Vol. 149, No. 6 — March 25, 2015
SOR/2015-56 March 4, 2015
PUBLIC SERVICE SUPERANNUATION ACT
FINANCIAL ADMINISTRATION ACT
Divestiture Regulations for Former Employees of Atomic Energy of Canada Limited (CANDU Reactor Division)
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 Divestiture Regulations for Former Employees of Atomic Energy of Canada Limited (CANDU Reactor Division).
DIVESTITURE REGULATIONS FOR FORMER EMPLOYEES OF ATOMIC ENERGY OF CANADA LIMITED (CANDU REACTOR DIVISION)
1. (1) These Regulations apply to a person who satisfies the following conditions:
- (a) the person was employed by Atomic Energy of Canada Limited and became employed by Candu Energy Inc. on October 2, 2011 as a result of an agreement between Atomic Energy of Canada Limited, Candu Energy Inc., and SNC Lavalin Group Inc., signed on June 29, 2011, and has continued to be so employed without interruption until the coming into force of these Regulations; and
- (b) the person ceased to be deemed to be employed in the public service for the purposes of the Public Service Superannuation Act (the “Act”) as a result of Candu Energy Inc. ceasing on October 2, 2014 to be deemed to be part of the public service as a result of that agreement and a direction of the Treasury Board dated June 23, 2011 made under subsection 40.1(2) of the Act.
Exception — person re-employed
(2) These Regulations do not apply to a person who is re-employed by Candu Energy Inc.
Exceptions — survivors and children
(3) 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 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 Candu Energy Inc.
Survivor and children benefits
3. The survivor and children of a person who dies while employed by Candu Energy Inc. 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 referred to in subsection 12(8) of the Act; or
- (b) the allowances referred to in subsection 13(3) of the Act.
Sections 12 and 13 of Act
4. For the purposes of sections 12 and 13 of the Act, the age of a person when they cease to be employed in the public service is their age on the day on which they cease to be employed by Candu Energy Inc.
5. For the purposes of sections 12, 13 and 13.01 of the Act, pensionable service includes the period of service that begins on October 2, 2014 and ends on the day on which a person ceases to be employed by Candu Energy Inc.
When certain provisions are applicable
6. (1) Sections 12, 13 and 13.01 of the Act only apply to a person as of the day on which they cease to be employed by Candu Energy Inc.
(2) However, if on October 2, 2014, were it not for these Regulations, the person would be entitled to a return of contributions under subsection 12(3) of the Act, they may request, in writing, the return of contributions no later than October 1, 2015, 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 Candu Energy Inc.
Group 1 contributor
8. A person to whom these Regulations apply is considered to be a Group 1 contributor.
Coming into force
9. These Regulations are deemed to have come into force on October 2, 2014.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
As of October 2, 2014, approximately 900 former employees of the CANDU Reactor Division of Atomic Energy of Canada Limited (AECL) employees (referred herein as continuing employees) ceased to contribute and accrue pensionable service under the Public Service Pension Plan. In the absence of these Regulations, continuing employees would have one year from that date to exercise an option for benefit under the Public Service Superannuation Act. Furthermore, continuing employees who on that date did not meet the minimum age and service thresholds requirements under that Act, would be subject to a reduction in the benefits payable to them.
Under the Jobs and Economic Growth Act of 2010, the federal government authorized a number of measures for the reorganization and divestiture of all or part of AECL. On October 1, 2011, the CANDU Reactor Division of AECL was sold to Candu Energy Inc., a subsidiary of SNC-Lavalin Group Inc. At the time of the sale, the Government of Canada directed that those employees who accepted continued employment with Candu Energy Inc. would retain their active membership in the Public Service Pension Plan for a transitional period not to exceed three years, in order to provide Candu Energy Inc. and the bargaining agents with sufficient time to negotiate and implement new pension arrangements.
The Government of Canada recognizes that the transfer or divestiture of the administration of a service means that the active participation in the Public Service Pension Plan is unilaterally terminated for affected employees. Accordingly, the Government of Canada has traditionally approved pension protection regulations to ensure that the pension benefits of affected employees are not adversely impacted by the transfer. The Public Service Superannuation Act authorizes the making of divestiture regulations.
The objective of the Divestiture Regulations for Former Employees of Atomic Energy of Canada Limited (CANDU Reactor Division) is to mitigate potential reductions to continuing employees’ pension entitlements they may incur due to the termination of their active participation in the Public Service Pension Plan as a result of the privatization of the CANDU Reactor Division.
The Divestiture Regulations for Former Employees of Atomic Energy of Canada Limited (CANDU Reactor Division) will apply only to continuing employees who are in the employ of Candu Energy Inc. on and after October 1, 2014, for at least one day.
The Regulations defer the date on which the continuing employees are eligible to exercise their pension benefit options under the Public Service Superannuation Act to the date on which they will cease employment with Candu Energy Inc., rather than October 2, 2014, the day on which their active participation in the Public Service Pension Plan ended. In very limited instances, some continuing employees will have the option to receive a return of their pension contributions or to transfer the value of their accrued federal pension benefits to a locked-in registered retirement savings vehicle, prior to ceasing to be employed with Candu Energy Inc.
In addition, the Regulations provide that the period of employment with Candu Energy Inc., after October 1, 2014, and the age of a continuing employee when they cease employment with the Candu Energy Inc., will be used for determining eligibility and available benefit options under the Public Service Superannuation Act.
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal, as there is no impact on small business.
Since the sale of the CANDU Reactor Division, it has been recognized that divestiture regulations would be required in order to offer continuing employees certain pension protections. Since early 2010, there have been ongoing consultations between officials of the Department of Natural Resources and the Treasury Board of Canada Secretariat regarding the overall restructuring of Atomic Energy of Canada Inc., including the development of the Divestiture Regulations.
Employees and bargaining agents were aware that the Regulations may be made. It is expected that they will welcome the Regulations, as they provide continuing employees with pension benefit protections.
Public Works and Government Services Canada, as the administrator of the Public Service Pension Plan, has been made aware that the Regulations were to be made and is fully prepared to implement them.
The Public Service Superannuation Act authorizes the making of divestiture regulations. These regulations are the only means by which to apply pension benefit protections to continuing employees and to meet the Government’s objective.
If the Regulations are not made, there is a risk of negative reaction from continuing employees. Union representatives have advised Government officials that employees have concerns regarding the uncertainty of their pension benefits, and the potential impacts on their retirement income arrangements and their decision to remain employed with Candu Energy Inc. The Regulations will provide the required assurances to these employees.
The pension accounts of continuing employees will continue to be administered on an ongoing basis irrespective of the making of the Regulations; therefore there is no incremental increase to administrative costs.
Pension Policy and Stakeholders Relations
Pensions and Benefits Sector
Treasury Board of Canada Secretariat