Bill C-2

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	Financial Review of the Canada Pension Plan
R.S., c. 30 (2nd Supp.), s. 56	94. (1) Subsection 113.1(1) of the Act is replaced by the following:
Review every three years	113.1 (1) Once every three years after 1997, the Minister of Finance and ministers of the Crown from the included provinces shall review the financial state of the Canada Pension Plan and may make recommendations as to whether benefits or contribution rates or both should be changed.
R.S., c. 30 (2nd Supp.), s. 56	(2) Subsection 113.1(2) of the Act is repealed.
R.S., c. 30 (2nd Supp.), s. 56	(3) Subsection 113.1(3) of the Act is replaced by the following:
Completion of review	(3) If possible, the review in each three year period must be completed in time to permit the Minister of Finance to make recommendations to the Governor in Council before the end of the second year of the three year period.
R.S., c. 30 (2nd Supp.), s. 56	(4) Subparagraph 113.1(4)(b)(iii) of the Act is replaced by the following:
	(iii) the ratio of the projected assets of the Canada Pension Plan over the projected expenditures of the Canada Pension Plan, and
R.S., c. 30 (2nd Supp.), s. 56	(5) Subsection 113.1(4) of the Act is amended by striking out the word ``and'' at the end of paragraph (b) and by replacing paragraph (c) with the following:
	(c) the financing objective of having a contribution rate that is no lower than the rate
	(i) that, beginning with the year 2003, is the lowest constant rate that can be maintained over the foreseeable future, and
	(ii) that results in the ratio of the proj ected assets of the Canada Pension Plan at the end of any given year over the projected annual expenditures of the Canada Pension Plan in the following year being generally constant; and
	(d) that changes to the Act that increase benefits or add new benefits must be accompanied by a permanent increase in the contribution rates to cover the extra costs of the increased or new benefits and by a temporary increase in the contribution rates for a number of years that is consistent with common actuarial practice to fully pay any unfunded liability resulting from the increased or new benefits.
R.S., c. 30 (2nd Supp.), s. 56	(6) Subsections 113.1(5) and (6) of the Act are replaced by the following:
Role of Minister when recommenda- tions made	(5) On the completion of a review required by subsection (1), the Minister of Finance may recommend to the Governor in Council that the Governor in Council make regulations under subsection (6) to amend the schedule in accordance with that subsection to give effect to any recommendations made under subsection (1). Where the recommendations made under subsection (1) are that no changes be made to benefits or contribution rates, the Minister of Finance shall cause those recommendations to be published in the Canada Gazette.
Regulation to adjust rates	(6) Subject to subsections (7) and (8), the Governor in Council may, on the recommendation of the Minister of Finance made under subsection (5), by regulation amend the schedule to change the contribution rate for employees, employers and self-employed persons for any or all of the years following the review.
R.S., c. 30 (2nd Supp.), s. 56	(7) Subsection 113.1(8) of the Act is replaced by the following:
Coming into force of regulation	(8) Where a review takes place in a three year period as required by subsection (1) and the Governor in Council before October 1 of the third year of that period makes a regulation under subsection (6), the regulation shall, by order made by the Governor in Council, come into force, or is deemed to have come into force, on January 1 of the year after that period.
Provincial consent required	(8.1) An order made under subsection (8) may not be made unless the lieutenant governor in council of each of at least two thirds of the included provinces, having in total not less than two thirds of the population of all of the included provinces, has, before the October 1 date referred to in that subsection, signified the consent of that province to the coming into force of the regulation.
R.S., c. 30 (2nd Supp.), s. 56	(8) Subsection 113.1(11) of the Act is replaced by the following:
Interpreta- tion	(11) In subsections (11.01) to (11.03),
	A is one half of the contribution rate most re cently specified before October 1, 2000 un der paragraph 115(1.1)(c) for self- employed persons for 2003; and
	B is the contribution rate at October 1, 2000 for employees and employers for 2003.
Where rate is insufficient - 1st case	(11.01) Subject to subsection (11.04), if neither A nor B is greater than 4.95% and A is greater than B, the schedule is deemed to have been amended as of October 2, 2000 to increase the contribution rate for employees and employers for each year after 2002 to A.
Where rate is insufficient - 2nd case	(11.02) Subject to subsection (11.04), if A is greater than 4.95% and B is less than or equal to 4.95%,
	(a) the benefits payable in 2001, 2002 and 2003 shall be determined as if the ratios referred to in paragraphs 45(2)(b) and 56(2)(c), subsection 58(1.1) and subpara graph 59(c)(ii) were each 1; and
	(b) the schedule is deemed to have been amended as of October 2, 2000
	(i) to increase the contribution rate for employees and employers for each year after 2002 to the rate determined by the formula
	4.95% + 1/2(A - 4.95%)
	and
	(ii) to increase the contribution rate for self-employed persons for each year after 2002 to twice the contribution rate deter mined by the formula in subparagraph (i).
Where rate is insufficient - 3rd case	(11.03) Subject to subsection (11.04), if subsections (11.01) and (11.02) do not apply and A is greater than B,
	(a) the benefits payable in 2001, 2002 and 2003 shall be determined as if the ratios referred to in paragraphs 45(2)(b) and 56(2)(c), subsection 58(1.1) and subpara graph 59(c)(ii) were each 1; and
	(b) the schedule is deemed to have been amended as of October 2, 2000
	(i) to increase the contribution rate for employees and employers for each year after 2002 to the rate determined by the formula
	B + 1/2(A - B)
	and
	(ii) to increase the contribution rate for self-employed persons for each year after 2002 to twice the contribution rate deter mined by the formula in subparagraph (i).
Where subsections (11.01) to (11.03) do not apply	(11.04) Subsections (11.01) to (11.03) do not apply where
	(a) a recommendation was made under subsection (1) after 1997 that the contribu tion rates for 2003 and subsequent years be increased and the rates were increased before October 1, 2000 by an Act of Parliament or by a regulation made under subsection (6) to give effect to that recom mendation; or
	(b) a recommendation was made under subsection (1) after 1997 that the contribu tion rates for 2003 and subsequent years not be increased and the Minister of Finance before October 1, 2000 has caused that recommendation to be published in the Canada Gazette.
Where rates are insufficient	(11.05) Subject to subsections (11.12) and (11.13), where, after 2002, at October 1 of the year before a three year period for which a review is required by subsection (1), the contribution rate for self-employed persons for the years in that three year period is less than the contribution rate most recently specified under paragraph 115(1.1)(c) for self-employed persons for those years,
	(a) the benefits payable in the three year period shall be determined as if the ratios referred to in paragraphs 45(2)(b) and 56(2)(c), subsection 58(1.1) and subpara graph 59(c)(ii) were each 1; and
	(b) the schedule is deemed to have been amended as of the next day after that October 1
	(i) to increase the contribution rate for employees and employers for each year after that October 1 to the rate deter mined under subsections (11.07) to (11.11) for that year, and
	(ii) to increase the contribution rate for self-employed persons for each year after that October 1 to twice the contribution rate determined under subsections (11.07) to (11.11) for employers for that year.
Interpreta- tion	(11.06) In subsections (11.07) to (11.11),
	A is one half of the contribution rate most re cently specified under paragraph 115(1.1)(c) for self-employed persons for the years in the three year period referred to in subsection (11.05); and
	B is the contribution rate for employees and employers on October 1 of the third year of the last three year period for which con tribution rates were set for employees and employers, by an Act of Parliament or by a regulation made under subsection (6), on the recommendation of ministers under subsection (1).
Determi- nation of rate - 1st case	(11.07) If neither A nor B is greater than 4.95% and A is greater than B, the contribution rate for employees and employers for each year after the October 1 date referred to in subsection (11.05) is A.
Determi- nation of rate - 2nd case	(11.08) If A is greater than 4.95%, B is less than or equal to 4.95% and the percentage determined by the formula
	1/2(A - B)
	is less than or equal to 0.1%, the contribution rate for employees and employers for each year after the October 1 date referred to in sub section (11.05) is the rate determined by the formula
	4.95% + 1/2(A - 4.95%)
Determi- nation of rate - 3rd case	(11.09) If A is greater than 4.95%, B is less than or equal to 4.95% and the percentage determined by the formula
	1/2(A - B)
	is greater than 0.1%, the contribution rate for employees and employers is
	(a) for the first year after the October 1 referred to in subsection (11.05), the rate determined by the formula
	4.95% + 1/6(A - 4.95%)
	(b) for the next year, the rate determined by the formula
	4.95% + 1/3(A - 4.95%)
	and
	(c) for each subsequent year, the rate determined by the formula
	4.95% + 1/2(A - 4.95%)
Determi- nation of rate - 4th case	(11.1) If subsections (11.07) to (11.09) do not apply and the percentage determined by the formula
	1/2(A - B)
	is less than or equal to 0.1%, the contribution rate for employees and employers for each year after the October 1 date referred to in sub section (11.05) is the rate determined by the formula
	B + 1/2(A - B)
Determi- nation of rate - 5th case	(11.11) If subsections (11.07) to (11.1) do not apply, the contribution rate for employees and employers is
	(a) for the first year after the October 1 referred to in subsection (11.05), the rate determined by the formula
	B + 1/6(A - B)
	(b) for the next year, the rate determined by the formula
	B + 1/3(A - B)
	and
	(c) for each subsequent year, the rate determined by the formula
	B + 1/2(A - B)
Where paragraph (11.05)(a) does not apply	(11.12) Paragraph (11.05)(a) does not apply if subsection (11.07) applies.
Where subsection (11.05) does not apply	(11.13) Subsection (11.05) does not apply where
	(a) a recommendation was made under subsection (1) in the three years before the three year period referred to in subsection (11.05) that the contribution rates for one or more of the years in that three year period be increased and the rates were increased before October 1 of the year before that three year period, by an Act of Parliament or by a regulation made under subsection (6), to give effect to that recommendation; or
	(b) a recommendation was made under subsection (1) in the three years before the three year period referred to in subsection (11.05) that the contribution rates for the years in that three year period not be increased and the Minister of Finance before October 1 of the year before that three year period has caused that recom mendation to be published in the Canada Gazette.
Adjustment	(11.14) If a contribution rate determined under any of subsections (11.01) to (11.03) and (11.07) to (11.11) is not a multiple of 0.005%, the contribution rate is to be rounded to the nearest multiple of 0.005%.
Rates to be published	(11.15) The Minister of Finance shall publish in the Canada Gazette any amendment to the schedule deemed to have been made under this section.
R.S., c. 30 (2nd Supp.), s. 57(1)	95. (1) Subsection 114(2) of the Act is replaced by the following:
Effective date of major amendments	(2) 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, the general level of benefits provided by this Act or the contribution rate for employees, employers or self-employed persons for any year, it shall be deemed to be a term of that enactment, whether or not it is expressly stated in the enactment, that the provision shall come into force only on a day to be fixed by order of the Governor in Council, which day shall not in any case be earlier than the first day of the third year following the year in which any notice of intention to introduce a measure containing a provision to that effect was laid before Parliament.
	(2) Paragraph 114(4)(f) is replaced by the following:
	(f) the Canada Pension Plan Investment Board Act,
	(3) The portion of subsection 114(4) of the Act after paragraph (f) is replaced by the following:
	it shall be deemed to be a term of that enact ment, whether or not it is expressly stated in the enactment, that 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.

Bill C-2

Financial Review of the Canada Pension Plan