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Ah radar-070912
 

Ah radar-070912

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    Ah radar-070912 Ah radar-070912 Document Transcript

    • Radar July 9, 2012The Aon Hewitt Radar is a weekly summary of regulatory developments and trends related to retirementand financial management, employee health benefits, and other HR issues in Canada. It highlights issuesthat may require employers to take action to comply with new rules or review existing plans.Health & Benefits Generic Price Reductions in AlbertaBill C-38: Budget Implementation Act and Nova ScotiaReceives Royal Assent Effective July 1, 2012, the government of Alberta reduced what it pays for generic drugs, from 45 per cent of the costBill C-38, the Jobs, Growth and Long-term Prosperity Act, of name brand drugs to 35 per cent. The Transitionhas received Royal Assent and amends the: Allowance (introduced in 2010 to provide an additional Canada Labour Code to require employers that payment on dispensing fees for prescriptions under $75) is provide benefits under a long-term disability plan to $2 in 2011/12, and will decrease to $1 in 2012/13. insure their plans, subject to certain exceptions; Excise Tax Act to expand the lists of GST/HST zero- Also effective July 1, 2012, the price cap on generic rated medical and assistive devices and non- medications, based on the price of equivalent brand drugs prescription drugs used to treat life-threatening under the Nova Scotia Pharmacare programs, was diseases, and to exempt certain pharmacists reduced from 40 to 35 per cent. professional services from the GST/HST; Food and Drugs Act to give the Minister of Health the power to establish a list that sets out prescription Increased Co-payment Rates in drugs or classes of prescription drugs that can be sold Ontario to a consumer only under a prescription; Income Tax Act to expand the list of eligible expenses Regulations under the Health Insurance Act and the Long- under the Medical Expense Tax Credit to include Term Care Homes Act have been amended to increase blood coagulation monitors and their disposable the co-payment rates that chronic care patients and long- peripherals; term care home residents contribute toward the cost of Federal-Provincial Fiscal Arrangement Act to adjust meals and accommodation, from $53.23 to $55.04 per Canadas equalization framework, including day. In addition, long-term care home residents admitted implementation of the total transfer protection for the to a newer facility who are moving into preferred current fiscal year; and accommodations will pay an updated premium rate - an Canada Health Act to include members of the Royal increase from $8 to $9 per day for semi-private, and from Canadian Mounted Police within the definition of $18 to $19.75 per day for a private room. "insured person".Aon Hewitt | © 2012 Aon Hewitt Inc. All Rights Reserved.
    • The True Cost of Health Care As introduced on first reading, the Bill had contained provisions to amend the Income Tax Act to introduce aAccording to new research from the School for Public temporary measure allowing certain family members untilPolicy, health care is financed by a wide variety of taxes, the end of 2016 to open an RDSP for an adult who mightby inter-governmental transfers, by borrowing against not be able to enter into a contract. However, thisfuture tax revenues, and by drawing down savings. temporary measure does not appear in the final version ofHowever, when provincial health spending is financed in Bill C-38 that received Royal Assent.ways other than taxation, it grows two to three times morequickly than it would have otherwise. Between 2001 and Accounting Developments2008, these distortions amounted to $6.75 billion at thenational level. Therefore, when Canadians are clear about The IASB has issued Consolidated Financial Statements,the true cost of health care, they more effectively play the Joint Arrangements and Disclosure of Interests in Othertraditional role of consumers by guarding against waste Entities: Transition Guidance (Amendments to IFRS 10,and inefficiency and so contribute to a more efficient and 11 and 12). Their effective date is annual periodseffective publicly funded health care system. beginning on or after January 1, 2013, which is aligned with the effective date of IFRS 10, 11 and 12, and clarify the transition guidance in IFRS 10. Additional transition relief is provided in IFRS 10, 11 and12, limiting thePensions & Investments requirement to provide adjusted comparative information to only the preceding comparative period. For disclosuresBill C-38: Budget Implementation Act related to unconsolidated structured entities, the amendments will remove the requirement to presentReceives Royal Assent comparative information for periods before IFRS 12 is firstBill C-38, the Jobs, Growth and Long-term Prosperity Act, applied.has received Royal Assent, and amends the: Old Age Security Act to provide the Minister of Human The CICA has advised that Paragraph 4600.32(a)(ii) and Resources and Skills Development authority to waive an Appendix have been added to Section 4600 Pension the requirement for an application for OAS benefits for Plans, to clarify that the fair value disclosures in many eligible seniors, to gradually increase the age of paragraphs 27-27B of IFRS 7 Financial Instruments: eligibility for the OAS Pension, the GIS, the Allowance Disclosures that were deleted as a consequence of and the Allowance for the Survivor, and to allow incorporating IFRS 13 Fair Value Measurement into Part I individuals to voluntarily defer their OAS Pension up of the CICA Handbook will continue to be required for to five years past the age of eligibility in exchange for pension plans that have adopted the measurement a higher, actuarially adjusted pension; requirements of IFRS 13. Pension Benefits Standards Act, 1985 to give retroactive effect to subsections 39(2) and (3) which New Pension Portability Provisions deal with the applicability of regulations to pension plans or to one or more classes of pension plans; for Members of the RCMP various statutes to prohibit the issuance of life The Royal Canadian Mounted Police Superannuation annuity-like products by entities other than insurance Regulations have been amended, effective September 1, companies; 2012, to expand existing election for prior service Department of Human Resources and Skills opportunities for members of the Royal Canadian Mounted Development Act to add provisions relating to the Police Pension Plan, and support the introduction of protection of personal information obtained in the pension transfer agreements. The changes modernize the course of administering or enforcing the Canada RCMP Plan and introduce pension choices currently Pension Plan and the Old Age Security Act, and so available under the federal Public Service Pension Plan that appeals will be heard by the Social Security and many other Canadian plans. For example, a member Tribunal; and may improve the value of prior service by having his or her Excise Tax Act to facilitate the Government of British future pension benefit calculated based on higher Columbias decision to exit the HST framework. earnings, obtain or improve ancillary benefits such as survivor benefits, or qualify for retirement at an earlier age.Aon Hewitt | © 2012 Aon Hewitt Inc. All Rights Reserved.
    • To support full implementation of these new pension expectancy would increase private DB pension liabilitiesportability provisions, the Retirement Compensation by as much as $84 billion.Arrangements Regulations, No. 1 (which provideadditional retirement benefits for certain members of theRCMP Plan) must also be amended to provide appropriateaccommodations with respect to transfer value pensionbenefits, prescribe rules for elections to count prior TRC / Otherservice, and implement pension transfer agreements withoutside eligible employers. Bill C-38: Budget Implementation ActFinally, amendments to the Pension Benefits Division Receives Royal AssentRegulations ensure that any amount paid out of the RCMP Bill C-38, the Jobs, Growth and Long-term Prosperity Act,Plan to another employer pursuant to a pension transfer has received Royal Assent, and amends the Immigrationagreement, or any amount paid to the plan member as a and Refugee Protection Act and other statutes toconsequence of such a transfer, is reduced by the authorize regulatory requirements to be imposed onactuarial value of the reduction that would otherwise have employers respecting authorizations to work in Canada. Itbeen made to the members pension benefit at the time of also repeals the Fair Wages and Hours of Labour Act,retirement because of a payment under the Pension which governs construction contracts involving theBenefits Division Act in respect of a spouse or common- Government of Canada, and amends the Employmentlaw partner. Equity Act to remove requirements that are specific to the Federal Contractors Program for Employment Equity.Public Sector Amendments inQuebec, Public Hearings on Bill 80 As well, Bill C-38 amends the Employment Insurance Act and the Department of Human Resources and SkillsEffective July 1, 2012, the Regulation under the Act Development Act to:respecting the Pension Plan of Management Personnel - permit the determination of benefits by reference to ahas been amended to revise the tariffs applicable to pay persons highest earnings in a given number of weeks;the cost of redemption of service for periods of absence - authorize regulations respecting what constitutes suitablewithout pay under sections 38 and 118 of the Act employment;respecting the Pension Plan of Management Personnel, - remove the requirement that a consent to deduction be inand for service accumulated by an employee hired as a writing;casual employee under section 146 of the Act. - provide a limitation period within which certain repayments of overpayments need to be deducted andBeginning September 11, 2012, the government of paid, and to clarify the provisions respecting the refund ofQuebec will hold public hearings as part of its general premiums to self-employed persons;consultation on Bill 80, An Act respecting voluntary - require the EI premium rate to be set on a seven-yearretirement savings plans. Organizations wishing to break-even basis once the EI Operating Account returnsparticipate must submit a brief to the clerk of the to balance; andCommittee on Labour and the Economy no later than - have EI appeals heard by the Social Security Tribunal.August 30, 2012. EI Pilot ProjectsImpact of Longevity Improvements on In its 2012 Budget, the federal government alsoUS Corporate Plans announced plans to implement, effective April 7, 2013, aThe IMF has released a working paper which provides the new permanent approach to calculating EI benefit ratesfirst empirical assessment of the impact of life expectancy based on the regional availability of work (Variable Bestassumptions on the liabilities of private US defined benefit Weeks). In the interim, current EI rules in effect across thepension plan, according to which each additional year of country will continue to apply. As such, amendments tolife expectancy increases pension liabilities by 3 to 4 per the Employment Insurance Regulations will extend Pilotcent. This effect is not only statistically highly significant Project No. 16 (Best 14 Weeks) until April 6, 2013. Thebut also economically: each year of additional life extension is designed to test claimants behavioral changes in anticipation of Variable Best Weeks and bridgeAon Hewitt | © 2012 Aon Hewitt Inc. All Rights Reserved.
    • the gap until it comes into force. Minimal impact onemployers is expected.In addition, the amendments introduce a new WorkingWhile on Claim (WWC) national pilot project for threeyears, from August 5, 2012 to August 1, 2015. PilotProject No. 18 will reduce claimants benefits by 50 percent of their earnings while on claim starting with the firstdollar earned, with the goal of ensuring they benefit fromworking more. The government expects claimants toaccept more available work, resulting in increasedearnings and greater attachment to the labour market.Take Action | If you would like further information on any of thesetopics, please contact Aon Hewitt at Infocan@hewitt.com.The Aon Hewitt Radar is provided for information purposes only and should not be relied on as legal advice oropinion.About Aon HewittAon Hewitt is the global leader in human capital consulting and outsourcing solutions. The company partners withorganizations to solve their most complex benefits, talent and related financial challenges, and improve businessperformance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital,retirement, investment management, health care, compensation and talent management strategies. With morethan 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and theiremployees. For more information on Aon Hewitt, please visit www.aonhewitt.com.Aon Hewitt | © 2012 Aon Hewitt Inc. All Rights Reserved.