Regulations Amending the Supplementary Death Benefit Regulations: SOR/2024-85

Canada Gazette, Part II, Volume 158, Number 11

Registration
SOR/2024-85 May 9, 2024

PUBLIC SERVICE SUPERANNUATION ACT

P.C. 2024-506 May 9, 2024

Her Excellency the Governor General in Council, on the recommendation of the President of the Treasury Board, makes the annexed Regulations Amending the Supplementary Death Benefit Regulations under section 61footnote a of the Public Service Superannuation Act footnote b.

Regulations Amending the Supplementary Death Benefit Regulations

Amendments

1 The long title of the Supplementary Death Benefits Regulations footnote 1 is replaced by the following:

Supplementary Death Benefit Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

3 (1) The definition department in section 2 of the Regulations is repealed.

(2) The definition sous-chef in section 2 of the French version of the Regulations is repealed.

(3) The definition deputy head in section 2 of the English version of the Regulations is replaced by the following:

deputy head
has the same meaning as in section 2 of the Public Service Superannuation Regulations; (sous-ministre)

(4) Section 2 of the French version of the Regulations is amended by adding the following in alphabetical order:

sous-ministre
s’entend au sens de l’article 2 du Règlement sur la pension de la fonction publique. (deputy head)

4 Section 3 of the English version of the Regulations is replaced by the following:

3 Subject to these Regulations, the contributions required to be paid by a participant must be paid monthly by reservation from the participant’s salary.

5 Sections 4 and 5 of the English version of the Regulations are replaced by the following:

4 A participant who is absent from duty must contribute to the Consolidated Revenue Fund an amount equal to the amount the participant would be required to contribute under section 53 of the Act if the participant were not absent from duty.

5 The contributions required to be paid by a participant who is absent from duty with pay must be paid monthly by reservation from the participant’s salary.

6 (1) The portion of subsection 6(1) of the English version of the Regulations before paragraph (a) is replaced by the following:

6 (1) Subject to subsection (2) and section 7, a participant who is absent from duty without pay must pay the contributions that are required to be paid in respect of that absence

(2) The portion of subsection 6(2) of the English version of the Regulations before paragraph (a) is replaced by the following:

(2) If payment under paragraph (1)(b) would cause the participant financial hardship, the participant may choose to make payment by reservation from their salary of approximately equal instalments over a period not exceeding the lesser of

7 Section 7 of the Regulations is replaced by the following:

7 The contributions that are required to be paid by a participant referred to in section 47.1 of the Act, or by a participant who is absent from duty without pay to serve as described in any one of the following paragraphs, must be paid in advance, annually:

8 Sections 8 and 9 of the Regulations are replaced by the following:

8 The contributions required to be paid by a participant who is a seasonal employee or sessional employee for the period during which they are not on duty in the public service must be paid at the time and in the manner that contributions would be payable under section 6 as if the employee were, during that period, a participant described in that section.

Participants Receiving Less than Normal Salary

9 (1) For the purposes of Part II of the Act, when a participant engaged otherwise than on a full-time basis during an educational leave or a period of seasonal lay-off receives, during the educational leave or period of lay-off, salary that is less than what they would have received had they not been on leave or lay-off, they are deemed to have been, while so engaged, employed in the public service and the salary that they are deemed to have received during that leave or period of lay-off is the salary that they would have received had they not been on leave or lay-off.

(2) The contributions required to be paid by a participant described in subsection (1) must be paid at the time and in the manner that contributions would be payable under section 6 as if the participant were, during their educational leave or period of lay-off, a participant described in that section.

9 The portion of subsection 10(1) of the English version of the Regulations before paragraph (b) is replaced by the following:

10 (1) Subject to subsection (2), every elective participant must contribute to the Consolidated Revenue Fund $0.15 each month for every $1,000 of the basic benefit if the participant

10 (1) The portion of subsection 11(1) of the English version of the Regulations before paragraph (a) is replaced by the following:

11 (1) Subject to section 12, every elective participant, other than an elective participant referred to in subsection 10(1), must contribute to the Consolidated Revenue Fund each year, in advance, for every $2,000 of the basic benefit of the participant

(2) The portion of subsection 11(2.1) before paragraph (a) of the English version of the Regulations is replaced by the following:

(2.1) Subject to section 12, a participant referred to in subsection (1) must pay

(3) Subsection 11(3) of the Regulations is replaced by the following:

(3) If an elective participant does not pay their annual contribution in accordance with subsection (2.1) because they received erroneous or misleading information as to their obligations under the Act from a person employed in the public service whose ordinary duties include giving advice about the application of the Act, the participant must pay their annual contribution within three months after the day on which they receive a notice with the correct information; however, the due date of each annual contribution after that contribution remains as set out in paragraph (2.1)(b).

11 (1) Subsection 12(1) of the English version of the Regulations is replaced by the following:

12 (1) Subject to subsection (2), if an elective participant is or becomes entitled to an annuity or an annual allowance under Part I of the Act, the contributions that they are required to pay under section 10 or 11 must, unless the participant otherwise directs, be reserved from that annuity or annual allowance when it becomes payable to the participant.

(2) Subsections 12(2) and (3) of the Regulations are replaced by the following:

(2) If an annuity or annual allowance payable under Part I of the Act to an elective participant is not sufficient to pay the contributions that the participant is required to pay under section 10 or 11, the participant must pay the contributions, in advance, annually.

(3) A direction made by a participant under subsection (1) must be in writing, signed by the participant and delivered to the Minister.

(4) The direction is effective on the first day of the month following the month in which it is received by the Minister.

12 Section 14 of the English version of the Regulations is replaced by the following:

14 If an elective participant has paid a contribution in respect of a period longer than one month and before the end of that period they become a participant, other than an elective participant, under the Act or under Part II of the Canadian Forces Superannuation Act, the participant is to be paid an amount equal to a fraction of the last contribution that they have paid, which is to be determined as follows:

13 Section 15 of the Regulations is replaced by the following:

15 The reduction referred to in the definition basic benefit in subsection 47(1) of the Act is to be made on April 1st or October 1st of each year, whichever date immediately follows the participant’s birthday.

14 Section 16 of the English version of the Regulations is replaced by the following:

16 The reduction in the amount that certain participants are required to contribute under section 53 of the Act is to commence on April 1st or October 1st, whichever date immediately follows the anniversary of the birthday of the participant on which the participant became eligible for the reduction.

15 Section 17 of the Regulations is replaced by the following:

17 For the purposes of Part II of the Act, a person’s service in the public service is deemed to be substantially without interruption if, during a relevant period,

16 (1) The portion of section 18 of the French version of the Regulations before paragraph (a) is replaced by the following:

18 Pour l’application de la partie II de la Loi et du présent règlement :

(2) Paragraphs 18(a) and (b) of the Regulations are replaced by the following:

(3) The portion of paragraph 18(c) of the Regulations before subparagraph (i) is replaced by the following:

17 (1) The portion of subsection 19(1) of the Regulations before paragraph (a) is replaced by the following:

19 (1) For the purposes of Part II of the Act, the salary that is or was authorized to be paid to a person employed in the public service at a rate other than an annual rate is to be computed in terms of an annual rate by multiplying the rate of pay that they are or were paid

(2) The portion of paragraph 19(1)(a) of the French version of the Regulations before subparagraph (i) is replaced by the following:

(3) Subparagraphs 19(1)(a)(i) and (ii) of the Regulations are replaced by the following:

(4) The portion of paragraph 19(1)(b) of the French version of the Regulations before subparagraph (i) is replaced by the following:

(5) Subparagraph 19(1)(b)(i) of the Regulations is replaced by the following:

(6) Subparagraph 19(1)(b)(ii) of the French version of the Regulations is replaced by the following:

(7) Subsection 19(2) of the Regulations is replaced by the following:

(2) For the purposes of this section, the number of hours or days in a person’s standard work week is the number of hours or days that the person is or was, as the case may be, ordinarily required to work during such a work week.

18 (1) The portion of section 20 of the Regulations before paragraph (a) is replaced by the following:

20 Subject to sections 21 and 22, a participant, other than an elective participant, is deemed, for the purposes of Part II of the Act, to have ceased to be employed in the public service

(2) Paragraphs 20(a) and (b) of the English version of the Regulations are replaced by the following:

(3) Subparagraph 20(c)(i) of the Regulations is replaced by the following:

(4) Subparagraph 20(c)(ii) of the English version of the Regulations is replaced by the following:

(5) Paragraphs 20(d) and (e) of the Regulations are replaced by the following:

(6) Paragraph 20(f) of the English version of the Regulations is replaced by the following:

19 Subsection 21(1) of the Regulations is replaced by the following:

21 (1) A participant who is a sessional employee is deemed, for the purposes of Part II of the Act, to have ceased to be employed in the public service on the first day of the session of Parliament immediately following the session in which they were actively employed unless

20 Section 22 of the Regulations is replaced by the following:

22 A participant who is a seasonal employee is deemed, for the purposes of Part II of the Act, to have ceased to be employed in the public service on the first day on which they are required to return to duty following the season in which they were actively employed unless

21 Section 23 of the Regulations is replaced by the following:

23 For the purposes of the definition salary in subsection 47(1) of the Act, the day on which a retroactive increase in salary is deemed to have commenced to have been received by a participant is the first day of the month after the month in which

22 Subsections 24(1) and (2) of the Regulations are replaced by the following:

24 (1) For the purposes of Part II of the Act, proof of age of the participant is to be established in the same manner as it is established under section 48 of the Public Service Superannuation Regulations before any benefit is to be paid on the participant’s death.

23 Sections 25 and 26 of the Regulations are replaced by the following:

25 (1) Any election that a person makes under section 51 of the Act must

(2) The document to be issued to each elective participant as evidence that they are a participant under Part II of the Act is established using

Naming and Revoking of Beneficiaries

26 (1) A participant may, for the purposes of Part II of the Act, name up to five beneficiaries.

(2) For the purposes of Part II of the Act, a beneficiary may be any of the following:

(3) In order to name a beneficiary, the following information must be submitted in writing to the Minister and be accompanied by an attestation that is dated and signed by the participant and that confirms that the information is complete and accurate:

(4) The naming is effective on the day on which the participant signs the attestation if it is received by the Minister before the death of the participant.

(5) In cases where the attestation is not received by the Minister before the death of the participant, the naming is effective on the day on which the participant signs the attestation if

(6) If a participant has named more than one beneficiary and the information submitted with respect to one of those beneficiaries is illegible or incomplete, or does not refer to the estate or succession of the participant, an individual or a registered charity, as defined in subsection 248(1) of the Income Tax Act, the validity of the naming with respect to the other beneficiaries will not be affected.

(7) Any naming will revoke any previous naming.

24 Section 28 of the Regulations is replaced by the following:

28 A Crown corporation or public board that is not specified in Schedule III must pay to the Consolidated Revenue Fund each month an amount equal to $0.04 for every $1,000 of the basic benefit of each participant who is employed by the Crown corporation or public board at any time during that month.

25 The English version of the Regulations is amended by replacing “Public Service” with “public service” in the following provisions:

26 Schedules II to V to the Regulations are replaced by the Schedule II and III set out in the schedule to these Regulations.

Transitional Provision

27 Any naming of a beneficiary by a participant, under section 26 of the Supplementary Death Benefit Regulations, before the day on which these Regulations come into force, remains valid until it is revoked.

Coming into Force

28 These Regulations come into force on June 1, 2024, but if they are registered after that day, they come into force on the day on which they are registered.

SCHEDULE

(Section 26)

SCHEDULE II

(Paragraphs 25(2)(a) and (b))

FORM 1

Date:

Pension number:

Personal record identifier:

Supplementary Death Benefit

Public Service Pension Plan

Public Service Superannuation Act, Part II

Notice of automatic enrolment post-employment

This document is issued to

(INSERT PARTICIPANT NAME)

as evidence of your continued participation in the supplementary death benefit under the Public Service Pension Plan following your last day of employment in the public service on the (INSERT DATE).

Government of Canada Pension Centre

FORM 2

Date:

Pension number:

Personal record identifier:

Supplementary Death Benefit

Public Service Pension Plan

Public Service Superannuation Act, Part II

Notice of optional enrolment post-employment

This document is issued to

(INSERT PARTICIPANT NAME)

as evidence of your continued participation in the supplementary death benefit under the Public Service Pension Plan following your last day of employment in the public service on the (INSERT DATE) and as a consequence of your election to continue coverage on the (INSERT DATE).

Government of Canada Pension Centre

SCHEDULE III

(Sections 27 and 28)

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Most members of the public service pension plan are entitled to the Supplementary Death Benefit (SDB), a benefit similar to a decreasing term life insurance. It pays out a lump-sum benefit upon the death of a plan member. Across the Canadian pension and insurance industries, the option to name multiple beneficiaries, including minors, and the ability to name one’s beneficiaries online are common features. In these ways, the SDB and its administration have not kept pace with industry standards, plan member needs or digital service expectations.

Under the Supplementary Death Benefit Regulations (the Regulations), the member can name only one beneficiary and cannot name a person under the age of 18 as a beneficiary. To get around these limitations, members can redirect the benefit to their estate, but in doing so, the benefit becomes subject to taxes, creditor claims, and probate fees. This approach most often results in a delayed and potentially reduced payment. Because of this, members and their beneficiaries are inadvertently penalized.

The Regulations also require a prescribed form to be completed in writing, witnessed, and mailed to Public Services and Procurement Canada (PSPC) before the naming comes into effect. This paper burden contributes to a mediocre member response rate (only 75% of members name a beneficiary) and validation issues (approximately 5% of forms received are considered invalid). Further, the record of a member’s named beneficiary is not accessible to the member online. As a result, members forget who they have named or forget to change their beneficiary after a major life event, such as a divorce or the death of said beneficiary. These issues contribute to over 10 000 “cold cases” where beneficiaries do not come forward or cannot be located and their benefit remains unpaid. They are also a significant source of administrative burden as the Government of Canada Pension Centre must respond to claims disputing the named beneficiary on file.

Background

The SDB was introduced in 1955 through Part II of the Public Service Superannuation Act (PSSA) and is administered in accordance with the terms of the PSSA and the Regulations. Participation in the plan is compulsory for most active members under the public service pension plan and post-retirement coverage is available for eligible pensioners. It provides designated beneficiaries with a lump-sum benefit upon the death of a participant. The benefit is equal to twice the participant’s annual salary rounded up to the next $1,000 and is payable to the designated beneficiary or the participant’s estate. Participants’ premiums are paid as deductions from their salary or pension. The benefit amount automatically increases as the participant’s salary increases. Starting at age 66, the participant’s coverage decreases by 10% each year to a minimum of $10,000 by age 75. If the participant is still employed at age 65, they are entitled to coverage of $10,000, which is maintained for life at no further cost.

According to the most recently published Actuarial Report on the Public Service Pension Plan, as of March 31, 2020, there were 521 580 participants in the SDB plan. Of these, approximately 63% are active participants and the remaining 37% are retirees. Annual SDB payments to beneficiaries totalled approximately $192 million.

Objective

The Regulations Amending the Supplementary Death Benefit Regulations (the amendments) modernize the administration of the SDB to better meet plan members’ needs and align with industry standards. Specifically, the amendments aim to

Description

The amendments

Regulatory development

Consultation

In 2017, an extensive benchmarking exercise was completed wherein 23 administrators of 92 other public service pension plans across Canada were consulted on their approaches to beneficiary designation and their use of electronic communication. This consultation revealed that the administration of the SDB was not keeping pace with technological advancements in the industry or member expectations.

The Public Service Pension Advisory Committee (the Committee), comprised of employer, employee, and retiree representatives, was first consulted on this initiative in January 2018 and has received updates for each subsequent year. The Committee represents the views of active and retired participants in the SDB plan, their beneficiaries and PSPC. In each subsequent consultation, the Committee has maintained support for the initiative.

The amendments are exempt from prepublication in the Canada Gazette, Part I, because they do not impact the general public or the business community. The amendments also pertain to internal government human resources operations on which employee and retiree representatives from the Committee have been consulted.

Modern treaty obligations and Indigenous engagement and consultation

Employees of the Government of Nunavut, the Government of Yukon, and the Government of the Northwest Territories are subject to the PSSA. In this limited sense, the amendments to the Regulations apply or take effect in one or more modern treaty areas. However, the amendments have no impact on land and resource management, are not in conflict with Indigenous self-governments located in the implicated geographic area, nor require the additional employment of federal officials in a geographic area subject to a modern treaty. Also, these amendments do not involve the procurement of goods, services, real property, or construction in a geographic area subject to a modern treaty. Land claim organizations or Indigenous self-governments are not eligible recipients of any program and service funding, or other resources associated with the implementation of the amendments to the Regulations. Accordingly, the amendments do not require Canada to fulfill any consultation or engagement requirements described in a modern treaty, nor do they create other federal modern treaty responsibilities.

Instrument choice

There is no alternate instrument to address the issue. The matter is explicitly within the purview of the Regulations. The principles of outcome-based regulation have been incorporated into the development of the amendments insofar as they are being drafted to prompt a change in behaviour in the membership. Baselines are in place to gauge whether improvements in response rates and valid form submissions are achieved.

Regulatory analysis

Benefits and costs

Without the amendments, the designation of beneficiaries for the SDB would continue to only be administered through paper-based processes, contributing to a continuation of mediocre designation rates and to the collection of “cold cases” wherein named beneficiaries cannot be located and their benefit remains unpaid.

The amendments will allow for a simplified process to designate a beneficiary through an updated online pension portal. The pension portal will allow members to easily keep track of who they have designated as their beneficiary or beneficiaries. This less burdensome process is expected to increase the rate at which members designate beneficiaries, resulting in more beneficiaries receiving payments directly, fewer errors in the designation process and a greater rate of benefits being paid out.

Modernizing the pension portal is expected to reduce many of the time-consuming processes currently associated with the administration of the SDB, which include manually scanning mailed-in forms. Additionally, by addressing the most common reasons for invalid forms, PSPC estimates that these updates could save over 400 hours of administration per year and help over 2 500 members per year avoid an invalid designation.

The amendments will benefit plan members by providing greater flexibility. By allowing the naming of multiple SDB beneficiaries and the ability to designate those beneficiaries online, these amendments will make the process more convenient and easier to understand for plan members and reduce the need for paper-based processes and paid postage.

As part of a broader initiative to modernize the secure online pension portal, PSPC allocated $1 million of its existing operating resources to create the digital framework within which the amendments will be implemented, and to update outreach materials and inform plan members of the regulatory changes. Once operational, any ongoing costs related to the maintenance of the SDB functions within the pension portal will be incorporated into PSPC’s existing schedule for the upkeep of the larger pension portal.

There are no incremental costs in terms of benefit liabilities to the public service pension plan associated with the amendments. These amendments will provide the authority for the plan administrator (PSPC) to accept e-designations in the future, allow for multiple beneficiaries, and permit for better tracking of beneficiaries through improved administration, which is projected to result in a reduction in benefit payment “cold cases.”

Small business lens

Analysis under the small business lens concluded that the amendments will not impact Canadian small businesses.

One-for-one rule

The one-for-one rule does not apply, as there is no impact on business.

Regulatory cooperation and alignment

These amendments are not related to a commitment under a formal regulatory cooperation forum. While not tied to a formal regulatory cooperation initiative, the amendments align with efforts across the Government to modernize, simplify and digitize administrative processes.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required. This is primarily because the implementation is limited to SDB designation and does not mandate digital communication. The new Regulations permit the continued acceptance of paper forms. Electronic designation will reduce paper waste and carbon emissions related to the production of paper, pens, ink and transportation of products and paper mail. Increased energy consumption is anticipated from the process allowing online designation; however, this may be somewhat offset by a decrease in the use of electricity for printers and scanners per the paper-based process. As such, the implementation is projected to have a neutral, if slightly positive, environmental impact.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for these amendments.

Implementation, compliance and enforcement, and service standards

Coordination with PSPC, as the public service pension plan and pay administrator, has taken place concerning the design and implementation strategy of the regulatory changes. This coordination ensures that the electronic systems updates will align with the provisions and requirements of the amendments.

The regulatory amendments come into force on June 1, 2024, or if they are registered after that day, they come into force on the day on which they are registered. This is to ensure close sequencing with the launch of the updates to the pension portal. Upon the coming into force of the regulatory amendments, active members will be permitted to designate their beneficiaries online and name multiple beneficiaries. Retired members will also be permitted to name multiple beneficiaries and able to do so online once access to the pension portal is extended to retired members (projected for spring 2025). Upon the coming into force of these amendments, PSPC will

All system updates have been tested, passed testing and are ready for implementation. Measures are in place to ensure that the amendments are administered consistently and that plan members have the information they need. This includes the implementation of a communications strategy to notify participants of the new option to name multiple beneficiaries, inform them of the importance of designating a beneficiary and remind them to update beneficiary designations following relevant life events. The Treasury Board Secretariat (TBS) and PSPC will prepare interpretation and guidance materials for plan members and their employers on the modernization of the Supplementary Death Benefit Plan. These materials will be made available on the Canada.ca website to coincide with the coming into force of the Regulations.

PSPC and TBS will monitor the success of the policy objectives through an evaluation of member response rates, the number of invalid forms received, and the number of SDB payments released. This performance measurement will be incorporated into existing frameworks.

Contact

Laura MacLean
Acting Director
Employee Relations and Total Compensation
Office of the Chief Human Resources Officer
Treasury Board of Canada Secretariat
Telephone: 613‑720‑4693
Email: Laura.MacLean@tbs-sct.gc.ca