Canada: Temporary deferred salary leave plan, pension plan relief (COVID-19)
Temporary relief measures for employers that sponsor “deferred salary leave plans” (DSLPs) or “registered pension plans” (RPPs) for their employees
Temporary relief measures for employers that sponsor DSLPs or RPPs for their employees
Temporary relief measures for employers that sponsor “deferred salary leave plans” (DSLPs) or “registered pension plans” (RPPs) for their employees were enacted in response to the coronavirus (COVID-19) pandemic.
- The relief introduces temporary “stop-the-clock measures” for the period 15 March 2020 through 30 April 2022, so that an employee's DSLP does not need to be terminated if the employee suspends a leave-of-absence to return to work or the employee chooses to delay a paid leave-of-absence.
- The relief temporarily allows RPPs to enter into a loan (or a series of loans) after April 2020 and before February 2022, as long as the loan (or series) is repaid no later than 30 April 2022.
- The relief permits retroactive contributions to an employee's money purchase account to replace required contributions that were not made in 2020 or 2021. The employee or employer generally needs to make these retroactive contributions after 2020 and on or before 30 April 2022.
- The relief broadens the definition of "eligible period of reduced pay" to allow RPPs to recognize full pensionable service for more employees experiencing a period of reduced work and pay during COVID-19 for both 2020 and 2021.
The temporary relief also allows retroactive contributions to an employee's money purchase account for required contributions that were not made in 2020 and 2021, among other changes.
The Department of Finance previously announced relief to help employers manage and maintain their employee benefit obligations throughout the pandemic, and to allow employees who participate in DSLPs to suspend or defer their scheduled leave for a limited time without putting their plan at risk. Read TaxNewsFlash
Read a July 2021 report prepared by the KPMG member firm in Canada
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