Portions of the Public Service General Divestiture Regulations: SOR/2018-143
Canada Gazette, Part II, Volume 152, Number 14
June 25, 2018
PUBLIC SERVICE SUPERANNUATION ACT
P.C. 2018-875 June 22, 2018
Her Excellency, the Governor General in Council, on the recommendation of the President of the Treasury Board, pursuant to paragraph 42.1(1)(u) footnotea of the Public Service Superannuation Act footnoteb, makes the annexed Portions of the Public Service General Divestiture Regulations.
Portions of the Public Service General Divestiture Regulations
1 The following definitions apply in these Regulations.
Act means the Public Service Superannuation Act. (Loi)
new employer means a person or body who, by reason of an agreement with Her Majesty in right of Canada, carries out the activities that were formerly carried out by a portion of the public service. (nouvel employeur)
2 (1) Subject to subsection (2), these Regulations apply to a person who, by reason of an agreement between Her Majesty in right of Canada and a new employer, ceases to be employed in the public service and becomes employed by the new employer after the day on which these Regulations come into force.
Exception — person re-employed
(2) These Regulations do not apply to a person who becomes re-employed by the new employer.
Non-application — survivor and children
(3) Sections 4 to 6 do not apply to the survivor or children of a person who has received a return of contributions or has exercised an option in accordance with subsection 3(2).
When certain provisions are applicable
3 (1) Sections 12 to 13.01 of the Act only apply to the person on or after the day on which they cease to be employed by the new employer.
(2) Despite subsection (1), if, on or after the day on which these Regulations come into force, a person, were it not for these Regulations, would be entitled to a return of contributions under subsection 12(3) or 12.1(4) of the Act, the person may request, in writing, the return of contributions within one year after the day on which they cease to be employed in the public service and become employed by the new employer, and, if, in the same circumstances, a person is entitled to exercise an option in favour of the transfer value referred to in section 13.01 of the Act, they may exercise the option within the same period.
Benefits for survivor and children
4 The survivor and children of a person who dies while employed by the new employer are entitled to one of the following benefits to which they would have been entitled if the person had been employed in the public service:
- (a) the death benefit under subsection 12(8) or 12.1(8) of the Act;
- (b) the allowances referred to in subsection 13(3) or 13.001(3) of the Act.
Subsection 26(2) of Act
5 For the purposes of subsection 26(2) of the Act, a person is deemed to cease to be employed in the public service on the day on which they cease to be employed by the new employer.
Subsection 10(5) of Act
6 For the purposes of subsection 10(5) of the Act, the one-year period referred to in paragraph (a) of that subsection begins on the day on which the person ceases to be employed by the new employer.
7 For the purposes of sections 12 to 13.01 of the Act, pensionable service includes the period of service that begins on the day on which the person ceases to be employed in the public service and that ends on the day on which they cease to be employed by the new employer.
Sections 12 to 13.01 of Act
8 For the purposes of sections 12 to 13.01 of the Act, the age of the person when they cease to be employed in the public service is their age on the day on which they cease to be employed by the new employer.
Coming into force
9 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.)
On September 13, 2015, Atomic Energy of Canada Limited (AECL) transferred its subsidiary, Canadian Nuclear Laboratories (CNL), to Canadian National Energy Alliance (CNEA), a private sector company. CNL is responsible for the management and operation of AECL’s sites under contractual arrangements between AECL, CNL and the CNEA. Following the maximum period of transitional coverage under the Public Service Superannuation Act (the Act), approximately 3 300 CNL employees will cease to contribute and accrue pensionable service under the public service pension plan as of September 13, 2018. In the absence of these Regulations, CNL employees would have one year from that date to exercise an option for benefits under the Act without any protections to take into account their involuntary termination from the public service.
In order to alleviate regulatory development costs and potential uncertainties faced by employees that may be impacted by a future government divestiture, there is also a need to provide pension protection under the public service pension plan to employees affected by any future government divestiture, unless directed otherwise by the Treasury Board of Canada.
Starting in 2009, AECL underwent a major restructuring that was completed in September 2015 when the shares of CNL were transferred to CNEA, and existing employees of CNL became employed in the private sector. At the time of the transfer, the Government of Canada directed that transferred employees would retain their active membership in the public service pension plan for a transitional period not to exceed three years. This transitional coverage is set to expire on September 13, 2018.
The Government of Canada recognizes that the transfer or divestiture of the administration of a service means that active participation in the public service pension plan is unilaterally terminated for affected employees. As such, regulations have historically been made under the Public Service Superannuation Act to protect their pension entitlements.
The objective of the Portions of the Public Service General Divestiture Regulations (the Regulations) is to protect pension entitlements that would otherwise be adversely impacted due to the termination of an employee’s active participation in the public service pension plan as a result of a government divestiture.
The Regulations will apply to CNL employees whose transitional coverage under the public service pension plan will end on September 13, 2018, and will automatically apply to any employees affected by a future government divestiture.
The Regulations are designed to mitigate potential pension benefit reductions that would have otherwise applied to individuals who do not meet the age and service requirements for an unreduced pension under the public service pension plan. The Regulations provide that the duration of employment with the new employer, and an individual’s age when they end their employment with the new employer, will be used to determine eligibility for an unreduced pension under the public service pension plan.
The Regulations also mitigate adverse effects on pension benefits by allowing survivor benefits in situations where transferred individuals marry or enter into a common-law relationship or acquire a child while employed by the new employer.
The “One-for-One” Rule does not apply to this proposal since there will be no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal since there will be no impact on small business.
Since early 2010, there have been ongoing discussions between officials of the Department of Natural Resources, the Treasury Board of Canada Secretariat and bargaining agents, regarding the overall restructuring of AECL.
Bargaining agents and CNL employees raised concerns regarding the uncertainty of their pension benefits and the potential impacts on their retirement income arrangements. A Pension Plans Participation Agreement was established in order to address these concerns. Bargaining agents and employees were informed of the intention to introduce these regulations in order to provide pension protection under the public service pension plan to CNL employees affected by the divestiture.
Public Services and Procurement Canada, as the administrator of the public service pension plan, has been consulted and is fully prepared to implement the Regulations.
The Public Service Superannuation Act authorizes divestiture regulations to be made. The Regulations are the only means by which the Government of Canada can apply pension benefit protections in respect of transferring employees and mitigate negative pension consequences following the divestiture.
If the Regulations are not made, employees transferred out of the public service as a result of the CNL divestiture can be expected to react negatively. CNL employees would either have to defer receipt of their public service pension to avoid a reduction to their benefit, or would have to accept a reduction to their benefit if they are not eligible for an immediate annuity (unreduced pension) as of September 13, 2018. The Regulations will provide the required assurances to these employees, and to any employees impacted by any future government divestiture, in a fair and consistent manner.
Pension accounts for employees falling under the Regulations will continue to be administered on an ongoing basis irrespective of the making of the Regulations; there is no incremental increase to government administration costs. A review of past divestiture regulations has confirmed that no GBA+ issues have been raised by transferring employees, bargaining agents or government officials. Therefore, there are no GBA+ implications expected as a result of these Regulations.
Acting Executive Director
Pension Policy and Programs
Pensions and Benefits Sector
Treasury Board of Canada Secretariat