Words and Phrases - "annuity"

The definition of “permissible distributions” in Reg. 8502(d) seems to provide that the portion of the individual pension plan minimum amount that is not described as a “payment of benefits in accordance with the plan as registered” is considered to be a “permissible distribution”. This language suggests that an amount in excess of the “lifetime retirement benefit” that has been otherwise calculated does not qualify for pension splitting, as it does not appear to be “a payment in respect of a life annuity out of or under a superannuation or pension plan”, as required under the “pension income” definition in s. 118(7) Is that correct?

CRA stated its agreement:

Beginning in the calendar year in which an IPP member attains 72 years of age, ITR 8503(26) requires the IPP to make annual payments to the member that are at least equal to the member’s IPP minimum amount for the year. …

By virtue of the definitions “eligible pension income” and “pension income” in subsections 60.03(1) and 118(7) …, the only type of payment from a defined benefit provision of a registered pension plan (such as an IPP) that is eligible for pension income splitting under section 60.03 is a life annuity payment. This includes lifetime retirement benefits paid to a member of an IPP.

However, any additional payment that an IPP may be required to make in a particular year to comply with the IPP minimum amount rules is not eligible to be split. Such a payment does not have the character of a life annuity payment. It is not part of a series of periodic payments … .