FEDERAL REG

SOR/2016-48: Ste. Anne’s Hospital Divestiture Regulations Public Service Superannuation Act Financial Administration Act

REGISTRATION OF FEDERAL REGULATION - VIA PART II OF THE GAZETTE

Registered
March 17, 2016


REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues Just over 500 Veterans Affairs Canada employees working at Ste. Anne’s Hospital (the Hospital) have accepted a job offer from the Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l’île-de-Montréal (the Centre) under the terms of a transfer agreement. These employees (transferring... (Click for more)


Published on March 17, 2016

Bill Summary

SOR/2016-48: Ste. Anne’s Hospital Divestiture Regulations Public Service Superannuation Act Financial Administration Act

REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Issues Just over 500 Veterans Affairs Canada employees working at Ste. Anne’s Hospital (the Hospital) have accepted a job offer from the Centre intégré universitaire de santé et de services sociaux de l’Ouest-de-l’île-de-Montréal (the Centre) under the terms of a transfer agreement. These employees (transferring employees) will cease to contribute and cease to accrue pensionable service under the Public Service Pension Plan. The Ste. Anne’s Hospital Divestiture Regulations (the Regulations) are necessary to mitigate negative pension consequences for transferring employees’ pension benefits that would emerge in the absence of the Regulations. Background In 1963, the Royal Commission on Government Organization recommended that the Department of Veterans Affairs’ departmental hospitals be transferred to provincial jurisdiction. On April 16, 2015, a transfer agreement was signed by the Minister of Veterans Affairs, Quebec’s ministers of Health and Social Services, and Canadian Intergovernmental Affairs, and the Director General of the Centre. The transfer agreement will see the Hospital, the last departmental hospital, transferred to provincial jurisdiction on April 1, 2016. Under the Public Service Pension Plan, the pension benefit options available to a contributor are determined by his or her age and accrued pensionable service on the day he or she ceases to be employed in the public service. When either age and/or pensionable service fall below prescribed thresholds, contributors will face reductions to their pension benefits. Furthermore, spouses and children that a former contributor acquires after ceasing to be employed in the public service are not eligible to receive the default survivor benefits available under the pension plan. In recognition of the fact that a transfer, or divestiture, of the administration of a service unilaterally hastens an employee’s departure from the public service, the Public Service Superannuation Act authorizes the making of divestiture regulations. With respect to pension benefits and options, divestiture regulations have the effect of situating former employees in a similar position they would have been in had they not been transferred. The Government of Canada has consistently implemented such regulations in instances where a federal service is transferred or divested. Objectives Without the Regulations potential reductions to transferring employees’ pension benefits would be fixed on April 1, 2016, if, on that date, a transferring employee does not meet pension benefit eligibility thresholds. The Regulations seek to minimize potential reductions by recognizing employment with the Centre for eligibility threshold purposes. Employment with the Centre will not, however, serve to increase pensionable service accrued under the Public Service Pension Plan. In the absence of the Regulations, children and spouses acquired after the Hospital’s transfer would not be entitled to survivor benefits under the Public Service Pension Plan. The Regulations will provide full survivor benefit entitlements to spouses and children acquired by a transferring employee during their period of employment with the Centre. Description The Regulations will apply to the Hospital’s employees who accept an offer of employment under the terms and conditions of the transfer agreement, and will continue to apply so long as the transferring employees remain employed by the Centre and retain their pension benefits under the Public Service Pension Plan. The Regulations will defer the date on which transferring employees are eligible to exercise their pension benefit options to the date on which they cease employment with the Centre, rather than April 1, 2016 (i.e the day on which they cease employment in the public service). As a result, the duration of employment with the Centre and a transferring employee’s age when he or she ends his or her employment with the Centre will be used to determine the benefit options available under the Public Service Pension Plan. The Regulations will also extend survivor benefit eligibility to children and/or spouses acquired during the period in which the Regulations apply to a transferring employee. “One-for-One” Rule The “One-for-One” Rule does not apply to these Regulations, as there will be no change in administrative costs to business. Small business lens The small business lens does not apply to these Regulations, as they will impose no impact on small business. Consultation In June 2014, the Government of Canada authorized that the details of the terms and conditions of employment, agreed to in principle, be shared with the Hospital employees. Employees and their representatives were made aware that divestiture regulations may be implemented. There have also been several information sessions given to employees of the Hospital. Department of Public Services and Procurement officials were present to provide targeted information regarding employees’ pensions and benefits and to answer related questions; divestiture regulations were discussed during these sessions. During the course of employee engagements, there was no negative reaction to the possible implementation of divestiture regulations. Transferring employees and their representatives are expected to support the implementation of the Regulations, as they will provide transferring employees with pension benefit protections and mitigate adverse pension consequences. The administrator of the Public Service Pension Plan, the Department of Public Services and Procurement, is aware of these Regulations and is fully prepared to implement them on April 1, 2016. Rationale The Public Service Superannuation Act authorizes divestiture regulations to be made. The Regulations are the only means by which the Government of Canada can apply pension benefit protections in respect of transferring employees. The Regulations will provide transferring employees with assurance that negative pension consequences, resulting from the transfer of the Hospital’s administration, would be mitigated. No additional financial or human resources are required to implement or administer the Regulations. Contact Kimberley Gowing Senior Director Pension Policy and Stakeholder Relations Pensions and Benefits Sector Treasury Board of Canada Secretariat Ottawa, Ontario K1A 0R5 Telephone: 613-952-3121 Footnote a S.C. 2003, c. 22, subpar. 225(z.19)(xxxiv) Footnote b S.C. 2012, c. 31, s. 499(3) Footnote c R.S., c. P-36 Footnote d R.S., c. F-11

This Bill does not amend any statutes.

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