Finance Minister Bill Morneau announced the release of draft regulations that will help employers who sponsor a Registered Pension Plan (RPP) or salary deferral leave plan for their employees to manage and maintain their benefit obligations through the crisis.
The proposed draft regulations would support the effective administration of such plans through the COVID-19 pandemic, providing temporary relief from various registration rules and other conditions that must be complied with under the Income Tax Regulations by:
- Adding temporary stop-the clock rules to the conditions applicable to salary deferral leave plans for the period of March 15, 2020 to April 30, 2021.
- Removing restrictions that prohibit an RPP from borrowing money.
- Extending the deadline for decisions to retroactively credit pensionable service under a defined benefit plan or to make catch-up contributions to money purchase accounts.
- Permitting catch-up contributions to RPPs to be made in 2021 in the event that 2020 required contributions to be reduced.
- Setting aside the 36 month employment condition in the definition “eligible period of reduced pay” for the purpose of using prescribed compensation to determine benefits or contribution levels.
- Allowing wage rollback periods in 2020 to qualify as an eligible period of reduced pay for prescribed compensation purposes.
The government will continue to monitor and respond to the wide-ranging impacts of COVID-19, and take additional actions as needed to protect the health and safety of Canadians and stabilize the economy.
To read the full statement, click here.