Vol. 148, No. 8 — April 9, 2014

Registration

SOR/2014-70 March 28, 2014

ROYAL CANADIAN MOUNTED POLICE PENSION CONTINUATION ACT

Royal Canadian Mounted Police (Dependants) Pension Fund Increase in Benefits Order

P.C. 2014-308 March 27, 2014

Whereas it appears from a report made under section 56 of the Royal Canadian Mounted Police Pension Continuation Act (see footnote a) that the Royal Canadian Mounted Police (Dependants) Pension Fund is substantially in excess of the amount required to make adequate provision for the prospective payments out of it;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to subsection 57(1) of the Royal Canadian Mounted Police Pension Continuation Act (see footnote b), makes the annexed Royal Canadian Mounted Police (Dependants) Pension Fund Increase in Benefits Order.

ROYAL CANADIAN MOUNTED POLICE (DEPENDANTS) PENSION FUND INCREASE IN BENEFITS ORDER

1. The following pension benefits, as provided in Part IV of the Royal Canadian Mounted Police Pension Continuation Act (see footnote 1), are to be increased in the following manner:

2. This Order comes into effect on April 1, 2014.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

The Actuarial Report as of March 31, 2013, on the benefit plan financed through the Royal Canadian Mounted Police (Dependants) Pension Fund, revealed that the plan is substantially in excess of the amount required to cover future pension payments. The plan is entirely funded by contributions of former members of the Royal Canadian Mounted Police (RCMP) plus interest.

In accordance with subsection 57(1) of the Royal Canadian Mounted Police Pension Continuation Act (RCMP PCA), the governing statute, when such a surplus exists, benefits to recipients may be increased by Order of the Governor in Council.

If the surplus was to continue, the last remaining recipient would be entitled to an excessively high and unfair benefit.

Background

The benefit plan associated with the Royal Canadian Mounted Police (Dependants) Pension Fund was first established in 1934 and is administered in accordance with Part IV of the Royal Canadian Mounted Police Pension Continuation Act (RCMP PCA). The plan provides a pension to widows and children of former non-commissioned officers of the RCMP who would not otherwise be entitled to a benefit.

Contributions to the plan were optional for non-commissioned officers on active duty upon the establishment of the Fund and mandatory for those officers engaged after that time. Non-commissioned officers engaged after 1948 were subject to new pension arrangements that provided pension benefits to widows and children without requiring additional contributions. Consequently, except for certain non-commissioned officers whose continuous service dated back to 1934 or earlier, there were no new contributors to the plan after 1948.

Under section 56 of the RCMP PCA, a valuation of the assets and liabilities of the Fund must be made at least every five years. In accordance with generally accepted actuarial practices, the valuations are performed every three years. The previous valuation was made on March 31, 2010, and the next is planned for March 31, 2016.

As of March 31, 2013, the plan had only 132 widows in receipt of payments. There are no longer any children eligible to receive benefits.

Objectives

The Actuarial Report as of March 31, 2013, demonstrated that the Fund had an actuarial surplus of $1.3 million and recommended that $0.6 million be distributed in the form of benefit improvements to recipients while $0.7 million remain in the Fund for future improvements.

The objective of this proposal is to make the recommended distribution of the surplus by Order of the Governor in Council.

Description

The most recent valuation of the assets and liabilities of the Fund was made as of March 31, 2013, by the Office of the Chief Actuary, Office of the Superintendent of Financial Institutions. The valuation recommends that $0.6 million of the $1.3 million actuarial surplus be distributed in the form of benefit improvements as follows:

The Order of the Governor in Council would allow these recommended increases to be made.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no costs on small business.

Consultation

Consultations took place with the Office of the Chief Actuary which recommended the distribution of the Fund’s surplus in the form of increased benefits to recipients. Consultations with the Department of Finance confirmed that the Actuarial Report as of March 31, 2013, was tabled in Parliament by the Minister of Finance on January 22, 2014.

Rationale

The RCMP PCA provides that where the Actuarial Report on the Royal Canadian Mounted Police (Dependants) Pension Fund reveals a surplus, the Governor in Council may, by Order, increase the benefits payable to recipients; therefore, there is no alternative but to make this Order.

The plan is entirely financed through the Fund which forms part of the Public Accounts of Canada. The Fund is

The RCMP PCA requires the Government to make contributions only if the Fund is in a deficit. Every actuarial valuation to date has revealed a surplus; therefore, no Government contributions have ever been credited to the Fund.

The Fund is estimated to decline steadily until the last dollar is paid to the last widow, without giving special treatment to that widow. This is projected to occur in 2044, based on estimates in the Actuarial Report as of March 31, 2013.

Contact

Chantal Pethick
Director General
National Compensation Services
Royal Canadian Mounted Police
Ottawa, Ontario
K1A 0R2
Telephone: 613-843-6045
Email: Chantal.Pethick@rcmp-grc.gc.ca