| 7-921700 | |
| 24(1) | D. S. Delorey |
| (613) 957-8953 |
Attention: 19(1)
October 2, 1992
Dear Sirs:
This is with respect to your letter of January 22, 1992 addressed to the Registered Plans Division and transferred to this Division for reply.
You are concerned with the situation where the retirement benefits under a registered pension plan ("RPP") are subject to "ad hoc" adjustments that meet the requirements of subparagraph 8503(2)(a)(iii) of the Income Tax Regulations (the "Regulations"). Where such an ad hoc adjustment is made to increase the amount of the pension payable under the RPP, you ask if such an increase can be paid to an individual who previously transferred his commuted benefits to a LIF or locked-in registered retirement savings plan ("RRSP").
If our understanding is correct, the situation you envisage is one where an individual's entitlement under an RPP after the commutation would be limited to benefits equal to ad hoc adjustments (if any) times a notional amount; i.e., times an amount equal to the pension to which he would have been entitled had the commuted amount not been transferred to a LIF or locked-in RRSP. It is our view that such a benefit is not one of the permissible benefits listed in subsection 8503(2) of the Regulations with the result that the requirements in paragraph 8502(c) of the Regulations would not be met.
We trust our comments are of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate