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The Association of Canadian Pension Management is calling on the federal government to implement two measures to assist in identifying deceased pension plan beneficiaries and in recovering overpaid amounts.

In its letter to the department of Finance Canada, the ACPM requested that plan administrators be permitted to recover tax withheld at source through a credit from the Canada Revenue Agency to accommodate repayment by the estate of only the net overpayment amount, as well as providing confirmation of a plan beneficiary’s death to pension plan administrators.

Read: FSRA issues final guidance on missing pension plan members

The letter said in the event of an overpayment made upon the death of a pensioner, current CRA guidelines require the estate to return the gross overpayment amount in order to be made whole, a larger amount than was received by the deceased individual since a portion of the pension overpayment is remitted directly to the CRA as tax withheld at source. In addition, no mechanism currently exists to confirm a plan member’s death directly to the administrator.

“This approach isn’t viable where the overpaid amount is returned to the plan by a party other than the member’s estate, such as a deceased plan member’s spouse where the estate has been closed and isn’t applicable to any overpayment made from a supplementary plan. Recovery of overpaid benefits is a costly and lengthy process for plan administrators and where overpayments are not recovered, the pension fund is negatively impacted.”

Read: Federal court decertifies veterans’ class action for delay on pension benefits

Copyright © 2021 Transcontinental Media G.P. Originally published on benefitscanada.com

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