Income Tax Regulations — 8504
8504 (1) For the purposes of subparagraph 8502(c)(i), the following conditions are applicable in respect of the lifetime retirement benefits provided to a member under a defined benefit provision of a pension plan: (a) the amount (expressed on an annualized basis) of lifetime retirement benefits payable to the member for the calendar year (in this paragraph referred to as the “year of commencement”) in which the lifetime retirement benefits commence to be paid does not exceed the aggregate of (i) the aggregate of all amounts each of which is, in respect of a calendar year after 1990 (in this paragraph referred to as a “specified year”) in which the member was, at any time, connected with an employer who participated in the plan in the year for the benefit of the member, the lesser of (A) the amount determined by the formula .02 × A × (B / C) where A is the aggregate of all amounts each of which is the member’s compensation for the specified year from an employer who participated under the provision in the year for the benefit of the member, B is the greatest of all amounts each of which is the average wage for a calendar year not before the specified year and not after the year of commencement, and C is the average wage for the specified year, and (B) the amount determined by the formula D × E where D is the defined benefit limit for the year of commencement, and E is the fraction of the specified year that is pensionable service of the member under the provision, and (ii) the amount determined by the formula F × G where F is the lesser of (A) 2 per cent of the member’s highest average compensation (computed under subsection (2)) for the purpose of the provision, indexed to the year of commencement, and (B) the defined benefit limit for the year of commencement, and G is the aggregate of all amounts each of which is the duration (measured in years, including any fraction of a year) of a period that is pensionable service of the member under the provision and no part of which is in a specified year; and (b) the amount of lifetime retirement benefits payable to the member for a particular calendar year after the year in which the lifetime retirement benefits commence to be paid does not exceed the product of (i) the aggregate of the amounts determined under subparagraphs (a)(i) and (ii), and (ii) the greatest of all amounts each of which is the ratio of (A) the average Consumer Price Index for a calendar year not earlier than the calendar year in which the lifetime retirement benefits commence to be paid and not later than the particular year to (B) the average Consumer Price Index for the calendar year in which the lifetime retirement benefits commence to be paid. Highest Average Compensation (2) For the purposes of subsection (1) and paragraph 8505(3)(d), the highest average compensation of a member of a pension plan for the purpose of a defined benefit provision of the plan, indexed to the calendar year (in this subsection referred to as the “year of commencement”) in which the member’s lifetime retirement benefits under the provision commence to be paid, is, (a) in the case of a member who has been employed for 3 non-overlapping periods of 12 consecutive months each by employers who participated under the provision for the benefit of the member, 1/3 of the greatest of all amounts each of which is the aggregate of the member’s total indexed compensation for the purpose of the provision for each of the 36 months in 3 such periods throughout which the member was so employed, and (b) in any other case, the amount determined by the formula 12 × (H / I) where H is the aggregate of all amounts each of which is the member’s total indexed compensation for the purpose of the provision for a month throughout which the member was employed by an employer who participated under the provision for the benefit of the member, and I is the number of months for which total indexed compensation is included in the amount determined for H, and, fo