Vol. 150, No. 7 — April 6, 2016
SOR/2016-48 March 17, 2016
PUBLIC SERVICE SUPERANNUATION ACT
FINANCIAL ADMINISTRATION ACT
Ste. Anne’s Hospital Divestiture Regulations
The Treasury Board, on the recommendation of the President of the Treasury Board, pursuant to paragraph 42.1(1)(u) (see footnote a) and subsection 42.1(2) (see footnote b) of the Public Service Superannuation Act (see footnote c) and paragraph 7(2)(a) of the Financial Administration Act (see footnote d), makes the annexed Ste. Anne’s Hospital Divestiture Regulations.
Ste. Anne’s Hospital Divestiture Regulations
1 (1) These Regulations apply to a person who, by reason of an agreement between the Government of Canada, the Government of Quebec and the Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l’Île-de-Montréal (the “Centre”), dated April 16, 2015, ceases to be employed in the public service and becomes employed by the Centre.
Exception — person re-employed
(2) However, these Regulations do not apply to a person who is re-employed by the Centre.
Exceptions — survivor and children
(3) Moreover, sections 2, 3 and 7 do not apply to the survivor and children of a person who has received a return of contributions or has exercised an option under subsection 6(2).
Subsection 10(5) of Act
2 For the purposes of subsection 10(5) of the Public Service Superannuation Act (the “Act”), the one-year period referred to in paragraph (a) of that subsection begins on the day on which the person ceases to be employed by the Centre.
Benefits — survivor and children
3 The survivor and children of a person who dies while employed by the Centre are entitled to one of the following benefits to which they would have been entitled if the person had been employed in the public service:
- (a) the death benefit under subsection 12(8) or 12.1(8) of the Act; or
- (b) the allowances referred to in subsection 13(3) or 13.001(3) of the Act.
Sections 12 to 13.001 of Act
4 For the purposes of sections 12 to 13.001 of the Act, a person’s age when they cease to be employed in the public service is their age on the day on which they cease to be employed by the Centre.
5 For the purposes of sections 12 to 13.01 of the Act, pensionable service includes the period of service that begins on the day on which a person ceases to be employed in the public service and ends on the day on which they cease to be employed by the Centre.
When certain provisions are applicable
6 (1) Sections 12 to 13.01 of the Act only apply to a person beginning on the day on which they cease to be employed by the Centre.
(2) However, if on or after April 1, 2016 the person would be entitled to a return of contributions under subsection 12(3) or 12.1(4) of the Act, were it not for these Regulations, they may request, in writing, the return of contributions no later than one year after the day on which they cease to be employed in the public service and become employed by the Centre, and if, in the same circumstances, they would be entitled to exercise an option under section 13.01 of the Act, they may exercise the option within the same period.
Subsection 26(2) of Act
7 For the purposes of subsection 26(2) of the Act, a person is deemed to cease to be employed in the public service on the day on which they cease to be employed by the Centre.
Coming into force
8 These Regulations come into force on April 1, 2016.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Just over 500 Veterans Affairs Canada employees working at Ste. Anne’s Hospital (the Hospital) have accepted a job offer from the Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l’île-de-Montréal (the Centre) under the terms of a transfer agreement. These employees (transferring employees) will cease to contribute and cease to accrue pensionable service under the Public Service Pension Plan.
The Ste. Anne’s Hospital Divestiture Regulations (the Regulations) are necessary to mitigate negative pension consequences for transferring employees’ pension benefits that would emerge in the absence of the Regulations.
In 1963, the Royal Commission on Government Organization recommended that the Department of Veterans Affairs’ departmental hospitals be transferred to provincial jurisdiction. On April 16, 2015, a transfer agreement was signed by the Minister of Veterans Affairs, Quebec’s ministers of Health and Social Services, and Canadian Intergovernmental Affairs, and the Director General of the Centre. The transfer agreement will see the Hospital, the last departmental hospital, transferred to provincial jurisdiction on April 1, 2016.
Under the Public Service Pension Plan, the pension benefit options available to a contributor are determined by his or her age and accrued pensionable service on the day he or she ceases to be employed in the public service. When either age and/or pensionable service fall below prescribed thresholds, contributors will face reductions to their pension benefits. Furthermore, spouses and children that a former contributor acquires after ceasing to be employed in the public service are not eligible to receive the default survivor benefits available under the pension plan.
In recognition of the fact that a transfer, or divestiture, of the administration of a service unilaterally hastens an employee’s departure from the public service, the Public Service Superannuation Act authorizes the making of divestiture regulations. With respect to pension benefits and options, divestiture regulations have the effect of situating former employees in a similar position they would have been in had they not been transferred. The Government of Canada has consistently implemented such regulations in instances where a federal service is transferred or divested.
Without the Regulations potential reductions to transferring employees’ pension benefits would be fixed on April 1, 2016, if, on that date, a transferring employee does not meet pension benefit eligibility thresholds. The Regulations seek to minimize potential reductions by recognizing employment with the Centre for eligibility threshold purposes. Employment with the Centre will not, however, serve to increase pensionable service accrued under the Public Service Pension Plan.
In the absence of the Regulations, children and spouses acquired after the Hospital’s transfer would not be entitled to survivor benefits under the Public Service Pension Plan. The Regulations will provide full survivor benefit entitlements to spouses and children acquired by a transferring employee during their period of employment with the Centre.
The Regulations will apply to the Hospital’s employees who accept an offer of employment under the terms and conditions of the transfer agreement, and will continue to apply so long as the transferring employees remain employed by the Centre and retain their pension benefits under the Public Service Pension Plan.
The Regulations will defer the date on which transferring employees are eligible to exercise their pension benefit options to the date on which they cease employment with the Centre, rather than April 1, 2016 (i.e the day on which they cease employment in the public service). As a result, the duration of employment with the Centre and a transferring employee’s age when he or she ends his or her employment with the Centre will be used to determine the benefit options available under the Public Service Pension Plan.
The Regulations will also extend survivor benefit eligibility to children and/or spouses acquired during the period in which the Regulations apply to a transferring employee.
The “One-for-One” Rule does not apply to these Regulations, as there will be no change in administrative costs to business.
Small business lens
The small business lens does not apply to these Regulations, as they will impose no impact on small business.
In June 2014, the Government of Canada authorized that the details of the terms and conditions of employment, agreed to in principle, be shared with the Hospital employees. Employees and their representatives were made aware that divestiture regulations may be implemented.
There have also been several information sessions given to employees of the Hospital. Department of Public Services and Procurement officials were present to provide targeted information regarding employees’ pensions and benefits and to answer related questions; divestiture regulations were discussed during these sessions.
During the course of employee engagements, there was no negative reaction to the possible implementation of divestiture regulations. Transferring employees and their representatives are expected to support the implementation of the Regulations, as they will provide transferring employees with pension benefit protections and mitigate adverse pension consequences.
The administrator of the Public Service Pension Plan, the Department of Public Services and Procurement, is aware of these Regulations and is fully prepared to implement them on April 1, 2016.
The Public Service Superannuation Act authorizes divestiture regulations to be made. The Regulations are the only means by which the Government of Canada can apply pension benefit protections in respect of transferring employees.
The Regulations will provide transferring employees with assurance that negative pension consequences, resulting from the transfer of the Hospital’s administration, would be mitigated.
No additional financial or human resources are required to implement or administer the Regulations.
Pension Policy and Stakeholder Relations
Pensions and Benefits Sector
Treasury Board of Canada Secretariat