Res #: 26-09A
Number: 26
Year: 2009
Midterm: No
Expired: Yes
Responses Received: No
Departments: Canada Revenue Agency (CRA)

Whereas various actuarial studies in the past have indicated that the Municipal Employees Pension Plan (MEPP) has generated significant surpluses; and 

Whereas the Canada Revenue Agency has regulations that limit the size of pension plan surpluses which forced MEPP to either increase benefits or reduce premiums in order to reduce it’s surplus; and  

Whereas it appears that MEPP will be in a deficit position at the end of the 2008 calendar year; and 

Whereas some of MEPP’s options to overcome its deficit is to increase contributions by somewhere between 30 and 50% or to look at reducing benefits; and 

Whereas CUPE is asking for a review of the actions of the Municipal Employees Pension Plan in an effort to force the employers to contribute an extra $30 Million to the Plan to cover MEPP deficits; 

Be it Resolved that SARM lobby the Federal Government to amend the Income Tax Act in such a way as to permit pension plans to carry larger surpluses so they will not have to continually make adjustments to benefits and contributions to stay within the regulated surplus. 

Response from David Walsh, Manager, Executive Correspondence Section,
Canada Revenue Agency:

Please be assured that your concerns will be given careful consideration.

Response from Honourable Jean-Pierre Blackburn, Minister of National Revenue:

The resolution asks the federal government to increase the current pension surplus limit in the Income Tax Act, applicable to defined benefit pension plans, so that these pension plans may provide continuity of benefit and contribution levels by maintaining larger plan surpluses.

While the Canada Revenue Agency is responsible for the administration of the Act, the Department of Finance Canada is responsible for tax policy, and any change to the legislation applicable to the pension surplus limit would have to be considered by that department.  I am therefore forwarding a copy of our correspondence to the Honourable James M. Flaherty, Minister of Finance, for his consideration.

Response from the Departmental Correspondence Unit, Department of Finance Canada:

We acknowledge receipt of your correspondence of March 23, 2009, which was referred by the Minister of National Revenue, the Honourable Jean-Pierre Blackburn, to the Minister of Finance, the Honourable James M. Flaherty.

Please be assured that your comments will be brought to the Minister's attention as soon as possible.