Royal Canadian Mounted Police (Dependants) Pension Fund Increase in Benefits Order: SOR/2022-43
Canada Gazette, Part II, Volume 156, Number 6
SOR/2022-43 March 4, 2022
ROYAL CANADIAN MOUNTED POLICE PENSION CONTINUATION ACT
P.C. 2022-198 March 3, 2022
Whereas it appears from a report made under section 56 of the Royal Canadian Mounted Police Pension Continuation Act footnote a that the Royal Canadian Mounted Police (Dependants) Pension Fund is substantially in excess of the amount required to make adequate provision for the prospective payments to be made out of it;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, pursuant to subsection 57(1) of the Royal Canadian Mounted Police Pension Continuation Act footnote a, makes the annexed Royal Canadian Mounted Police (Dependants) Pension Fund Increase in Benefits Order.
Royal Canadian Mounted Police (Dependants) Pension Fund Increase in Benefits Order
1 The following pension benefits, as provided in Part IV of the Royal Canadian Mounted Police Pension Continuation Act, are to be increased in the following manner:
- (a) pensions for current and prospective widows are to be increased by 2% on April 1 in each of the 2020, 2021 and 2022 plan years;
- (b) lump sum benefits payable on the death of a former member who contributed to the plan and who is not survived by a widow are to be increased by 2% on April 1 in each of the 2020, 2021 and 2022 plan years; and
- (c) residual amounts payable on the death of a former member’s widow are to be calculated with a deemed increase in the former member’s contributions of
- (i) 1,381% if the widow’s death occurs in the 2021 plan year,
- (ii) 1,411% if the widow’s death occurs in the 2022 plan year, and
- (iii) 1,441% if the widow’s death occurs in the 2023 plan year.
2 This Order comes into force on the day on which it is registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Order.)
The benefit plan (the Plan), financed through the Royal Canadian Mounted Police (Dependants) Pension Fund (the Fund), is entirely funded by contributions of former members of the Royal Canadian Mounted Police (RCMP), plus interest. As required under the Royal Canadian Mounted Police Pension Continuation Act (the Act), the Office of the Chief Actuary prepares an actuarial report on the Plan on a tri-annual basis.
The latest report, the Actuarial Report on the RCMP (Dependants) Pension Fund (the “Report”), reconciled the assets and liabilities of the Plan as of March 31, 2019. The Report revealed that the Plan is in excess (by $0.9 million) of the amount required to cover future pension payments. If the surplus were to continue to exist, the last remaining recipient would be entitled to a disproportionate benefit.
In accordance with subsection 57(1) of the Act, when such a surplus exists, benefits to recipients may be increased by Order of the Governor in Council. Doing so would ensure the equitable distribution of the surplus to the remaining eligible widows and prospective survivors, as opposed to the last remaining recipient receiving the entirety of the surplus.
The Plan was established in 1934 and is administered in accordance with Part IV of the Act. The Plan provides a pension to widows of former non-commissioned officers (e.g. constables) of the RCMP hired between 1934 and March 1, 1949, who chose to make contributions to the Fund to provide a widow’s pension upon their death. While commissioned officers (e.g. inspectors) had automatic coverage for a widow’s pension, non-commissioned officers did not. Contributions to purchase such a benefit were optional and averaged approximately $5.30 per month.
Survivor benefits became automatic for non-commissioned officers hired on or after March 1, 1949; consequently, there were no new contributors to the Fund on or after that day. In 1959, the Royal Canadian Mounted Police Superannuation Act came into force. RCMP members hired since then are subject to the pension arrangements, including automatic survivor benefits, provided under this Act. Those hired after March 1, 1949, also became contributors under this Act when it was enacted.
The widow’s benefit under the Plan is approximately equal to 1.5% of the member’s final pay multiplied by his years of service, and is payable for life. If the widow dies before receiving payments at least equal to the member’s contributions, then a residual amount, equal to the difference between the member’s contributions and the total benefit received by the widow, is paid to their relatives or estate.
As of April 1, 2019, 23 living former RCMP members contributed to the Fund. The last member retired in 1987. All of the former members are male, with an average age of 93.3, and all of the survivors are widows. As of April 1, 2019, there were 78 widows with an average age of 90.6.
Under section 56 of the Act, a valuation of the assets and liabilities of the Fund must be made at least every five years. In accordance with generally accepted actuarial practices, the valuations are performed every three years. Pursuant to the Act, the Report is prepared at the direction of the Minister of Finance, who subsequently tables it in Parliament. The Report was presented to the Minister of Finance on March 24, 2021, and was tabled in Parliament on June 16, 2021.
The Report demonstrated that the Fund had a surplus of $0.9 million and recommended that annual benefit increases of 2.0% be applied effective April 1, 2020, April 1, 2021, and April 1, 2022, to help distribute this surplus.
The objective of the Order is to make the recommended benefit increases. The application of the Order is limited to the recipients of benefits under the Fund, which totalled 78 widows on April 1, 2019. In the event that a death that has occurred since, the increased benefit under this Order would go to the estate of the deceased widow.
This Order provides the following benefit improvements:
- (a) pension increases for current and prospective widows of 2.0% as of April 1, 2020, April 1, 2021, and April 1, 2022;
- (b) an increase in the lump sum benefit payable upon the death of a member of 2.0% as of April 1, 2020, April 1, 2021, and April 1, 2022; and
- (c) an increase in residual amount payable on the death of a widow of a member who dies in the 2021, 2022 or 2023 plan years, obtained by deeming the member’s contributions to be increased by 1.381%, 1.411% and 1.441% respectively (this is equivalent to an increase of 2.0% to a member’s deemed contribution as of April 1, 2019).
Consultation took place with the Office of the Chief Actuary that, in accordance with the requirements of the Act, recommended the distribution of the Fund’s surplus in the form of increased benefits to recipients. This proposal is beneficial to the widows it would impact; therefore, no consultation with them has occurred. However, once the Order is in place, the widows will be individually notified of the increase in their benefits via a letter from the Government of Canada Pension Centre.
Prepublication in the Canada Gazette, Part I
This Order was not subject to a prepublication comment period in the Canada Gazette, Part I, because its application is limited to the dependants (all widows) already in receipt of benefits from the Royal Canadian Mounted Police (Dependants) Pension Fund. This Order is beneficial to the widows impacted by it (78 as of April 2019) and does not affect the general public. The RCMP will proactively inform the widows of the benefit increase.
Modern treaty obligations and Indigenous engagement and consultation
This Order is not expected to have an impact on Indigenous peoples nor on Canada’s modern treaty obligations.
An Order is the only way to increase the benefits to dependants under the Act.
Benefits and costs
The Plan is financed entirely through the Fund. The Fund consists of all contributions made by members of the Plan, plus interest. The source of funds for the benefit increases that would be implemented through this Order is the Fund’s $0.9 million surplus. Therefore, there are no costs to the Government of Canada or Canadian taxpayers.
Small business lens
Analysis under the small business lens concluded that this Order would not impact Canadian small businesses.
The one-for-one rule does not apply, as there is no impact on business.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
This Order will have a beneficial impact on a small number of senior citizens (the vast majority of whom are women) by increasing their annual pension entitlement income, which currently averages $22,738. No other gender-based analysis plus (GBA+) impacts have been identified.
Implementation, compliance and enforcement, and service standards
The Government of Canada Pension Centre will send a letter to each widow to inform them of the benefit increase.
National Compensation Services
Royal Canadian Mounted Police