Now that pensioners and employees have confirmed their support for payout from the pension plan surplus the process will take the next crucial step toward distribution.
Early next month the CBC will write to the Office of the Superintendent of Financial Institutions (the regulator) to ask for the release of approximately $130-million dollars from the plan. At the same time a “second notice” will be sent to all contributors advising them of the request. There is no requirement for anyone to reply to the notice but anyone who wishes to do so will be given 30-days from receipt to make comment directly to OSFI.
Assuming no other issues arise, and the regulator approves the distribution there is an additional 40-day hold before the funds are released.
Payments will be made to individuals in a lump sum. For those who have access to RRSP accounts and adequate room the funds can be transferred directly to an RRSP account. For everyone else the funds are subject to a minimum tax withholding. For amounts of up to $5000 the withholding is 10%, for amounts of more than $5000 up to $15,000 it’s 20% and above $15,000 it’s 30%.
The payouts will be made as a percentage of individual lifetime pension contributions. That percentage is yet to be determined although we expect to know what it is early next month. Contributors will be notified of the amount they are to receive.
IMPORTANT NOTES: All of this is subject to approval of the regulator. We may also be doing the process all over again next year. The current payout is based upon surpluses generated in 2021 and 2022. There is every indication that we will have another surplus that qualifies for distribution at the end of this year.
Keep checking our website and FAQ for updates.