Registered Plans Division Financial Industries S.M. Kotlar Division Director
Attn: Jonathan Hollinger
Regulation 8503(15) XXXXXXXXXX
This is in reply to your memorandum of September 13, 1993 asking if you are correct in refusing to register the above-referenced pension plan (the "Plan").
The following is a brief summary of the relevant facts:
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
Our Comments:
It is our view that the provisions of subsection 8503(15) of the Regulations provide for and were intended to provide for circumstances such as those being considered in XXXXXXXXXX case. Paragraph 8503(15)(c) of the Regulations states that the provision will apply if:
"it is reasonable to consider that all, or substantially all, of such portion of the contribution as is in respect of past service benefits was paid by the employer, with the consent of the member, in lieu of a payment or other benefit to which the member would otherwise be entitled......".
The expression "would otherwise be entitled" does not in our view limit the application of subsection 8305(15) to payments to which an individual was entitled prior to the execution of an agreement under which the payment is made to the individual's pension plan, but that it also applies to concurrent entitlement. The question to be asked, therefore, is whether or not it is reasonable to expect that the individual would receive the payment were it not contributed to the pension plan. In XXXXXXXXXX, given
(a) his statement referred to in 3 above,
(b) that prior to entering into the Settlement Agreement, XXXXXXXXXX had written to him agreeing to pay the amount (see letters referred to in 3 above), and
(c) that he will receive the payment if the Plan is not registered (see 4(b) above),
the answer to this question in our view is obviously "yes".
It is thus our view that subsection 8503(15) of the Regulations provides you with authority to not register the Plan even if it could be successfully argued that XXXXXXXXXX did not have entitlement to the $XXXXXXXXXX prior to the execution of the Settlement Agreement. Incidentally, we are not convinced that he did not have prior entitlement to the payment given his comments and those contained in the letters from XXXXXXXXXX preceding the Settlement Agreement.
Since we are of the view that subsection 8503(15) of the Regulations applies even where there is no prior entitlement, we do not consider refusing to register the Plan (or other pension plans involving similar arrangements) to be in conflict with the decision rendered in the Crighton case.
As a matter of interest, our view that subsection 8503(15) applies even where there is no prior entitlement was expressed in a memorandum dated May 8, 1990 to Sharon Yetts of your Division. The memorandum related to representations made by XXXXXXXXXX and in the memorandum, Wayne Harding of this Division commented as follows:
"In our view Regulation 8503(21) is applicable where the allowance is not a prior entitlement but is offered concurrently, provided the employee has a right to receive it if he does not consent to the pension contributions."
As you are aware, subsection 8503(21) is now subsection 8503(15).
for DirectorFinancial Industries DivisionRulings DirectorateHAA 7217-1