Second Session,

46th General Assembly

58 Elizabeth II,

BILL 38

AN ACT TO AMEND THE MEMORIAL

UNIVERSITY PENSIONS ACT NO. 2

Received

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

Second

Reading ..............................................................................................

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

Third

Reading .................................................................................................

Royal

Assent ...................................................................................................

HONOURABLE DARIN KING

Minister of

Education

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTES

Clause 1 of the Bill would amend

various

definitions in the Memorial University Pensions Act. Paragraph 2(

j) would be amended to clarify the existing calculation

of the best five year average salary. The amendment proposed in paragraph 2(

k) would be required for compliance with the Income

Tax Act ( Canada ). Paragraph (k.3) would add a definition of salary to the Act,

which would clarify the existing calculation of the best five year average

salary. Amendments proposed in paragraphs 2(

n) and (

o) are housekeeping and

would reflect earning limits under the Canada Pension Plan.

Clause 2 of the Bill would add paragraph

3(1)(c.1) of the Act to recognize existing non-university employers that have

members who pay into the Memorial University Pension Plan. The amendment proposed

in paragraph 3(1)(

e) is consequential to that change. Subsections 3(3) and

(4) would be repealed and substituted to add phrasing required for compliance with

the Income Tax Act ( Canada ).

In clause 3 of the Bill,

section 5 of

the Act would be amended consequential to the proposed addition of paragraph

3(1)(c.1).

Clause 4 of the Bill would repeal and

substitute

section 6 of the Act to add phrasing required for compliance with

the Income Tax Act ( Canada ).

Clause 5 of the Bill would update the

references in

section 8 of the Act.

The amendments proposed in clauses 6,

7 and 8 of the Bill would add phrasing required for compliance with the Income Tax Act ( Canada ).

Clause 9 of the Bill would repeal the

disability pension provision currently in paragraph 15(1)(

d) of the Act. Removal

of this provision would ensure disabled employees draw from the long-term

disability plan rather than the disability provision of the pension plan.

In clause 10 of the Bill,

section 17

of the Act would be repealed as would be required for compliance with the Income Tax Act ( Canada ).

Clause 11 of the Bill would repeal

and substitute subsection 18(1) of the Act to reflect current policy and

provide members with clarity as to how a pension is calculated. Other

amendments proposed in clause 11 are housekeeping in nature and would also be

required for compliance with the Income

Tax Act ( Canada ).

Clause 12 of the Bill proposes to add

section 18.2 to the Act which would mirror provisions of the Public Service Pensions Act, 1991 .

The amendments proposed in clause 13

of the Bill, with the exception of subclause 13(2), would be required for

consistency with the Income Tax Act ( Canada ). The

addition of paragraph 19(1)(c.1) in subclause 13(2) would include as

pensionable service, periods of authorized unpaid leave or reduced pay, subject

to limits prescribed in clause 14.

Clause 14 of the Bill proposes to add

section 19.1 to the Act to reflect the limits for periods of unpaid leave or

reduced pay under the Income Tax Act

( Canada ).

Section 22 of the Act would be

repealed in clause 15 of the Bill. Removal of this provision would ensure

disabled employees draw from the long-term disability plan rather than the

disability provision of the pension plan.

In clause 16 of the Bill,

section 23

of the Act would be repealed and substituted to reflect current policy at Memorial University , to

effect compliance with the Pension

Benefits Act, 1997 and to bring the Memorial University Pension Plan more

in line with the Public Service Pension Plan.

Sections 26 and 27 of the Act would

be repealed and substituted in clauses 17 and 18 of the Bill as required for

compliance with the Pension Benefits Act,

Clause 19 of the Bill would repeal

section 29 of the Act as required for compliance with the Income Tax Act ( Canada ).

Clause 20 of the Bill would amend

subsections 29.1(2) and (3) to include a reference to paragraph 3(1)(c.1)

consequential to the proposed addition of that paragraph in clause 2.

Clause 21 of the Bill would repeal

section 29.2 of the Act. As proposed in clause 11, those provisions would be

included in

section 18.

Clause 22 of the Bill would delete references

section 17 in

section 35 of the Act. This would be required for compliance

with the Income Tax Act ( Canada ).

A BILL

AN ACT TO AMEND THE MEMORIAL UNIVERSITY PENSIONS ACT NO. 2

Analysis

S.2 Amdt.

Definitions

S.3 Amdt.

Application of Act

S.5 Amdt.

Pension fund

S.6 R&S

Charges upon fund

S.8 R&S

Investments

S.9 Amdt.

Trust account

S.12 Amdt.

Contributions to fund

S.13 Amdt.

Payments by government

S.15 Amdt.

Retirement

S.17 Rep.

President's pension

S.18 Amdt.

Amount of pension

S.18.2 Added

Offer of re-employment

S.19 Amdt.

Pensionable service

S.19.1 Added

Periods of unpaid leave or reduced pay

S.22 Rep.

Temporary pension

S.23 R&S

Survivor's allowance

S.26 R&S

Repayment of contributions to survivor

S.27 R&S

Repayment of contributions of deceased employees

S.29 Rep.

Adjustment or cancellation of pension

S.29.1 Amdt.

Policy directive

S.29.2 Rep.

Integration with Canada Pension Plan

S.35 Amdt.

Agreement with president

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

RSNL1990 cM-8

as amended

(1) Paragraphs 2(

j) and (

k) of the Memorial University Pensions Act are

repealed and the following substituted:

(j) "pensionable salary" means the

average salary received in any 5 years of pensionable service chosen by the

employee, calculated by reference to the salary in effect on the employee's

date of retirement and on the same date in each prior year of pensionable service;

(k) "pensionable service" means service

which may be taken into account in determining whether an employee has qualified

for the award of a pension and the amount of a pension and includes service

under

section 19, provided that pensionable service will be eligible service as

defined in the Income Tax Act (Canada)

and regulations made under that Act;

(2) Section 2 of the Act is amended by adding

immediately after paragraph (k.2) the following:

(k.3) "salary" means the annual basic

salary paid to an employee by the board or by an employer referred to in

paragraphs 3(1)(b), (

c) and (c.1), including other remuneration that the board

may prescribe by policy directive made under

section 29.1, but does not include

remuneration paid for teaching at summer school or for services other than or

ancillary to the principal duties in respect of the performance of which pensionable

service is credited to him or her under this Act, except as may be prescribed

by the board in a policy directive made under

section 29.1;

(3) Subparagraph 2(l)(iii) of the Act is amended

by deleting the word "and" at the end of the subparagraph.

(4) Paragraph 2(

m) of the Act is amended by

deleting the period at the end of the paragraph and substituting a semi-colon

and the word "and" and by adding immediately after that paragraph the

following:

(n) "year's basic exemption" means the

year's basic exemption as defined under the Canada Pension Plan; and

(o) "year's maximum pensionable

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

the Canada Pension Plan.

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

by adding immediately after paragraph (

c) the following:

(c.1) a person employed full-time for an indefinite

term by Memorial University of Newfoundland Students' Union, Medical Practice

Associates, and the Geological Association of Canada, Newfoundland Section, and

who is, on the date of the coming into force of this paragraph, a member of the

pension plan or in receipt of a pension benefit from the fund;

(2) Paragraph 3(1)(

e) of the Act is repealed and

the following substituted:

(

e) a person appointed by the board or by an

employer referred to in paragraph (b), (c), or (c.1) who is employed on a less

than full-time basis for an indefinite period as directed by the board and

approved by the minister.

(3) Subsections 3(3) and (4) of the Act are

repealed and the following substituted:

(3) An employee who, before his or her appointment

by the board, had been contributing to a registered retirement savings arrangement

may elect to continue his or her contributions to that arrangement by advising

the board within 60 days of beginning his or her employment.

(4) Where an employee makes an election under

subsection (3), the board may provide to the employee an amount for

contribution to the registered retirement savings arrangement in which the

employee participates not exceeding that which it would have otherwise contributed

to the fund with respect to that person.

3. Paragraph 5(b.1) of the Act is amended by

deleting the references "paragraphs 3(1)(

b) and (c)" and substituting

the references "paragraphs 3(1)(b), (

c) and (c.1)".

Section 6 of the Act is repealed and the

following substituted:

Charges upon fund

6. All

pensions, payments and refunds, and all expenses of the administration of this

Act are a charge upon and payable out of the fund and if at any time there is

not sufficient money at the credit of the fund for those purposes as they fall

due for payment the Minister of Finance shall pay to the board an amount to

cover the deficiency, and the board shall deposit that amount to the fund.

Section 8 of the Act is repealed and the

following substituted:

Investments

8. All

investments and reinvestments under

section 7 shall conform to the investment

requirements of

(

a) section 37 of the Pension Benefits Act, 1997 ; and

(

b) the regulations made under

section 78 of that

Act.

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

following substituted:

Trust account

(1) All

money paid into the fund shall be deposited to the credit of the fund in a

trust account kept by a custodian approved by the board.

7. (1) Subsection 12(1) of the Act is

repealed and the following substituted:

Contributions to

fund

(1) An

employee shall contribute to the fund an amount set by directive of the

Minister of Finance provided that an employee's contributions in a year shall

not exceed the lesser of

(a) 9% of the employee's compensation from the

board or an employer referred to in paragraphs 3(1)(b), (

c) and (c.1) for the

year; and

(b) $1,000 plus 70% of the employee's total

pension credits for the year

or another limit as prescribed by the Income Tax Act ( Canada ).

(2) Subsection 12(3.1) of the Act is repealed and

the following substituted:

(3.1) The board and an employer referred to in

paragraphs 3(1)(b), (

c) and (c.1) shall contribute to the fund an amount equal

to the contributions paid by their employees under this

section and additional

amounts required to be paid by an employer under the Pension Benefits Act,1997 and the rateable share of those

additional amounts shall be determined by the board where

(

a) contributions in any month will not be less

than the amount, if any, identified by the actuary as necessary to maintain registration

of the plan under the Pension Benefits

Act, 1997;

(

b) contributions in any month will not be more

than the amount, if any, identified by the actuary as the maximum amount

permissible in order to maintain registration of the plan under the Income Tax Act (Canada); and

(

c) those contributions are eligible contributions

as that term is defined in the Income Tax

Act ( Canada ).

(3.2) For the purpose of subsection (1), the terms

"compensation" and "total pension credits" shall have the

meaning assigned to them in the Income

Tax Act (Canada) .

8. Subsection 13(1) of the Act is repealed and the

following substituted:

Payments by government

(1) Where

a pension has been awarded to an employee under this Act and in determining the

amount of the pension a period referred to in paragraph 19(1)(

e) was counted as

pensionable service, the Minister of Finance shall pay to the board on March 31

in a year during which or part of which the pension was paid, an amount bearing

the same proportion to the pension as that period bears to the whole of the pensionable

service taken into account in determining the amount of the pension, and the

board shall deposit that amount to the fund.

9. Paragraph 15(1)(

d) of the Act is repealed.

Section 17 of the Act is repealed.

11. (1) Subsection 18(1) of the Act is

repealed and the following substituted:

Amount of pension

(1) The

annual amount of pension awarded under

section 16 shall be equal to:

(a) 2% of pensionable salary up to the average

year's basic exemption for the same 5 years used in determining pensionable

salary;

(b) 1.4% of pensionable salary in excess of the

same average year's basic exemption and up to the average year's maximum

pensionable earnings for the same 5 years used in determining pensionable

salary; and

(c) 2% of pensionable salary in excess of the same

average year's maximum pensionable earnings;

with the total multiplied by

(

d) the employee's pensionable service.

(2) Section 18 of the Act is amended by adding

immediately after subsection (1) the following:

(1.1) In addition to the pension under subsection

(1), where an employee retires prior to age 65, a bridge pension shall be

payable until the employee turns age 65, and the annual amount of that pension

shall be equal to

(a) 0.6% of pensionable salary in excess of the

average year's basic exemption and up to the average year's maximum pensionable

earnings for the same 5 years used in determining pensionable salary,

multiplied by

(

b) the employee's

pensionable service.

(1.2) The board, with the approval of the minister,

may issue a directive to exempt a person or class of persons from the application

of subsections (1) and (1.1).

(3) Subsection 18(2) and (3) of the Act are

repealed and the following substituted:

(2) A pension awarded under this Act, whether on

retirement, termination of employment or termination of the plan, shall not

exceed the maximum allowable benefit payable as determined under the Income Tax Act (Canada) .

(3) Subsection (2) shall not apply to an annual

pension of $300 or less for each year of pensionable service before January 1,

1992 or to the portion of the pension derived from an employee's voluntary

contributions on account of current service.

12. The Act is amended by adding immediately after

section 18.1 the following:

Offer of re-employment

18.2

(1) A

pensioner who has retired under the pension plan upon termination of employment

but has not reached the age at which a pension benefit is required to begin

under the Income Tax Act (Canada) may be re-employed in a pensionable

position.

(2) Where a pensioner accepts an offer of

re-employment under this section, his or her pension shall be cancelled and,

subject to the making of contributions in accordance with this Act, the period

of subsequent employment shall, in calculating a pension upon subsequent

retirement, be added to the years of pensionable service accumulated before his

or her first retirement and the pension shall be calculated in accordance with

section 18 as if the award of the former pension had not occurred.

13. (1) Paragraph 19(1)(

c) of the Act is

amended by adding immediately before the word "the" the first time it

occurs, the words and comma "in respect of service before 1992,".

(2) Subsection 19(1) of the Act is amended by

adding immediately after paragraph (

c) the following:

(c.1) the period during which an employee is on an authorized

unpaid leave of absence or reduced pay, subject to

section 19.1;

(3) Paragraph 19(1)(

f) of the Act is amended by

adding immediately before the word "the" the first time it occurs,

the words and comma "subject to the limits on

prescribed compensation set out in the regulations made under the Income Tax Act (Canada)," .

(4) Subsection 19(4) of the Act is repealed.

14. The Act is amended by adding immediately after

section 19 the following:

Periods of unpaid

leave or reduced pay

19.1

(1) In

this

section

(a) "actual salary" means the

remuneration actually received by the employee during a period of reduced pay;

(b) "nominal salary" means the salary of

the employee in effect before a period of reduced pay or leave of absence

without pay and any subsequent annual increments accorded by the regular salary

program of the university or an employer referred to in paragraphs 3(1)( b),

(

c) and (c.1); and

(c) "period of reduced pay" means a

period after 1991

(

i) in each year of which the employee renders

services to the board or an employer referred to in paragraphs 3(1)(b), (

c) and

(c.1), and

(ii) in each year of which the actual salary

received by the employee is less than the nominal salary as a consequence of

the employee and the board or an employer referred to in paragraphs 3(1)(b),

(

c) and (c.1) having entered into a reduced pay arrangement.

(2) An employee who is on an authorized unpaid

leave of absence may have that period credited as pensionable service, where

(

a) during the period the employee continues to

contribute to the fund based on the employee's nominal salary;

(

b) the employee elects within the lesser of 90

days after returning from that authorized leave and the date of termination

from the employer to purchase the period of leave, and contributes to the fund

an amount to be prescribed based on the employee's nominal salary; or

(

c) the employee elects after expiration of the

period referred to in paragraph (

b) and contributes to the fund an amount to be

prescribed based on the employee's salary at the date of election to purchase.

(3) An employee who has completed at least 36

months employment and has entered into a reduced pay arrangement, as approved

by the board or, subject to the board's approval, by an employer referred to in

paragraphs 3(1)(b), (c), or (c.1) shall, where the reduced pay arrangement so

provides, have that period of reduced pay credited as pensionable service,

subject to the limits set out in subsection (4) and provided that

(

a) pensionable service under this

section shall

be credited in full for the duration of the period of reduced pay;

(

b) contributions made to the fund by the employee

and the board or an employer referred to in paragraphs 3(1)(b), (

c) or (c.1)

shall be based on the employee's nominal salary; and

(

c) the employee's nominal salary shall be used in

the determination of pensionable salary.

(4) Notwithstanding subsection (2), the

pensionable service credited under this

section shall be limited to a

cumulative maximum of 5 years in respect of periods of unpaid leave of absence

or periods of reduced pay plus an additional 3 years in respect of periods of

parenting and shall be subject to the limits on prescribed compensation set out

in the regulations made under the Income

Tax Act (Canada).

Section 22 of the Act is repealed.

(1) Section 23 of the Act is repealed and

the following substituted:

Survivor's allowance

(1) Where

an employee

(

a) dies while in receipt of a pension;

(

b) is entitled to a pension on retirement under

section 15, and dies after retirement but before receiving a pension; or

(

c) is entitled to a pension on retirement under

section 15, and dies before retirement

the board shall award to the surviving

principal beneficiary an allowance equal to 60% of the pension being paid to

the employee or to which the employee is entitled at the date of death, without

actuarial reduction, and on the death of the surviving principal beneficiary an

allowance which the surviving principal beneficiary was receiving at the date

of death, if the employee or surviving principal beneficiary leaves a child or

children under age 18, shall be paid by the board to the guardian of the child

or children to be expended at the direction of the board for the support,

maintenance and education of each child until the child reaches age 18, and

where there are 2 or more children each child shall share equally in the

benefits to be derived from the allowance.

(2) Where an employee referred to in paragraph

(1)(

a) dies leaving no surviving principal beneficiary, the survivor's

allowance that would have been paid had there been a surviving principal

beneficiary shall be paid by the board to the guardian of the employee's

surviving children to be expended at the direction of the board for the

support, maintenance and education of each child until the child reaches age

18, and where there are 2 or more children, each child shall share equally in

the benefits to be derived from the allowance.

(3) Notwithstanding subsections (1) and (2), the

age limit of 18 set out in those subsections is increased to 24 while the child

is in full-time attendance at a school or post-secondary institution, or is

infirm.

(4) With respect to service after 1996, where the

commuted value of the survivor's allowance payable under paragraphs (1)(

b) and

(

c) is less than the commuted value of the employee's deferred pension benefit,

the survivor's allowance shall be increased so as to have a commuted value equal

to the commuted value of the employee's deferred pension benefit.

(5) The surviving principal beneficiary may elect

to receive the commuted value of the survivor's allowance payable under

paragraphs (1)(

b) and (

c) as a lump sum cash refund or a transfer to a

registered retirement savings arrangement in which the surviving principal beneficiary

participates provided that the surviving principal beneficiary meets the terms

and conditions required by the registered retirement savings arrangement.

(6) Where an employee referred to in subsection

(1) has not reached the age of 65 years at the date of his or her death, the

survivor's allowance shall include 60% of the bridge pension that the employee

was receiving or was entitled to receive under subsection 18(1.1) and that

amount shall be payable up to and including the month in which the deceased

employee would have turned 65.

Section 26 of the Act is repealed and the

following substituted:

Repayment of

contributions to survivor

26. Where

an employee dies before becoming entitled to a pension under this Act, the

board shall pay to a surviving principal beneficiary the amount the employee

has contributed to the fund, together with interest at the prescribed rate.

Section 27 of the Act is repealed and the

following substituted:

Repayment of

contributions of deceased employees

(1) Where an employee dies before becoming entitled to a pension

under this Act and leaves no principal beneficiary, the board shall pay to the

employee's executor or administrator the amount the employee has contributed to

the fund together with interest at the prescribed rate.

(2) When an employee or deferred pensioner dies

and leaves no principal beneficiary, the board shall pay to the employee's or

deferred pensioner's executor or administrator the following benefit:

(

a) where the employee was in receipt of a

pension, an amount equal to the amount the employee has contributed to the

fund, with interest at the prescribed rate, credited to the date of retirement,

less the total of pension payments received by the employee; or

(

b) where the employee or deferred pensioner was

entitled to a pension on retirement under this Act and dies before receiving a

pension, the following amounts:

(

i) in respect of pensionable service before January 1, 1997 , the employee's contributions together with interest at the

prescribed rate, and

(ii) in respect of pensionable service on and after

January 1, 1997 , the commuted value of the pension.

Section 29 of the Act is repealed.

(1) Paragraph 29.1(2)(

b) of the Act is

repealed and the following substituted:

(

b) employees of an employer referred to in

paragraphs 3(1)(b), (

c) and (c.1) who are employed full-time or part-time for a

fixed term of employment,

(2) Subsection 29.1(3) of the Act is repealed and

the following substituted:

(3) A directive prescribed under subsection

(2) or an employer referred to in paragraph 3(1)(b), (

c) or (c.1) may be counted as

pensionable service under this Act and may provide for matters relating to the

prior service.

Section 29.2 of the Act is repealed.

22. (1) Subsection 35(2) of the Act is amended

by deleting the phrase and commas ", other than

section 17,".

(2) Paragraph 35(3)(

a) of the Act is amended by

deleting the phrase and commas ", other than

section 17,".

Earl G. Tucker, Queen's Printer