Employee Benefits Program Policy
- 1. Summary
- 2. Legal and Policy Authority
- 3. Purpose, Objectives and Results
- 4. Eligible Recipients
- 5. Eligible Initiatives and Projects
- 6. Type and Nature of Eligible Expenditures
- 7. Stacking Provisions
- 8. Method for Determining the Amount of Funding
- 9. Maximum Amount Payable
- 10. Basis on Which Payments will be Made
- 11. Application and Assessment Criteria
- 12. Monitoring and Reporting Mechanisms
- 13. Official Languages
- 14. Redistribution of Contributions
- 15. Other Terms and Conditions
- Appendix 1: Definitions
- Appendix 2: Terms and Conditions for Existing Defined Benefit Pension Plans
- Appendix 3: Responsibilities and Procedures
- Appendix 4: Establishing a Pension Plan
- Appendix 5: Frequently Asked Questions
The purpose of the Employee Benefits program, formely known as the Band Employee Benefits program, is to provide funding to eligible Indian, Inuit and Innu employers to support the cost of the employer's share of contributions to pension and benefit plans for eligible employees. These may include the costs of employer sponsored pension plans, the Canada/Quebec Pension Plan (C/QPP) and additional non statutory employee benefits.
The Department of Indian Affairs and Northern Development (DIAND) may contribute toward the cost of the eligible employer’s share of pension and benefits plans for eligible employees delivering services pursuant to an eligible program.
The Department may contribute toward private pension plans, C/QPP, underwriter fees/administrative costs, and non-statutory benefit plans. Funding levels are based on the following rates:
- The Department may contribute to an eligible employer an amount up to a total of the sum of 5.5% (to the maximum allowed by the Canadian Revenue Agency), plus the applicable C/QPP percentage rate (as specified in the Canada Pension Plan), of eligible employee payroll toward the employer’s share of contributions to an employer-sponsored pension plan and/or C/QPP.
- The Department may also transfer to an eligible employer an additional amount of up to 2.0% of the eligible employee payroll to allow for the funding of other non-statutory employee benefits.
- An additional amount up to a total of $1,000 per employer plus $25 per eligible employee may be provided annually (approximately 0.2% of payroll), or if less than 10 employees, a total of $125 per eligible employee, by the Department, towards the eligible employer’s costs (including underwriter fees) of administering an employer-sponsored pension plan (and non-statutory band employee benefits, where applicable).
The employee’s share of the cost of employer-sponsored pension plans will be at least equal to the employer’s share contributed by DIAND.
Only the three existing defined benefit pension plans may vary from the levels specified above (see Appendix 2: Terms and Conditions for Existing Defined Benefit Pension Plans).
The Department will not contribute toward the cost of prior pensionable service of employees.
2. Legal and Policy Authority
Department of Indian Affairs and Northern Development Act, R.S.C., 1985, c. I-6, s. 4.
3. Purpose, Objectives and Results
Three distinct but related contribution programs constitute the core governance and administration support provided by DIAND to bands and Indian institutions. Collectively, they are referred to as the Indian Government Support (IGS) programs and include, Employee Benefits, Tribal Council Funding (TCF), and Band Support Funding (BSF).
The goal of IGS programming is to provide bands with assistance for the establishment and maintenance of effective local governance and administrative systems and the provision of programs and services to their citizenship. IGS is provided for a variety of functions, including: pension and benefit regimes for their employees; capacity development and training; and, where feasible and desirable, the regional administration of programs and services through tribal councils.
Employee Benefitsis one of the programming components of DIAND’s Results Framework which aims at improving the quality of life and increasing self-reliance of Indian communities. As part of the Framework’s Government pillar, the Employee Benefits program plays a key role in strengthening institutions by enabling recruitment and retention of a professional and independent Indian Inuit, and Innu public service.
The main objective of the Employee Benefits program is to enable eligible Indian, Inuit and Innu employers to compete effectively in attracting and retaining the qualified staff required to manage and deliver programs and services, particularly those taken over from the federal government in recent years. This can only be achieved by providing adequate funding to employers, giving them the opportunity to establish competitive employee benefit packages, comparable to other competing employers (e.g., federal, provincial and municipal governments, school boards, etc.). This also supports the Department’s goals of developing control of program management and program delivery to band communities.
4. Eligible Recipients
The class of eligible recipients include eligible employers as defined in Appendix 1: Definitions for the Employee Benefits program.
The employer-sponsored pension plans must meet the requirements of Canada Revenue Agency (CRA) and either those of the federal Pension Benefits Standards Act, 1985 (PBSA, 1985,) as determined by Office of the Superintendent of Financial Institutions (OSFI), or be a provincially legislated pension plan that meets the requirements of the provincial regulations and the equivalent provincial legislation in order to be eligible to receive funding under the Employee Benefits program.
Employers will also be eligible for funding for other non-statutory employee benefits under the Employee Benefits program only once an employer-sponsored pension plan has been approved for funding by DIAND under this program.
Notwithstanding the terms and conditions described here which apply to the Employee Benefits program, there are three defined benefit pension plans which pre-existed the current Employee Benefits program and in order to enable their continuance, have been allowed limited exemption from four specific areas. Variations from certain terms and conditions, as described in Appendix 2: Terms and Conditions for Existing Defined Benefit Pension Plans, will apply to these plans.
Where employees not eligible for Employee Benefits program funding participate in a plan, along with Employee Benefits funded employees, the following conditions apply:
- Band employee benefits programs developed for employees of eligible employers should be made available without prejudice to all employees, regardless of the funding source of the salary. Eligible employers will be responsible for resourcing the employer’s share for those employees whose salaries are not provided for in the funding from DIAND.
- Where employees of band-owned enterprises participate in band employee benefits programs established for eligible band council employees, the employer’s share of pension plan contributions, in respect of employees of that enterprise, will be paid by the enterprise, and not by the Department. Employers who have agreed to allow employees to participate in a pension plan must agree not to terminate the plan or, in the case of a multi-employer pension plan, their participation in the plan, or amend the plan, without notifying the employees, and obtaining concurrence from OSFI, or the appropriate provincial regulator, CRA and DIAND.
The Department requires that the plan specify that benefits are immediately vested, that payroll deductions must be held in trust separate from operating funds, and that funding toward the employer’s share of pension plan remittances be locked-in immediately upon receipt by the plan administrator.
Employees terminating their employment will have the corresponding accrued employer’s share placed in deferred pension benefits, or locked-in Registered Retirement Savings Plans (RRSPs) for the intended employees.
The eligible employer may agree, upon application for funding, to conclude a reciprocal pension transfer agreement with the Public Service Superannuation Plan. The eligible employer would submit its request for the establishment of a Reciprocal Transfer agreement directly to the Financial Management and Portability Group, Pensions and Special Projects Division, Personnel Policy Branch, Treasury Board Secretariat.
Employee Benefits program under the block funding approach
Eligible recipients for block funding are First Nations and Tribal councils who represent their communities and are mandated by First Nations to represent their communities.
5. Eligible Initiatives and Projects
Employee Benefits is eligible under these terms and conditions.
6. Type and Nature of Eligible Expenditures
The following funding approval processes will apply:
Funding under the EB program may be approved upon application where that application meets program-specific criteria.
Eligible expenditures under the Employee Benefits program include contributions toward private pension plans, C/QPP, underwriter fees/administrative costs, and non-statutory benefit plans, as defined in Appendix 1: Definitions for the Employee Benefits Program.
The Department will not contribute toward the cost of prior pensionable service of employees.
Employee Benefits Program under the block funding approach
Eligible expenditures as set out in these program terms and conditions shall apply in order to establish the initial base budget for block funding and where block funding is to be re-established.
7. Stacking Provisions
Proposals for funding from each recipient shall address the requirement for the recipient to declare any and all prospective sources of funding for the program or project, inclusive of all federal, provincial, territorial or municipal government (total government assistance) and other sources that is expected to be received. The maximum level of total government assistance will not exceed 100% of eligible expenditures.
8. Method for Determining the Amount of Funding
The method for determining the amount of funding is described within these terms and conditions under the headings of Type and Nature of Eligible Expenditures and Maximum Amount Payable.
9. Maximum Amount Payable
The maximum amount payable is determined by the funding formula.
The employee’s share of the cost of employer-sponsored pension plans will be at least equal to the employer’s share contributed by DIAND. Only the three existing defined benefit pension plans may vary from this maximum amount payable (see Appendix 2: Terms and Conditions for Existing Defined Benefits Pension Plans).
Employee Benefits Program under the block funding approach
Payments under the block funding approach shall not exceed the results given by the formula.
10. Basis on Which Payments will be Made
Contributions are normally paid on the basis of achievement or performance objectives or as reimbursement of expenditures incurred. Payments are made based on a cash flow forecast from the recipient.
11. Application and Assessment Criteria
Recipients who are former public office holders must respect and comply with the Conflict of Interest and Post-Employment Code for Public Office Holders and the Conflict of Interest and Post-Employment Code for the Public Service (2012). Recipients who are former public servants must respect and comply with the Values and Ethics Code for the Public Service. Where an applicant employs or has a major shareholder who is either a current or former (in the last twelve months) public office holder or public servant in the federal government, compliance with the Code(s) must be demonstrated.
Recipients must complete an application form annually in the manner prescribed by the Department, and must submit the form, duly filled out and signed, to the regional office. The application form contains the data used in the formula to establish the funding level and therefore must be reviewed for comparison with departmental records and approved by regional office. The application form must be a document separate from the funding arrangement and must not be incorporated into the text of the arrangement. For Employee Benefits, the application form must also be accompanied by a list of eligible employees.
In order to continue to receive funding under the IGS contribution program, the eligible recipient will provide the Department with:
- program specific annual reports which include the necessary information, as specified by the Department, sufficient to verify adherence to program terms and conditions and demonstrate results; and
- an annual financial audit as per the Year-End Reporting Handbook for First Nations, Tribal Councils and First Nation Political Organizations.
With respect to Employee Benefits, the eligible recipient must also provide all required reports to the OSFI or their provincial regulator as applicable and CRA as determined by those institutions.
Employee Benefits Program under the block funding approach
Once a recipient has met specific eligibility criteria for block funding, the application requirements of specific programs shall apply in order to establish the initial base budget for block funding and where block funding is to be re-established.
All recipients must submit an application for each agreement renewal. All recipients must submit an application form to receive any increase in funding or if they are assuming management of a new program. Recipients must agree to make available to their members a budget for the expenditure for all funds to be received, and to maintain accounting and record systems consistent with their responsibility to account properly for the expenditure of public funds.
12. Monitoring and Reporting Mechanisms
The Department has procedures and resources that enable it to observe due diligence in approving payments, in verifying their eligibility and in managing and administering programs.
Departmental funding is for the provision of employee benefit programs and the eligible employer is acting on its own behalf and not as an Agent of the Crown. The eligible employer is to be solely responsible for any and all payment and /or deductions required for the C/QPP and other employer-sponsored benefit programs. The eligible employer shall be responsible for making these payments directly. In the event that the employer fails to make the obligated payments the federal government assumes no responsibility to make these payments.
The eligible employer’s responsibilities include filing the Annual Information Returns required under the Pension Benefits Standards Act, 1985, or equivalent provincial legislation, and the Income Tax Act.
In the case of non-compliance with the terms and conditions of the Employee Benefits program, the Department will work closely with the recipient to resolve the difficulties. If the difficulties cannot be resolved, or in the unlikely event that OSFI or a provincial regulator de-registers a pension plan, the Department will discontinue funding until the plan is again approved by the appropriate regulator.
A separate audited "Schedule of Employee Benefits Funding" or a Note to the Financial Statements is to be prepared in accordance with the DIAND Year-End Reporting Handbook and provided as part of the Annual Audited Consolidated Financial Statements that the recipient is required to prepare and submit to DIAND. A statement will be required that the Employee Benefits funds are locked-in, that payroll deductions are held in trust separate from operating funds, and payments have been remitted in accordance with the plan or are current.
13. Official Languages
DIAND will respect the requirements stipulated in the Official Languages Act, related regulations, and federal government policies. Compliance will be achieved by ensuring that all external communications and public consultations, programs, and associated documents will be in both official languages. In addition, employees will be encouraged to participate in interdepartmental meetings and working sessions in the official language of their choice. Services to the public will be available in both official languages. This will include services delivered by federal employees and contractors delivering services on behalf of Departments and organizations.
14. Redistribution of Contributions
Where a recipient delegates authority or further distributes contribution funding to an agency (i.e. an authority, board, committee, or other entity authorized to act on behalf of the recipient), the recipient shall remain liable to the Department for the performance of its obligations under the funding agreement. Neither the objectives of the programs and services nor the expectations of transparent, fair and equitable services shall be compromised by any delegation or redistribution of contribution funding.
15. Other Terms and Conditions
Intellectual Property: Where a contribution is provided for the development of material in which copyright subsists, conditions for shared rights will be set out in the funding agreement.
Repayable Contributions: This provision of the Transfer Payment is not applicable because recipients will not be using the contribution funding for the purpose of producing profits or increasing equity in a business.
Appendix 1: Definitions for the Employee Benefits Program
Employee Benefits Program: refers to the program for which authority is presently sought through this submission. It includes pension plans (see below), other non-statutory benefits (see also below) and administration costs.
Eligible Employee: means a person who is employed by an eligible employer for the purposes of delivering services pursuant to an eligible program, but does not include a person who provides services pursuant to a contract for services or a person acting in the capacity of a member of a board of directors of a corporation, society, or any other incorporated body.
Eligible Employer: means an Indian, Inuit or Innu employer that is engaged in the delivery of services pursuant to an eligible program.
Eligible Program: means a program being the object of a funding arrangement with the department that was formerly delivered by DIAND, providing no funding for employee benefits is provided directly by the program, other than for the statutory benefits of Worker’s Compensation, Employment Insurance and pay in lieu of vacation. Excluded are employees working on capital projects or for a profit oriented organization which generates its own income.
Non-Statutory Benefits: means those employee benefits, other than pensions or statutory benefits (where pension refers to both private pension plans and the Canada or Quebec Pension Plan). The non-statutory benefits which are eligible for funding under the Employee Benefits program are also referred to as "group insurance". These include health insurance plans (supplementary medical and dental insurance), group life insurance, and salary continuation plans (short- and long-term disability insurance). These benefits also correspond to those most prevalent among non-Indian employers, including the federal public service.
Pension Plan: includes the Canada and Quebec Pension Plans, as well as employer-sponsored pension plans, which must be registered under either the Pension Benefits Standards Act, 1985 (PBSA, 1985) or equivalent provincial legislation and the Income Tax Act. This includes two types of employer-sponsored pension plans:
- Defined Contribution Pension Plan: a pension plan that consists of defined contribution provisions, which means a provision of a pension plan under which pension benefits for a member are determined solely as a function of the amount of pension benefit that can be provided by contributions made by or on behalf of that member, and interest earnings and other gains and losses allocated to that member.
- Defined Benefits Pension Plan: a pension plan that contains defined benefit provisions and is not a defined contribution plan. (See Appendix 2: Terms and Conditions for Existing Defined Benefit Pension Plans.)
Statutory Benefits: are those required by legislation, and which the employer and/or employee may not avoid paying. Canada and Quebec Pension Plans are statutory and are included as eligible benefits for the purpose of this program. Other statutory benefits such as Employment Insurance or Worker’s Compensation, however, are not eligible expenditures under this program.
Appendix 2: Terms and Conditions for Existing Defined Benefit Pension Plans
Three defined benefit pension plans have been in operation for a period of 25 years. Two of these plans are in Quebec: "Le Régime des bénéfices autochtones" and "Pension plan for employees of Mohawk Council of Kahnawake". The third plan is in Manitoba: "The retirement plan for employees of the Fort Alexander Indian Band".
These three plans were established prior to the conception and implementation of the department’s devolution plans, or the Employee Benefits program. The benefits of these defined benefit pension plans are similar to those of the public service superannuation plan. These three pension plans are in conformity with the requirements of the Pension Benefits Standards Act, 1985 (PBSA, 1985). They are very well managed as confirmed in 2002, by the Office of the Superintendent of Financial Institutions (OSFI). They meet the objectives of the government of Canada of ensuring that all Canadian workers have access to adequate pension plans.
There are four areas where the revised program terms and conditions impact directly upon the three existing defined benefit pension plans. Specifically, these involve the maximum level of contribution by the department towards the eligible employer’s share of contributions to these pension plans, the requirement that the employee’s share of the cost be at least equal to the employer’s share and the stipulation that the employer’s share of the pension plan remittance be locked-in immediately and that the benefits be immediately vested.
In this context, DIAND exempted the three defined benefit pension plans from only those specific requirements of the program terms and conditions which impact directly on these plans. The exemption permits the retention of the status quo for these pension plans, in their current form, with respect to the level of contribution of the department toward the employer’s share (i.e., based upon triennial actuarial valuations) and the timing of vesting of benefits and locking-in the employer’s share.
All the other approved existing pension plans, currently funded by DIAND are defined contribution pension plans because the employers had chosen that option when the plans were initiated. These pension plans conform to the current program terms and conditions.
B. Exceptions to Employee Benefits Program Terms and Conditions
The present Treasury Board Submission includes the following stipulations which pertain specifically to the existing currently funded defined benefit Indian pension plans:
- That DIAND will continue to fund the three existing defined benefit Indian pension plans ("Le Régime des bénéfices autochtones", "Pension plan for employees of Mohawk Council of Kahnawake", and "The retirement plan for employees of the Fort Alexander Indian Band") in their current form, in accordance with the Employee Benefits program terms and conditions, with the following specific exemptions from these terms and conditions with respect to the level of funding and design features:
- the maximum level of contribution by the department toward the employer’s share of pension plan contributions, which is specified in Summary;
- the requirement that the employee’s share of the cost of pension plan contributions be at least equal to the employer’s share contributed by DIAND, as indicated in, Maximum Amount Payable; and
- the requirement that the employer’s share be locked-in immediately upon receipt by the administrator of the plan and that benefits be immediately vested, as indicated in Eligible Recipients.
C. Scope of Extended Coverage
The exceptions to the Employee Benefits program terms and conditions will apply to the Fort Alexander plan and present and future eligible participants only as presently defined; that is, employees of the Sagkeeng Education Authority.
The same exceptions will also apply to present and future eligible employees of the "Pension Plan for employees of Mohawk Council of Kahnawake", as presently defined.
As "Le Régime des bénéfices autochtones" is a multi-employer plan, these exceptions will apply only to present and future eligible participants within the Region/Province of Quebec.
Appendix 3: Responsibilities and Procedures
The Eligible Employer’s responsibilities include the following:
- To be eligible to receive funding from the program, the eligible employer must prepare complete and accurate applications for pension plan registration and for Employee Benefits funding, and submit these to the regional INAC office.
- Applying for ongoing funding from INAC on an annual basis. In the case of multi-year agreements, the application for funding will be completed once and will be in effect for the duration of that agreement.
- Selecting an insurance company, trust company or investment manager to hold and manage the funds which will be deposited on behalf of eligible employees to the pension plan, and who may provide a non-statutory benefit plan.
- The administration of the benefit plan and/or pension plan including the recording of contributions to the pension plan and remitting all eligible employee and employer contributions to the pension plan fund as required by applicable legislation. Contributions to the employer-sponsored plan must be held in trust separate from operating funds and remitted within the time limits prescribed by the Pension Benefits Standards Act, 1985 or equivalent provincial legislation.
- Ensuring that the annual audit report, which is required to be filed with INAC, contains any necessary information specified in the funding agreement as being required to be reported regarding the Pension Plan and its funding.
- Filing the Annual Information Returns required under the Pension Benefits Standards Act, 1985, or equivalent provincial legislation, and the Income Tax Act.
The responsibilities of INAC headquarters include the following:
- The Director, Professional and Institutional Development, is responsible for the development, issuance and interpretation of the program policy for the Employee Benefits program.
- The Chief Financial Officer sector is responsible for managing the allocation process for the Employee Benefits program.
- The Director, Corporate Information and Management Directorate (CIMD) in Headquarters is responsible for the overall administration of the National Indian Government Support System (IGSS) which is used to determine eligible funding levels and performance reporting. The Director, CIMD, or his/her delegate, provides regional database support and training. The regions are responsible for gathering the relevant data and entering it in the system.
The responsibilities of INAC Regional Office include the following:
- Reviewing the initial proposal for completeness and verifying eligibility of the employer for Employee Benefits funding and verifying compliance with the specific terms of the Employee Benefits program.
- Reviewing and approving all applications for ongoing funding by INAC, subject to the limits of regional authority.
- Monitoring expenditures associated with the Employee Benefits program.
- Processing any applications submitted which include a request for INAC funding.
- Ensuring continuing compliance with the terms of the Employee Benefits policy.
The responsibilities the Office of the Superintendent of Financial Institutions or provincial regulator include the following:
- The Office of the Superintendent of Financial Institutions and equivalent provincial regulators are responsible for reviewing pension plans to determine if they are in compliance with the Pension Benefits Standards Act, 1985 or equivalent provincial legislation. The Office of the Superintendent of Financial Institutions or the provincial regulator will inform INAC whether or not the pension plan qualifies for registration under the Pension Benefits Standards Act, 1985, or equivalent provincial legislation and will forward their advice to INAC regional office at each stage. (Upon compliance, the Office of the Superintendent of Financial Institutions or the provincial regulator will register the pension plan under Pension Benefits Standards Act, 1985 or equivalent provincial legislation.)
Funding under the Employee Benefits program is available to support the eligible employer’s share of contributions on behalf of employees to an employer sponsored pension plan and/or the Canada/Quebec Pension Plan and, where an employer-sponsored pension plan is being funded, to support a non-statutory benefits plan for eligible employees.
Funding Levels and Eligibility
- INAC will provide funding towards the employer’s contribution to the pension plan, as follows. The departments will contribute to an eligible employer an amount up to a total of the sum of 5.5% plus the applicable C/QPP rate, of the salaries of eligible employees towards the employer’s share of contributions to an employer-sponsored pension plan and/or C/QPP premiums.
- Since the contribution of the department towards pension plans is based on actual costs, an annual adjustment to the employer contributions will be made based on annual reports.
- Where an eligible employee’s salary is only partly paid by INAC funds, then a percentage of the employer’s contribution in respect of that employee will be paid by INAC funds, while the remaining employer’s contribution must be paid by the other employer(s). The percentage that will be paid from INAC funds will be equal to the percentage of the eligible employee’s salary which is paid by INAC funds.
- Additional funding may be made available for the registration fees required to have the pension plan registered under the terms of Pension Benefits Standards Act, 1985 or equivalent provincial legislation.
- Funding for new pension plans will be transferred to the eligible employer only upon confirmation from Office of the Superintendent of Financial Institutions or the provincial regulator, that the plan meets requirements of the Pension Benefits Standards Act, 1985 or equivalent legislation.
- Upon approval of the plan for funding, the funds for the plan will be provided to the employer, as required, to cover a period beginning no earlier than the first day of the month prior to the month in which plan approval is received.
- Additional funding may be made available for professional administration costs of an employer-sponsored pension plan, in an amount equivalent to $1,000 (per eligible employer) plus $25 per participating eligible employee. However, where an employer sponsors a pension plan for fewer than ten employees, the total amount will be $125 per employee.
- Where funding has been approved for an employer-sponsored pension plan, the eligible employer may request an amount of up to 2.0% of eligible employee payroll towards the costs of a non statutory benefit plan for the eligible employees participating in the Employee Benefits-funded pension plan.
- Where an employer wishes to participate in an already funded multi employer pension plan, then a funding application for that employer and an appropriate amendment to the existing multi-employer plan are necessary. Funding may be provided upon verification of the foregoing by the INAC Regional office.
Ongoing Administration Responsibilities
- The employer is deemed to be the administrator by default but may choose to hire a professional administrator (individual or corporate) to perform the day-to-day administrative responsibilities connected with the pension plan. The final decision of whether to hire a professional administrator, and of the particular administrator to hire, remains with the employer.
- The administrator will be responsible for the ongoing administration of the pension plan. This includes the recording of contributions to the pension plan using an accounting system that records all transactions separately, and the remitting of all employee and employer contributions to the pension plan fund according to and with the time limits prescribed by the Pension Benefits Standards Act, 1985 or equivalent provincial legislation.
- In order to receive ongoing funding from the Employee Benefits Program, the employer must complete an Application for Employee Benefits annually and submit it to the INAC regional office.
- The administrator must file the Annual Information Returns required under Pension Benefits Standards Act, 1985 or reports required under equivalent provincial legislation and the Income Tax Act.
- The employer will ensure that the annual audit report filed with INAC contains the information required to be reported regarding the pension and employee benefits plans and their funding. For eligible employers for whom funding is provided through multi-year agreements, a list of eligible positions and total payroll must be provided with the annual reports.
- INAC will not contribute towards the cost of prior pensionable service by employees.
- The eligible employer must not terminate or amend the plan, or the trust agreement or insurance contract without notifying and obtaining approval from Office of the Superintendent of Financial Institutions or provincial regulator, and, as appropriate, INAC.
3. Dispute Resolution
Disputes regarding the accuracy of stated populations and programs administered will be adjudicated by the Regional Director General.
Disputes regarding the application of policy or formulae will be adjudicated by, in the first instance, the Regional Director General. If a satisfactory resolution is not achieved, the matter must be referred to the Director General, Governance, at Headquarters.
Appendix 4: Establishing a Pension Plan
Establishment of a Pension Plan
The first step in the establishment of a pension plan should be the "indication of intent". The eligible employer should first express its intent to establish a pension plan by preparing a band council resolution or a resolution of the board of directors. This resolution should indicate that the eligible employer will undertake the steps necessary to establish a pension plan. The eligible employer should obtain input from its employees prior to preparation of the band council resolution or a resolution of the board of directors.
- The eligible employer will then establish the features of the pension plan and will arrange, after verification with Office of the Superintendent of Financial Institutions or provincial regulator, for preparation of declaration of compliance, a pension plan text, employee booklet, and a trust agreement or an investment contract with an insurance company, and undertake a Statement of Investment Policy and Procedures (SIP&P). This will normally be done with the assistance of a trust company, insurance company or consultant.
- Design Features – The employer must ensure that the pension plan documents meet the requirements for funding under the program guidelines, which include but are not limited to the following:
- The pension plan must be made available to all employees of the eligible employer, regardless of the funding source of the employees’ salary. The eligible employer will be responsible for providing the funding for the employer’s contributions for those employees who are not eligible for INAC funding under this program.
- The eligible employees’ required contributions must be at least equal to the contribution provided from the Employee Benefits Program for the employer’s share of plan contributions.
- The employer contributions, less administration fees, if any, made on behalf of an eligible employee must be immediately vested in that employee.
- The employer contributions, less administration fees, if any, must be locked-in immediately upon deposit to the pension plan.
- The employer and employee contributions (payroll deductions) must be held in trust separate from operating funds.
Preparation of Application Package
The eligible employer will prepare an application package to request funding under the Employee Benefits program once all of the documentation has been completed. The application package should consist of:
- The band council resolution or resolution of the board of directors.
- An Application for Employee Benefits including the total number of eligible employees and total salary. When applying for joint pension plan funding under a multi-employer pension plan, each eligible employer must complete a separate Application for Employee Benefits Funding.
- A Canada Revenue Agency form CPT 124, if the eligible employer elects to participate in the Canada Pension Plan for status Indian employees.
- The plan text, employee booklet, cost certificate and investment contract or trust agreement for the pension plan.
- Canada Revenue Agency Form T510, Application for Registration of Employees’ Pension Plan.
- The Application for Registration required under Pension Benefits Standards Act, 1985, a cheque for the registration fee, made payable to the Receiver General of Canada, and the Declaration of Compliance, Office of the Superintendent of Financial Institutions 522. Alternatively, such documentation and payment as required for provincially registered pension plans.
- The eligible employer will submit the application package to the INAC regional office, once it is complete.
- The application package will be reviewed by the INAC regional office upon receipt. This review will ensure that the package is complete and that the eligible employer and eligible employees meet the criteria for funding under the Employee Benefits program.
- If the regional review of the application package is positive, the INAC regional office will prepare a recommendation for initial funding.
- When the documents meet Employee Benefits program-specific criteria then the INAC regional office will advise Headquarters. The employer will arrange for the plan to be reviewed by the Office of the Superintendent of Financial Institutions for compliance with the Pension Benefits Standards Act, 1985, or by the provincial regulator, and by Canada Revenue Agency for all Canada Revenue Agency requirements.
- The employer will submit complete copies of the pension documents to Office of the Superintendent of Financial Institutions or provincial regulator, indicating where further contact should occur (i.e.: through the employer, or the underwriter directly). The <INAC regional office will review the documents to ensure conformity with the Employee Benefits program criteria.
- If there are any changes required to the documents in order for them to be acceptable under the terms of the Pension Benefits Standards Act, 1985, equivalent provincial legislation, or Canada Revenue Agency requirements, the underwriter or employer will be contacted directly. The amended pension plan documents will then be submitted directly to Canada Revenue Agency and/or provincial agencies, as required.
Appendix 5: Frequently Asked Questions
1. Who is eligible forEmployee Benefits?
See definition of "Eligible Employer", "Eligible Program", and "Eligible Employee" under the Definitions section (Appendix 1).
To be eligible for Employee Benefits funding, the organization must be funded by INAC for an eligible program.
2. What are some examples of eligible and ineligible employee positions?
Examples of Eligible Positions
- School Bus Driver
- School Janitor
- School Librarian
- Band Manager
- Administration Clerk
- Finance Officer
- Economic Development Officer
- Lands Officer
- Social Worker (*provided salary funded by INAC program)
Examples of Ineligible Positions
- Daycare Worker (*except in Ontario Region)
- Police Officer
- Community Health Manager
- Addictions Counsellor
- Fisheries Officer
- Trading Post Manager
- Video Lottery Operator
- Store Clerk
Employees who are hired on contract, on a project basis, for profit related services, who’s source of funds is from a source other than INAC or from an INAC program that is ineligible, are all considered ineligible employees. (For more information, see definition of eligible employee in Appendix 1 above).
3. How are the different parts calculated to come up with the amount INAC provides for Employee Benefits?
The department may contribute toward private pension plans, Canada/Quebec Pension Plan, underwriter fees/administrative costs, and non-statutory benefit plans. (See Program Overview section for information on funding levels.)
For example, if 10 or more eligible employees:
- 5.5% private pension plan
- 4.95% C/QPP
- 2.0% non-statutory
- $1,000 per employer plus $25 per eligible employee
- =Total Employee Benefits Eligible Funding
For example, if less than 10 eligible employees:
- 5.5% private pension plan
- 4.95% C/QPP
- 2.0% non-statutory
- 125 per eligible employee
- =Total Employee Benefits Eligible Funding
4. Do First Nations have to submit names of employees who are not funded by INAC programs (e.g. Health Canada)?
Employers are only required to report the employees who are eligible for the Employee Benefits program. It is not necessary for employers to list employees whose positions are funded from a source other than INAC.
5. Will First Nations receive retroactive funding for previous year(s)?
No. The Employee Benefits program does not contribute toward the cost of prior pensionable service of employees.
The start date for Employee Benefits funding is determined by the approval of the Employee Benefits application (See Appendix 3: Responsibilities and Procedures.)
6. What steps need to be taken to get a pension fund in place for a First Nation? How does (if at all) the fact that the First Nation is under Third Party Management affect the situation?
Please see Appendix 4: Establishing a Pension Plan, for the steps required. Approval of new plans is a regional decision subject to funding availability. The Third Party Management policy does not support taking on new programs.
7. What are the deadlines for application? What is the base year? How do we determine if the information provided is correct?
The Employee Benefits application form, list of eligible employees and annual report are due May 31st to the regional office. Regional procedures are in place for the validation of this information. E.g. FSOs, Allocation Officers and Program Officers should have a process to verify that the First Nation employees on the List of Eligible Employees are delivering services pursuant to an eligible program.
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