As part of Canada's COVID-19 Economic Response Plan, the federal government has announced new draft regulations to support organizations and employees in maintaining their pension plans through the crisis.
The proposed regulations would apply to employers sponsoring registered pension plans or salary deferral leave plans. Parts of the Income Tax Regulations would be relaxed and amended to:
- allow registered pension plans to borrow money for more than 90 days as long as loans are repaid no later than April 30, 2021
- extend the deadline for retroactively crediting pensionable service under defined benefit plans
- allow retroactive contributions to registered pension plans for 2020 to be made in 2021
- waive the requirement for an employee to be employed for at least 36 months in determining benefit or contribution levels using prescribed compensation for periods of reduced pay
- waive the requirement that a reduction in pay must be commensurate with a reduction in work hours in determining benefit or contribution levels using prescribed compensation for periods of reduced pay
- allowing wage rollback periods in 2020 to qualify as an eligible period of reduced pay to use prescribed compensation in determining benefit or contribution levels
- adding temporary stop-the-clock measures to conditions applicable to salary deferral leave plans for the period of March 15, 2020 to April 30, 2021 (ensuring that employees returning early from leave or delaying their start of leave are not subject to early termination of their plans due to non-compliance with tax requirements)
It is not yet known when these amendments will come into effect. For more information on other programs available to support businesses in response to COVID-19, see our previous blog post: Federal and Provincial (BC) COVID-19 Economic Response Plans for Businesses.
Your CapriCMW Benefits team is here to help with short and long-term strategies around the structure of your employee benefits and retirement programs.