Regulation 8515

Subsection 8515(1)

Administrative Policy

Newsletter 21-1, Additional Conditions Applicable to Individual Pension Plans and Designated Plans, 16 March 2021

Effective prohibition of the avoidance of designated plan status through using hybrid defined benefit/money purchase provisions

  • A s. 147.1(5) condition is aimed at plans that in substance are designated plans but that avoid that status by providing that past service benefits are provided on a defined benefit basis while current service benefits are provided strictly on a money purchase basis, and with members having the option to convert their money purchase benefits into defined benefits at regular intervals. Such plans would typically then generate much higher defined benefit contributions than would otherwise be permitted if the plan was subject to the funding restrictions for a designated plan.
  • CRA is now imposing a condition that deems such plans to be designated plans. The condition is applicable to “employer contributions made pursuant to an actuary’s recommendation contained in an actuarial valuation report that is filed with us after [March 16, 2021]”.

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