Budget Measures Passed: July 1st Changes

Bill C-3, the Supporting Vulnerable Seniors and Strengthening Canadaís Economy Act received Royal Assent on June 26, 2011.  Several other budget measures will come into effect on July 1, 2011, as a result of legislation contained in Bill C-9. Seniors and members of pension plans will want to take note of these changes.

Seniors with modest incomes will be pleased to discover a top-up to GIS and Allowance payments beginning July 1, 2011.

According to the June, 2011 Federal Budget Documents, seniors with little or no income other than Old Age Security and the Guaranteed Income Supplement will receive additional annual benefits of up to $600 for single seniors and $840 for couples. Single recipients with an annual income (other than Old Age Security and the Guaranteed Income Supplement) of $2,000 or less, and couples with an annual income of $4,000 or less, will receive the full amount of the benefit. Above these income thresholds, the amount of the top-up will be gradually reduced and will be completely phased out at an income level of $4,400 for singles and $7,360 for couples.

Bill C-9 contains changes to the Pension Benefits Standards Act that will come into effect on July 1, 2011. All changes to the Pension Benefits Standards Regulations in the bill came into force as of their adoption date. These modificationswill apply to all federally regulated pension plans.

According to the Office of the Superintendent of Financial Institutions Canada, the July 1st measures include:

Death Benefits: Where there is no survivor on the death of the member or former member, an amount, as described in the provisions of the PBSA, must be paid to the designated beneficiary. If there is no designated beneficiary, the death benefit is payable to the estate. The differentiation between a pre-retirement death benefit for members eligible for early retirement and members who are not has been removed.

Immediate Vesting: Members' pension benefits are immediately vested upon joining a pension plan. An amendment to 18 (1)(c) provides that all pension benefits are locked-in after two years of plan membership. Most pre-1986 and post-1987 references affecting benefits have been removed throughout the PBSA.

Other pension measures have come into force since July 1^st, 2010 and there are several for which effective dates have yet to be announced.

ADDITIONAL EDUCATIONAL RESOURCES: Tax-Efficient Retirement Income Planning