Good afternoon, Madam Chair and members of the committee.
My name is Danielle Laflèche and I am the Director General of the Registered Plans Directorate at the Canada Revenue Agency. Accompanying me is Janice Laird. Ms. Laird is the Director of the Actuarial and Policy Division within the Directorate. Between Ms. Laird and I, we will do our best to answer your questions.
I want to thank you for inviting us to attend your meeting.
To set a helpful context for the discussions today, I would like to briefly describe the role of the Canada Revenue Agency, specifically the role of the registered plans directorate in the administration of the third pillar of the Canadian pension system, which consists mainly of registered pension plans and registered retirement savings plans.
As you know, the Department of Finance is responsible for developing and evaluating federal tax policy and the legislation through which policy becomes law. As administrator, the Canada Revenue Agency is responsible for the functions of implementing these laws, including providing information to the public and to stakeholders, establishing processes through which individuals and businesses may meet their tax obligations and receive benefits, and of course carrying out our compliance activities to help ensure that everyone respects the law as intended by Parliament.
The role of the registered plans directorate is to ensure that pension plans and other tax-assisted retirement savings vehicles are administered in accordance with the Income Tax Act. I can thus speak about the administration of the Income Tax Act for pension plans and other tax-assisted retirement savings plans.
The Income Tax Act allows individuals to save for retirement with various retirement vehicles, such as employer-sponsored pension plans and retirement savings plans. Under the Income Tax Act, individual contributions to retirement savings and pension plans are tax deductible. The plan assets, including the accumulated investment returns, are not subject to income tax until they are withdrawn.
In the case of an employer who sponsors a pension plan, the employer can make contributions to the pension plan and claim an income tax deduction. However, to be able to claim such a deduction, the employer must first have the pension plan registered and the amount of contributions approved by the registered plans directorate of the Canada Revenue Agency.
The employer must apply for registration, submit the plan text and an actuarial valuation report to the registered plans directorate, and demonstrate that the plan is established and will be administered in accordance with the Income Tax Act. The actuarial valuation report, which is prepared by an actuarial consulting firm at the request of the employer, specifies the amounts that the employer is required to contribute to meet the pension benefits promised.
The registered plans directorate reviews the plan text and the actuary's recommendation to ensure that the provisions of the Income Tax Act will be respected and that the contributions made by the employer on the recommendation of the actuary are reasonable. The determination of reasonableness is generally based on average age, average salary, and average years of service, not on gender.
The registered plans directorate also monitors and audits pension plans and other retirement savings vehicles to ensure that they continually comply with the provisions of the Income Tax Act. In addition, the registered plans directorate provides information services for other types of retirement and savings vehicles, including written responses and telephone services.
The directorate also develops and publishes on the Canada Revenue Agency website material intended for plan administrators, actuaries, and practitioners. Other areas within the Canada Revenue Agency provide telephone services, respond to written requests, and publish documents on the website to assist individuals in understanding their tax obligations and entitlements and in complying with the Income Tax Act.
The Canada Revenue Agency website includes specific portions with information for seniors and for individuals about registered retirement savings plans and other registered plans. I have brought some of these publications available on the website to assist you. These documents are: the guide for registered pension plans, which provides information for employers and plan administrators about the registration requirements of the plans; the guide for registered retirement savings plans and other registered plans for retirement for individuals; and the information sheet entitled “Death of an RRSP Annuitant”.
Madam Chair and members of the committee, this concludes our opening remarks. We're ready to respond to your questions.