Basic rules re variable benefit accounts
  2. The following requirements and restrictions are prescribed with respect to the payment of pension benefits that are variable benefits for the purposes of subsection 39.1 (2) of the Act: 1. A member who has received a statement under subsection 44 (1) of the General Regulation that includes the information set out in subsection (1.1) of that section may elect to receive variable benefits from a pension plan by delivering a direction to the administrator to establish a variable benefit account for the retired member. 2. If a variable benefit account is established for a retired member, the entire amount credited to the retired member in his or her defined contribution account shall be transferred to the retired member’s variable benefit account. However, if the pension plan permits a portion of the entire amount credited to the retired member in his or her defined contribution account to be transferred to the retired member’s variable benefit account, the retired member may elect to have a portion of the entire amount transferred to the variable benefit account. 3. An administrator shall make a payment out of a variable benefit account only once in a calendar year, unless the pension plan permits payments out of a variable benefit account more than once in a calendar year. 4. After a retired member or specified beneficiary receives an initial statement under section 3 or 4, as the case may be, the retired member or specified beneficiary must notify the administrator in writing of, i. the amount of income to be paid out of the variable benefit account in respect of the calendar year, subject to the minimum and maximum limits set out in paragraphs 9 and 10, ii. the frequency of the payment, if the pension plan permits payment out of the variable benefit account more than once in a calendar year, and iii. the method of payment. 5. If the retired member does not notify the administrator under paragraph 4 within 120 days after the administrator sent the initial statement under section 3, i. the administrator shall, in the calendar year that includes the 120th day after the initial statement is sent, pay to the retired member once an amount equal to the minimum required to be paid from the variable benefit account under the Income Tax Act (Canada), and ii. the administrator shall continue to pay an amount equal to the minimum required to be paid from the variable benefit account under the Income Tax Act (Canada) in every subsequent calendar year until the retired member gives a notice under paragraph 7. 6. If the specified beneficiary does not notify the administrator under paragraph 4 within 120 days after the administrator sent the initial statement under section 4, i. the administrator shall pay to the specified beneficiary the same amount of income, subject to the minimum and maximum limits set out in paragraphs 9 and 10, in the same frequency as in the calendar year of the retired member’s death, and ii. the administrator shall continue to pay the amount as required by subparagraph i in every subsequent calendar year until the specified beneficiary gives a notice under paragraph 7. 7. After a retired member or specified beneficiary has received an annual statement under section 5 or 6, as the case may be, the retired member or specified beneficiary may, once in a calendar year or more than once in the same calendar year if permitted to do so by the pension plan, notify the administrator in writing of, i. any change to the amount of income to be paid out of the variable benefit account in a calendar year, subject to the minimum and maximum limits set out in paragraphs 9 and 10, ii. any change to the frequency of the payment, if the pension plan permits payment out of the variable benefit account more than once in a calendar year, and iii. any change in the method of payment. 8. If a retired member or specified beneficiary has given the administrator a notice under paragraph 7, the administrator shall continue to pay the same amount of income, in the same frequency and using the same method of payment in accordance with the most recent notice until the retired member or specified beneficiary gives another notice under paragraph 7. 9. The amount of income paid during a calendar year out of a variable benefit account must not be less than the minimum amount required to be paid from the account under the Income Tax Act (Canada). 10. The amount of income paid during a calendar year out of a variable benefit account must not exceed the maximum amount of income that would be permitted under subsection 6 (1), (3) or (4) of Schedule 1.1 to the General Regulation as if the variable benefit account were a life income fund, except if during the calendar year the minimum amount specified by paragraph 9 for the year is greater than the maximum amount of income for the year.