2005 BILL 40

Second

Session, 45th General Assembly

Elizabeth II, 2005

BILL 40

AN ACT TO AMEND THE

TEACHERS'

PENSIONS ACT

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

LOYOLA SULLIVAN

Minister

of Finance and President of Treasury Board

Ordered

to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

Clause 1of

the Bill would amend the definition

section of the Teachers' Pensions Act by adding

definitions of "commuted value" and

"terminating teacher", amending the definition of "prescribed" and renumbering

paragraph 2(1)(a.2).

Clause 2 of

the Bill would amend

section 9 of the Act to carry over the existing ability of

teachers with less than 5 years of service to receive refunds of contributions

on termination.

Clause 3 of

the Bill would add a proposed

section 9.1 to provide for commuted value

transfers in relation to termination in compliance with the Pension Benefits Act, 1997 .

Clause 4 of

the Bill would amend

section 22 of the Act to confirm the application of the

pre-1991 accrual rate to all pre-1991 pensionable service.

Clause 5 of

the Bill would repeal and replace

section 26.1 of the Act to provide that annual

indexing be subject to the availability of funds in the teachers' indexing

account sufficient to cover the actuarial cost of increases and to provide a

formula for the proportionate reduction of such increases in the event that

sufficient funds are not available.

Clause 6 of

the Bill would add a proposed

section 27.1 to allow for commuted value transfers

of pre-retirement death benefits in compliance with the Pension Benefits Act, 1997 .

Clause 7 of

the Bill would repeal and replace

section 36 of the Act to allow for a commuted

value transfer of credits on marriage breakdown in compliance with the Pension Benefits Act, 1997 .

A BILL

AN ACT TO AMEND THE TEACHERS'

PENSIONS ACT

Analysis

S.2 Amdt.

Interpretation

2. S.9 Amdt.

Repayment of contributions

S.9.1 Added

Election upon termination

S.22 Amdt.

Calculation of pension

S.26.1 R&S

Indexing

S.27.1 Added

Death of employee

S.36 R&S

Marriage breakdown

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL1991 c17

as amended

1. (1) Subsection 2(1) of the Teachers' Pensions Act is amended by repealing paragraph (a.2) and

substituting the following:

(a.2) "commuted value" means commuted

value as defined in the Pension Benefits

Act, 1997 ;

(a.3) "consumer price index" with respect

to a year, means the average for each month of that year of the Consumer Price

Index for Canada as published by Statistics Canada;

(2) Paragraph 2(1)(

k) of the Act is repealed and

the following substituted:

(k) "prescribed" means, except where the

context otherwise indicates, pre scribed by

directives issued by the minister under

section 42;

(3) Subsection 2(1) of the Act is amended by

striking out the word "and" at the end of paragraph (

q) and adding

immediately after that paragraph the following:

(q.1) "terminating teacher" means a

teacher who terminates his or her employment or whose employment is terminated

for reasons other than disability and who is not retired or entitled to receive

a pension under subsection 20(1) or (3); and

2. Subsection 9(1) of the Act is repealed and the

following substituted:

Repayment of

contributions

(1) A

terminating teacher with less than 5 years of pensionable service may elect to

receive a refund of his or her contributions, with interest at a rate

prescribed.

(1.1) Where a teacher with less than 5 years of

pensionable service dies, the contributions made by the teacher, with interest

at a rate prescribed, shall be paid to the teacher's personal representative.

3. The Act is amended by adding immediately after

section 9 the following:

Election upon

termination

9.1

(1) A

terminating teacher with at least 5 years of pensionable service may elect,

within 180 days after termination,

(

a) a transfer of the commuted value of the

pension entitlement of the teacher, in accordance with paragraph 40(1)(

a) of

the Pension Benefits Act, 1997;

(

b) a deferred pension in accordance with

section

21; or

(

c) a return of the contributions made by the

teacher, with interest at a rate prescribed, for periods of pensionable service

credited

(

i) before January 1, 1987 ,

and

(ii) before January 1, 1997, where the teacher has

less than 10 years of pensionable service and is less than 45 years of age,

and a transfer of the commuted value of his

or her pension entitlement, based on the remaining periods of pensionable

service, under paragraph (a).

(2) In default of an election under subsection

(1) a teacher is considered to have elected to receive a deferred pension.

(3) A teacher who elects or is considered to have

elected under section (2) to receive a deferred pension may only revoke that

election to transfer his or her contributions to a pension plan included in the

Schedule to the Portability of Pensions

Act .

(4) A transfer under paragraph (1)(

a) which is not

to another pension plan or deferred life annuity shall, regardless of when the

pensionable service was credited, be to a retirement arrangement approved for

this purpose by the Superintendent of Pensions.

(5) A transfer under paragraph (1)(

a) shall not be

less than the contributions made by the teacher, with interest at a rate

prescribed.

(6) Where a transfer under paragraph (1)(

a) would

be greater than the maximum amount permitted under the Income Tax Act ( Canada ),

the excess shall be paid to the teacher.

(7) Where the annual pension payable is less than

4% of the YMPE for the calendar year in which the employment is terminated, a

teacher or former teacher is entitled to receive a lump sum payment instead of

the deferred pension under

section 21.

(8) Where the commuted value of a deferred pension

benefit is less than 10% of the YMPE for the calendar year in which the employment

is terminated, a teacher or former teacher is entitled to receive a lump sum

instead of the deferred pension under

section 21.

(9) For the purposes of subsections (7) and (8),

"YMPE" means the year's maximum pensionable earnings as defined under

the Canada Pension Plan.

Section 22 of the Act is amended by adding

immediately after subsection (1.2) the following:

(1.3) Notwithstanding subsection (1), where the period

of pensionable service credited includes service credited or eligible to be

credited for a period before January 1, 1991 and purchased

after January

1, 1991 , the pension in respect of that

pensionable service shall be the sum of

(a) 1.62% of the lesser of the average of the

(

i) teacher's highest 5 years of pensionable

annual salary, and

(ii) year's maximum pensionable earnings in the 3

years immediately before retirement; plus

(b) 2.22% of the excess of the average of the

teacher's highest 5 years of pensionable annual salary over the average of the

year's maximum pensionable earnings in the 3 years immediately before

retirement

multiplied by the number of years and 1/10

of pensionable service credited after March 31, 1967

in respect of the pensionable service credited for the period before January 1, 1991 and purchased after January 1, 1991 .

Section 26.1 of the Act is repealed and the

following substituted:

Indexing

26.1

(1) A

teachers' indexing account shall be established as a separate account within

the pension fund to provide for the increase in the amount of pension or

survivor benefits referred to in subsection (3).

(2) The following amounts shall be allocated to

the teachers' indexing account:

(a) .85% of the salary of every teacher to whom

the pension plan applies from the money deducted under subsection 6(2); and

(

b) an amount equivalent to the amount under

paragraph (

a) from the contributions of the government of the province under

subsection 8(1).

(3) On September 1 in a year, the amount of

pension or survivor benefit being paid to a person who has reached the age of

65 years shall be adjusted by multiplying

(

a) the annual amount of the pension or survivor

benefit;

(b) 60% of the ratio that the consumer price index

for the previous calendar year bears to the consumer price index for the

calendar year immediately before that previous calendar year,

but the amount of an increase shall not

exceed 1.2% of the annual pension or survivor benefit.

(4) Subsection (3) only applies to a pension or

survivor benefit where the teacher to whom that pension or benefit relates

retires after August

31, 1998 .

(5) The amount of a pension or survivor benefit

being paid to a person shall not decrease by reason only of an adjustment under

subsection (3).

(6) Notwithstanding subsection (3), the amount of

increase determined under subsection (3) shall be paid only to the extent that

funds are available in the teachers' indexing account and in the event that the

funds in the teachers' indexing account are insufficient to pay the full amount

of the actuarial cost of the increase under subsection (3), the amount of the

increase shall be reduced in accordance with subsection (7).

(7) A reduction in the increase payable under

subsection (3) shall be determined by the ratio of the funds in the teachers'

indexing account to the actuarial cost of the increase under subsection (3).

(8) For the purposes of subsections (6) and (7),

the actuarial cost of the increase under subsection (3) shall be determined by

the plan's actuary on September 1 of the year in which the adjustment under subsection

(3) is made.

(9) For the purposes of this section, the

teachers' indexing account shall participate in the pension fund as if it were

a plan defined under paragraph 2(

c) of the Pensions

Funding Act .

(10) Notwithstanding subsection (6),

section 9 of

the Pensions Funding Act does not

apply to the teachers' indexing account required under subsection (1).

(11) This

section is considered to have come into

force on September

1, 2002 .

6. The Act is amended by adding immediately after

section 27 the following:

Death of employee

27.1

(1) Where

a teacher with at least 5 years of pensionable service dies before receiving a

pension and a survivor benefit is payable under

section 26, a surviving

principal beneficiary may elect

(

a) to receive the survivor benefit in accordance

with

section 26; or

(

b) to receive in a lump sum

(

i) the commuted value of the survivor benefit, or

(ii) the commuted value of the teacher's pension

entitlement,

whichever is the greater.

(2) Where a teacher with at least 5 years of

pensionable service dies and there is no survivor benefit payable under

section

26, the commuted value of the pension entitlement of the teacher, calculated as

of the date of death, shall be transferred to the teacher's personal representative

and subsections 9(3), (4) and (5) apply to the transfer.

Section 36 of the Act is repealed and the

following substituted:

Marriage breakdown

36. Where

(

a) a court has made an order for the division of

matrimonial property under the Family Law

Act or a similar order has been made by a court outside the province; or

(

b) an employee has entered into a separation

agreement within the meaning of the Family

Law Act to divide matrimonial property,

a right under this Act shall be divided in

accordance with the court order or separation agreement and

Part VI of the Pension Benefits Act, 1997 applies, with

the necessary changes.

Earl G. Tucker,

Queen's Printer