Order Fixing the Day After the Day on Which this Order is Made as the Day on Which Division 28 of Part 5 of the Budget Implementation Act, 2022, No. 1 Comes into Force: SI/2023-14

Canada Gazette, Part II, Volume 157, Number 11

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SI/2023-14 May 24, 2023

BUDGET IMPLEMENTATION ACT, 2022, NO. 1

Order Fixing the Day After the Day on Which this Order is Made as the Day on Which Division 28 of Part 5 of the Budget Implementation Act, 2022, No. 1 Comes into Force

P.C. 2023-403 May 4, 2023

Whereas subsection 114(4)footnote a of the Canada Pension Planfootnote b provides that where any enactment of Parliament contains any provision that alters, or the effect of which is to alter, either directly or indirectly and either immediately or in the future, any of the matters referred to in that subsection, the provision shall come into force only on a day to be fixed by order of the Governor in Council, which order may not be made and shall not in any case have any force or effect unless the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to the enactment;

Whereas Division 28 of Part 5 of the Budget Implementation Act, 2022, No. 1, chapter 10 of the Statutes of Canada, 2022, contains provisions that alter, or have the effect of altering, either directly or indirectly and either immediately or in the future, the matters referred to in paragraphs 114(4)(a) and (d) of the Canada Pension Plan footnote b;

And whereas the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to those enactments;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, under subsection 422(2) of the Budget Implementation Act, 2022, No. 1, chapter 10 of the Statutes of Canada, 2022, fixes the day after the day on which this Order is made as the day on which Division 28 of Part 5 of that Act comes into force.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

This Order brings into force amendments to the Canada Pension Plan that ensure the correct calculation of benefits for the Post-Retirement Disability Benefit and the child-rearing and disability drop-ins and align the legislation with the original policy intent for eligibility. These amendments come into force on the day after the day this Order is made.

Objective

The objective of this Order is to bring into force certain amendments made to the Canada Pension Plan to ensure the correct calculation of eligibility and benefits for individuals qualifying for the Post-Retirement Disability Benefit and the child-rearing and disability drop-ins.

Background

As part of the 2016–2018 Triennial Review of the Canada Pension Plan, federal and provincial governments agreed to better protect the benefits of parents and persons with disabilities by creating the Post-Retirement Disability Benefit and introducing drop-in mechanisms to the Canada Pension Plan enhancement.

Post-Retirement Disability Benefit

The Post-Retirement Disability Benefit provides protection to individuals who take their retirement pension before age 65 and subsequently become disabled (meaning they would not be able to qualify for a disability pension). The Post-Retirement Disability Benefit was legislated as part of the Budget Implementation Act, 2018, No. 1 and started in January 2019. It is payable until age 65 or until the individual is no longer disabled.

The eligibility requirements were intended to be the same as for the disability pension. That is, an individual needs to have a severe and prolonged disability and make contributions in the Minimum Qualifying Period (i.e. in at least four of the last six years or three of the last six years for contributors with 25 or more years of contributions).

The eligibility for the Post-Retirement Disability Benefit is different than for the disability pension in three specific ways:

The current provisions for the Post-Retirement Disability Benefit do not specify a start and end date for the Minimum Qualifying Period. Because the date of application can, in some cases, be years after the onset of disability, it can potentially exclude valid contributions and narrow eligibility.

The amendments in the Budget Implementation Act, 2022, No. 1 specify the start and end date for the Minimum Qualifying Period and align the legislation with the original policy intent for eligibility. That is, the Minimum Qualifying Period for the Post-Retirement Disability Benefit would be aligned with the Minimum Qualifying Period for the disability pension (i.e. in at least four of the last six years or three of the last six years for contributors with 25 or more years of contributions). Moreover, these amendments also ensure that other potential interpretations for the Minimum Qualifying Period in the Post-Retirement Disability Benefit are avoided.

Disability drop-in

The Canada Pension Plan enhancement provides protection for individuals who are disabled and unable to work by “dropping-in” an amount that functions as pensionable earnings when benefits are being calculated. This amount is equal to 70% of the average pensionable earnings in the six years prior to the onset of disability.

In order to align the disability drop-in with how benefits are calculated in the Canada Pension Plan (i.e. on a monthly basis), a couple of amendments are being made to the current Canada Pension Plan legislation:

These amendments were made as part of the Budget Implementation Act, 2022, No. 1. The YMPE is an important element in the calculation of the amount to be dropped-in and these amendments ensure that the disability drop-in is properly calculated (i.e. prorated) when an individual turns 18.

Child-rearing drop-in

The Canada Pension Plan enhancement protects the benefits of individuals who are the primary caregivers to children seven and under and whose earnings may be affected as a result by “dropping-in” an amount that functions as pensionable earnings when benefits are being calculated. This amount is equal to the average pensionable earnings in the five years prior to the birth or adoption of a child.

In order to align the child-rearing drop-in with how benefits are calculated in the rest of the Canada Pension Plan (i.e. on a monthly basis), an amendment to prorate the value of the YMPE for years in which the contributor turns 18 is necessary. This amendment was made as part of the Budget Implementation Act, 2022, No. 1 and ensures that the calculation of benefits in the year in which a contributor (i.e. a primary caregiver) turns 18 is prorated correctly.

Implications

This Order establishes when the amendments to the Canada Pension Plan in the Budget Implementation Act, 2022, No. 1 (i.e. Division 28 of Part 5 of that Act) come into force. It ensures the correct calculation of eligibility and benefits for a small number of individuals qualifying for the Post-Retirement Disability Benefit and the child-rearing and disability drop-ins. These amendments are technical in nature and simply ensure that the eligibility and calculation of these benefits are consistently applied for all individuals and align the legislation with the original policy intent.

These amendments have no impact on the financial position of the Canada Pension Plan, as they do not change the eligibility and/or the amount of benefit paid from the original policy intent when these benefits were introduced in 2019. The information regarding the Post-Retirement Disability Benefit and the child-rearing/disability drop-ins is already published on the Canada Pension Plan website. All published materials and communications will be reviewed to ensure that the eligibility and calculation of these benefits are properly reflected. There are no issues from an administration or an information technology perspective with the implementation of these amendments.

Consultation

Pursuant to subsection 114(4) of the Canada Pension Plan, the legislative amendments in Division 28 of Part 5 of the Budget Implementation Act, 2022, No. 1 require the formal consent of at least two thirds of the provinces, representing at least two thirds of the population, in order to come into effect. The necessary formal consent from the provinces has been obtained.

Contact

Galen Countryman
Director General
Federal-Provincial Relations Division
Federal-Provincial Relations and Social Policy Branch
Department of Finance
Telephone: 613‑513‑4085
Email: galen.countryman@fin.gc.ca