Up to Speed? Rules Change for RPP and Salary Deferral Leaves

Walter Harder

On July 2, the government released draft legislation to temporarily change some of the rules around salary deferral leave and Registered Pension Plans. Here’s what you need to know:

Salary Deferral Leave Plans

For the period March 15, 2020 to April 30, 2021, an employee on leave may suspend that leave to return to do essential-services work  and then return to their leave. In those cases, the two leave periods will be considered to be a consecutive leave of absence.

If the employee resumes their leave in 2020, the deferred salary must be paid by the end of 2021.  If they resume their leave between January 1, and April 30, 2021, their deferred salary must be paid by the end of 2022.

Employees who were scheduled to start their leave between March 15, 2020 and April 30, 2021 but were unable to do so, can extend their leave by up to 14 months even if the delay makes the deferral period longer than six years.

Registered Pension Plans

Defined contribution catch-up contributions by both the employee and employer may be made in 2021 until April 30. When that happens they  will be treated as if they were made in 2020.

More good news: RPPs will be allowed to recognize a full service during 2020 even if the employee has a pay reduction that is not commensurate with a reduction in work hours, and even if they have not been with the employer for thirty-six months.

In order to ensure liquidity of a registered pension plan with reduced contributions being made in 2020, the plans will be allowed to borrow after April 2020 so long as the loans are repaid by April 30, 2021.

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