Pension Plan for Salaried Employees [Restated 1992] (43K)
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PRUDENTIAL STEEL LIMITED
PENSION PLAN FOR SALARIED EMPLOYEES
(Restated effective January 1, 1992 and including amendments to January 1, 1998)
Certified Correct Copy
Administrator
Prepared by:
SEDGWICK NOBLE LOWNDES
JULY, 1998
FOREWORD
The Prudential Steel Limited Pension Plan for Salaried Employees (the "Plan")
was established by Prudential Steel Limited (the "Company") on January 1, 1974
for the purpose of providing pensions to its salaried employees. The Plan is
amended and restated to incorporate:
(a) amendments to date;
(b) changes required under the Income Tax Act effective January 1, 1992;
TABLE OF CONTENTS
Article Page No.
Definitions ...........................................................1
ELIGIBILITY AND MEMBERSHIP..................................................6
CONTRIBUTIONS .........................................................7
TRANSFER OF EMPLOYEES.......................................................8
RETIREMENT DATES .........................................................9
RETIREMENT PENSION .........................................................10
NORMAL AND OPTIONAL FORMS OF RETIREMENT PENSION.............................12
COMMUTATION OF VESTED PENSION...............................................13
VESTING ................................................................14
DEATH BENEFITS ............................................................15
BENEFITS ON TERMINATION OF EMPLOYMENT.......................................16
MARRIAGE BREAKDOWN .........................................................17
FUNDING AND INVESTMENT......................................................18
ADMINISTRATION .............................................................19
EXPLANATION AND DISCLOSURE..................................................21
AMENDMENT OR TERMINATION OF THE PLAN........................................22
GENERAL
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DEFINITIONS
(continued)
Definitions The following words and phrases, when used in the Plan, shall have
the following meanings unless the context clearly indicates otherwise:
"Act" means Employment Pension Plans Act, of Alberta and regulations thereunder,
both as amended from time to time.
"Actuarial Equivalent" means a pension of an equivalent value where such
equivalent is established using actuarial tables, actuarial assumptions and
methodology as may be selected by the Company on the recommendation of the
Actuary, subject to the requirements of the Act and the Income Tax Act.
"Actuary" means a Fellow of the Canadian Institute of Actuaries (who may be a
Member of a firm of consulting actuaries) appointed by the Company to render
actuarial services under the Plan.
"Administrator" means the person, or persons, appointed under Section 14.01.
"Approved Leave" meansleaves of absence authorized by the Company in writing,
periods of Disability
"Beneficiary" means the person who, subject to the requirements of the Act, has
been legally designated by a Member to receive any death benefits payable under
the Plan. If, at the time when any payment is to be made to a Beneficiary, there
is no Beneficiary living, "Beneficiary" shall mean the estate of the Member.
"Commuted Value" means, in relation to benefits that a person has a present or
future entitlement to receive a lump sum amount which is the actuarial present
value of those benefits computed using rates of interest, the actuarial tables
and other assumptions as may be adopted by the Company on the recommendation of
the Actuary, subject to the Act and the Income Tax Act.
"Company" means Prudential Steel Limited and any affiliated or associated
company which may be designated as a participating employer by the Company and
which has agreed to participate in the Plan. Where a reference in the Plan is
made to any action to be taken, consent, approval or opinion to be given,
"Company" means Prudential Steel Limited, acting through the board of directors
of Prudential Steel Limited or any person authorized by that board of directors
for purposes of the Plan.
"Continuous Service" means continuous employment (i) in the pipe producing
facilities and offices of the Company or (ii) for such periods and with such
corporations or other businesses, being subsidiaries, affiliates or associates
of the Company, as the Company shall designate for such person. Continuous
Service means service rendered in Canada.
Continuous Service includes Approved Leave and Foreign Service. "Credited
Service" means completed years and months of Continuous Service, subject to the
limitations of Regulation 8507 of the Income Tax Act. For a Member who is
employed on a less than full-time basis or for less than a complete Plan Year,
"Credited Service" will be determined for each such Plan Year by pro-rating the
Member's period of Credited Service, as defined hereunder, in accordance with
the ratio of such Member's actual hours worked during such Plan Year to the
hours regularly scheduled to be worked by a full-time Member during such Plan
Year.
"Early Retirement Date" means the date described in Section 5.02.
"Earnings" means the remuneration paid to a Member by the Company or Foreign
Employer in a fiscal year and includes:
regular wages and salaries shift overtime, Sunday and statutory holiday premium;
and statutory holiday allowances.
For Management Members, Earnings for any year shall include 50% of any bonus
paid to such Member in such year under the bonus plan established for Employees
under the management group of the Company. For an Employee who is employed on a
less than full-time basis or for less than a complete Plan Year the Employee's
earnings will be annualized by multiplying the Employee's actual earnings, as
adjusted hereunder, by the ratio of the hours regularly scheduled to be worked
by a full-time Employee in a Plan Year to the Employee's actual hours worked
during that Plan Year. "Effective Date" means January 1, 1974.
"Employee" means any person who is regularly employed by the Company and who is
paid on a salaried basis but does not include any person employed on an
hourly-rated basis. A person shall be deemed to be regularly employed if he is
on the payroll of the Company or is off the payroll of the Company during
periods Approved Leave or Foreign Service.
"Final Average Earnings" means the average of a Member's Earnings during the
five years of Credited Service within the ten year period preceding the Member's
retirement, death or termination of Continuous Service in which the highest
average is attained. If a Member has not completed 5 years of Credited Service,
Final Average Earnings will be based on the average of the Member's earnings
during the Member's years of Credited Service.
"Foreign Employer" means any affiliated or associated company of the Company
which is not designated as a participating employer by the Company and is not
resident in Canada.
"Foreign Service" means continuous employment with a Foreign Employer. A Member
rendering this service must have been or is a resident in Canada. Foreign
Service shall be limited to the first three years of the Member's employment
outside of Canada. If the Member returns to Canada and then again becomes
employed outside of Canada, Foreign Service shall be limited to a further three
year limit as though the Member had not been previously employed outside of
Canada. This renewal of the three year limit applies only if, while in Canada,
the Member renders services for a period of at least 12 months under an
employment contract with the Company. Foreign Service shall be granted on a
current service basis only and only if pension benefits are not provided to the
Member under another arrangement sponsored by the Foreign Employer.
"Former Member" means a person who has ceased to be a Member, but who retains an
entitlement to a Vested Pension under the Plan.
"Fund" means the fund established under the terms of the Plan which provides for
the accumulation of contributions, and for the payment of certain benefits, as
herein provided.
"Funding Agent" means a trust company, insurance company authorized to carry on
a life insurance business in Canada or a group of at least 3 individuals
resident in Canada, at least one of whom is independent of the Company, and
includes any combination thereof appointed by the Company from time to time to
hold, administer and invest the Fund.
"Hourly-Rated Plan" means the Prudential Steel Limited Pension Plan for
Hourly-Rated Employees.
"Income Tax Act" means the Income Tax Act (Canada) and the Regulations
thereunder, as amended or replaced from time to time.
"Management Member" means a Member who is or has at any time during the Member's
employment with the Company been designated by the Company as being in the
management group of the Company.
"Member" means an Employee who has enrolled in the Plan in accordance with
Article 2 and whose Membership has not ceased by reason of termination,
retirement or death.
"Normal Retirement Date" means the date described in Section 5.01.
"Pensioner" means a person who was a Member or Former Member and who has
commenced to receive a pension payable from the Plan.
"Plan" means Prudential Steel Limited Pension Plan for Salaried Employees, as
set out on these and the following pages and as amended from time to time.
"Plan Year" means a calendar year.
"Postponed Retirement Date" means the date described in Section 5.04.
"Prescribed Savings Arrangement" means:a locked-in retirement account; a life
income fund; or any other retirement savings fund that complies with the Act and
registered pursuant to the Income Tax Act.
"Salaried Member" means a Member who is not a Management Member.
"Spouse" means a person of the opposite sex who:
is married to the Member or Former Member and who has not been living separate
and apart from the Member or Former Member; or
has been living with the Member or Former Member for 3 years and held out by the
Member or Former Member in the community in which they live as the Member's or
Former Member's consort.
"Surplus" means the excess of the value of the assets of the Fund over the value
of the liabilities of the Plan as calculated by the Actuary, in accordance with
the Act, at a specific point in time.
"Unreduced Early Retirement Date" means the date described in Section 5.03.
"Vested Pension" means the deferred pension calculated in accordance with
Article 6, to which a Member is entitled in accordance with Article 9 arising
from Credited Service.
"YMPE" means the year's maximum pensionable earnings as defined under the Canada
Pension Plan.
Unless the context clearly requires otherwise, words importing the masculine
shall include the feminine and words importing the singular shall include the
plural and vice versa.
ELIGIBILITY AND MEMBERSHIP
Existing Members
Each Employee who was a Member of the Plan as of December 31, 1991 shall
continue to be a Member. Eligibility for Membership
Each Employee shall become a Member of the Plan on the first day of the month
next following the month in which he has completed twelve months of Continuous
Service and is actively at work. Enrollment in the Plan
To enroll as a Member, an Employee must complete and sign the form, or forms,
prescribed for that purpose by the Company. Re-Employment of Employees
If a former Employee is subsequently re-employed by the Company, such person
shall be treated as a new employee for all purposes of the Plan and shall enroll
in the Plan upon fulfilling the eligibility requirements described in this
Article 2. If a Pensioner is re-employed, the Pensioner's pension payments will
continue and the Pensioner shall not accrue benefits under this Plan for the
period of re-employment. Changes in employers as between the Company and its
subsidiary shall be deemed not to be a termination of employment for the
purposes of the Plan. However, this Section 2.04 shall not be construed as
alienating any previously accrued or granted entitlements.
CONTRIBUTIONS
Member Required Contributions
No contributions are required of Members.
Company Contributions
The Company shall, from time to time, make contributions for deposit to the Plan
of such total amount as, based on the advice of an Actuary, is required to
provide the normal cost of the Members' current accruals in accordance with the
provisions of the Plan, after taking into account the assets of the Fund and all
other relevant factors, and to provide for the proper amortization of any
unfunded liability or experience deficiency with respect to previous accruals,
all pursuant to the requirements of the Act. Company contributions in a year, if
any, shall not exceed amounts permitted as "eligible contributions" as defined
under the Income Tax Act. If at any time while the Plan continues in existence,
the Actuary certifies that there is a Surplus in the Fund, such Surplus, or any
portion of Surplus, may be used by the Company to reduce its contribution
obligations under this Section 3.02, subject to any limitations prescribed under
the Act and the Income Tax Act. Remittance of Contributions
All Company contributions, if any, due in a Plan Year shall be remitted into the
Fund each within 30 days following the end of the quarter in respect of which
that contribution is due.
TRANSFER OF EMPLOYEES
Transfer from the Plan
A Member who transfers to hourly-rated employment shall be enrolled in the
Hourly-Rated Plan as of the date of transfer. Any benefit paid from the
Hourly-Rated Plan shall be calculated based on the Member's Credited Service
from the date of transfer. The Member's Continuous Service while on salaried
status shall be deemed to be Continuous Service for vesting of benefits in the
Hourly-Rated Plan. In no event shall there be any duplication of benefits for a
Member between this Plan and the Hourly-Rated Plan. Notwithstanding the above,
benefits accrued based on Credited Service and Final Average Earnings to the
date of transfer shall not be reduced. Transfer to the Plan
If a Member is transferred from hourly to salaried status for less than 6
months, the Member's accrual of benefits for that period will be under the
Hourly-Rated Plan and not under this Plan.
If a Member is transferred from hourly to salaried status for more than 6 months
but less than 2 years, the Member's benefit accruals under the Hourly-Rated Plan
shall cease during the time in which the Member had a salaried status. All
benefits accrued under the Hourly-Rated Plan, to the date of such transfer shall
remain to the Member's credit until retirement, termination or death, at which
time the appropriate provisions of the Hourly-Rated Plan shall apply. The
Member's benefit accruals during the Member's salaried status will be covered
under the provisions of this Plan.
If a Member is transferred from hourly to salaried status for more than 2 years,
the Member will cease to be a member of the Hourly-Rated Plan. The assets equal
to the going-concern actuarial liability with respect to the benefits for such
member accrued under the Hourly-Rated Plan to the date of transfer, as
determined by the Actuary, will be transferred to the Plan.
RETIREMENT DATES
Normal Retirement Date
The Normal Retirement Date under the Plan shall be the last day of the month
during which the Member attains age 65. On the Normal Retirement date, the
Member shall retire from the service of the Company unless the Company may wish
him to continue in its service and he consents to do so. Early Retirement Date
The Early Retirement Date under the Plan shall be the last day of any month
within 10 years preceding the Normal Retirement Date. Unreduced Early Retirement
Date
The Unreduced Early Retirement Date under the Plan shall be the last day of any
month preceding the Normal Retirement Date and shall be the earlier date after
which the Member:
attains age 55 and completes 30 years of Credited Service; or
attains age 62.
Postponed Retirement Date
If a Member remains in Continuous Service after the Normal Retirement Date, such
Member may elect to postpone retirement until the end of the calendar year in
which the Member attains age 69. The Postponed Retirement Date shall be the last
day of the month in which the Member elects to retire.
RETIREMENT PENSION
Normal Retirement Pension
A Member who retires on the Normal Retirement Date shall receive a monthly
pension equal to the sum of: For Salaried Members 0.70% of the Member's Final
Average Earnings up to the YMPE multiplied by the Member's Credited Service.
plus 1.65% of the Member's Final Average Earnings above the YMPE multiplied by
the Member's Credited Service. For Management Members 0.95% of the Member's
Final Average Earnings up to the YMPE multiplied by the Member's Credited
Service plus 1.90% of the Member's Final Average Earnings above the YMPE
multiplied by the Member's Credited Service. Early Retirement Pension
A Member who retires on an Early Retirement Date in accordance with Section 5.02
shall receive an annual pension determined in accordance with Section 6.01
reduced by 1/2 of 1% for each month that the Early Retirement Date precedes
the Member's Unreduced Early Retirement Date. Bridge Benefit
Member who retires early in accordance with Section 5.02 shall receive a bridge
benefit commencing on the Member's Early Retirement Date. This bridge benefit
shall be equal to: 0.95% of the Member's Final Average Earnings up to the YMPE
multiplied by the Members Credited Service not exceeding 40 years, reduced by
1/2 of 1 % for each completed calendar month by which the Early Retirement Date
precedes the Unreduced Early Retirement Date. This reduction shall not apply if
the Member has attained age 55 and completed 30 years of Credited Service. The
last bridge benefit payment shall be made on the earlier of the first of the
month preceding the Member's Normal Retirement Date or the first of the month
preceding or coinciding with the death of the Member. In no event shall the
bridge benefit exceed the amount of the maximum Canada Pension Plan and Old Age
Security benefits to which the Member would have been entitled had the Member
retired at his Normal Retirement Date, reduced where the Member has not attained
age 60, by 1/4 of 1 per cent for each month between the Member's Early Retire-
ment Date and the date on which the Member would attain age 60 and 10% for each
year that the Member's Continuous Service is less than 10. Ad Hoc Supplements
Supplementary retirement income benefits in recognition of increases in the cost
of living shall be paid to Pensioners in such amounts, at such times, commencing
on such dates, for such periods and subject to such conditions, limitations and
other provisions as are from time to time set out in a schedule or schedules to
the Plan added with the authority of a resolution of the board of directors of
the Company. Any supplementary relevant income benefits shall comply with the
requirements of the Act and the Income tax Act. Maximum Lifetime Retirement
Benefits
Notwithstanding any other provisions of this Plan to the contrary and subject to
Section 6.05(b), the pension payable to a Member under the Plan, including any
pension payable to a Member's Spouse as a result of a marriage breakdown in the
year in which the pension commences to be paid shall not exceed the lesser of
(1) and (2) as follows:
$1,722.22 multiplied by the Member's years of Credited Service, excluding that
portion of the Member's pre-1992 Credited Service in excess of 35 years; and
2% of the Member's highest average compensation (as defined in the Income Tax
Act) in any 3 non-overlapping periods of 12 consecutive months multiplied by the
Member's years of Credited Service excluding that portion of the Member's
pre-1992 Credited Service in excess of 35 years.
The pension payable under Section 6.02 in co-ordination with the benefit payable
under Section 6.03 shall not exceed (1) plus (2) as follows:
the maximum pension described in Section 6.05(a); plus
1/35th of the maximum benefit payable under the Canada Pension Plan (determined
at the Member's retirement date as if the Member had attained age 65) multiplied
by the Member's years of Credited Service not exceeding 35 years.
NORMAL AND OPTIONAL FORMS OF RETIREMENT PENSION
Normal Form
The normal form of pension payable to a Member under the Plan shall consist of
monthly payments, commencing as specified under Section 17.11 and continuing for
the lifetime of the Member with a guarantee of 60 monthly payments in any event.
Mandatory Joint and Survivor Pension
Subject to Section 7.03, for a Member who has a Spouse on retirement, the
mandatory form of pension shall be a joint and survivor annuity that is the
Actuarial Equivalent of the pension described in Section 7.01, payable in equal
monthly amounts in accordance with Section 17.11 and continuing for the lifetime
of the Member, with 60% of the monthly pension continuing to the Spouse on the
Member's death for the Spouse's lifetime.
Waiver of Joint and Survivor
A Spouse may elect not to receive the joint and survivor pension described in
Section 7.02 by executing a written waiver in the manner and form prescribed by
the Act.
Optional Forms of Pension
Subject to Section 7.03, if applicable, a Member may elect prior to retirement
to receive the normal form of pension in an optional form that is the Actuarial
Equivalent. However, the amount of pension payable under the optional form
elected by the Member shall not exceed the amount of pension payable under the
normal form. The Member may elect one of the following optional forms:
Life Annuity - without guarantee
This option provides an annual pension, payable for the lifetime of the Member
in equal monthly amounts.
Life Annuity - guarantee for 10 or 15 years
This option provides an annual pension, payable for the lifetime of the Member
in equal monthly amounts, with a guarantee of 10 or 15 years, as elected by the
Member.
Joint and Survivor Life Annuity
This option provides an annual pension, payable in equal monthly amounts, for
the lifetime of the Member, with 100% of that monthly pension continuing on the
death of the Member to the Member's Spouse.
Commutation of Small Pensions
Notwithstanding any provision in the Plan to the contrary, if at termination or
retirement the amount of a Member's annualized Vested Pension payable from
Normal Retirement Date is not more than 2% of the YMPE or the Commuted Value is
not more than 4% of the YMPE, the Company, in lieu of making periodic pension
payments to the Member, may pay the Commuted Value of such pension, in complete
discharge of all obligations of the Plan, to the Member in a cash lump sum.
VESTING
Vesting
A Member shall become entitled to a Vested Pension upon completing 5 years of
Continuous Service.
Vesting on Normal Retirement Date
A Member who attains the Normal Retirement Date while in the Continuous Service
of the Company shall be fully vested in the pension accrued to the Member's
credit during such period of Continuous Service since the Member's most recent
date of commencement of employment with the Company.
DEATH BENEFITS
Pre-Retirement Death Benefits
Not Vested
If a Member dies before the Member's retirement and the Member is not vested in
accordance with Section 9.01, no death benefit is payable under the Plan.
(a) Vested
No Spouse
If a Member dies before the Member's retirement and the Member is vested in
accordance with Section 9.01 and is not survived by a Spouse, the death benefit
payable to the Beneficiary in a lump sum payment under the Plan is equal to 60%
of the Commuted Value of the Member's accrued pension calculated according to
the formula in Section 6.01.
(1) With Spouse
If a Member dies before the Member's retirement and the Member is vested in
accordance with Section 9.01 and is survived by a Spouse, the death benefit
payable under the plan is equal to the greater of (A) and (B) as follows: 60% of
the Commuted Value of the Member's accrued pension had he terminated his
membership immediately before his death; and
if the Member had at least 10 years of Continuous Service with the Company, the
Commuted Value of the pension equal to 50% of the pension that would have been
paid to the Member as if the Member had retired the day before his death and had
no reduction for early retirement prior to age 65.
Spousal Portability Options
The surviving Spouse may elect to receive the benefit described in Section
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