreements (SSAs) with foreign governments since 1977. These agreements are bilateral treaties under international law, which coordinate the social security legislation of Canada and a foreign country with the intention of eliminating cases where workers might have to contribute to the social security systems of the two countries for the same work as well as to ensure that the coverage of Canadian workers under the Canada Pension Plan will not be interrupted. Of the 54 SSAs that Canada has ratified with foreign governments, 48 of them provide that Canadian employees working in Canada for a foreign mission (embassy) are covered under the Canada Pension Plan.
In recent years, having two separate agreements to recognize various types of pensionable employment has become unnecessary, as more and more of the SSAs now address the inclusion of locally-employed workers of a foreign mission (embassy), and many of them specifically provide for the termination of the former Minister of National Revenue agreements. Accordingly, the listing of these countries in Schedule VII to the Regulations is obsolete, as is listing the excluded types of pensionable employment in Schedule VIII to the Regulations.
Amendments to the Regulations in 1980 prescribed the conditions under which Canada Pension Plan coverage could be extended, pursuant to the terms of an SSA, to certain types of employment. At the time that this amendment was made, there were concerns that the terms of an SSA might open the door to granting coverage for employment that was never intended to be pensionable. Therefore, the provision including such employment in pensionable employment was made “subject to subsection 6(2) of the Act,” which includes a paragraph excluding employment in Canada by a foreign country from pensionable employment. This conflict needs to be addressed in order for the intent of the various SSAs to be achieved.
Despite the restriction, the intent of the signatories of the SSAs has been respected, and their provisions have been administered in such a way that the employment of locally-employed workers of a foreign mission (embassy) is recognized as pensionable. Consequently, this proposed amendment to remove that restriction will have no impact on the Canadians working for a foreign mission (embassy) in Canada currently covered under the 48 existing SSAs that recognize their employment as pensionable employment for CPP purposes.
- (a) Correct inconsistencies between the English and French versions of the Regulations;
- (b) Ensure that the intent of Canada and foreign governments that employ individuals in Canada and whose employment is recognized under an SSA as being covered under the Canada Pension Plan is respected; and
- (c) Update the Regulations to account for the termination of Minister of National Revenue agreements which have been terminated by SSAs.
The French version of the Regulations is amended to reflect the English version of “is paid fees or other remuneration on a per diem basis, or a retainer or honorarium,” and to add the word “allocation” to align the text with the wording used in the provincial legislation as a synonym of “honoraires.”
The Regulations are amended to specifically exclude the application of paragraph 6(2)(j) of the CPP to ensure that the employment of locally-employed workers of a foreign mission (embassy) is included in pensionable employment.
Schedules VII and VIII to the Regulations are amended to remove references to those foreign countries whose agreements with the Minister of National Revenue have been terminated and replaced by an SSA.
The “One-for-One” Rule does not apply as these regulatory amendments do not impose additional administrative costs on Canadian businesses.
Given the housekeeping nature of the amendments, consultations with other stakeholders were not necessary.
These amendments to the Regulations are administrative in nature as they
- (a) correct an inconsistency between the French and English versions of the Regulations;
- (b) ensure that the wording the Regulations is consistent with the intent of SSAs signed with various foreign countries; and
- (c) update the references to various foreign countries in Schedules VII and VIII to the Regulations to reflect the intent of various SSAs.
These amendments ensure that the intent of the parties that have signed an SSA that recognizes as pensionable the employment of locally-employed employees of a foreign government is respected. These amendments have no substantive impact, as the SSAs have been administered in such a way as to recognize as pensionable the employment of locally-employed workers of a foreign mission (embassy).
The amendments to Schedules VII and VIII of the Regulations remove any ambiguity as to which agreement applies with respect to the employment in Canada of locally-employed workers of a foreign mission (embassy).
CPP/EI Rulings Division
Canada Revenue Agency