HomeMy WebLinkAboutCS 06-07
REPORT TO 2'25
EXECUTIVE COMMITTEE
Report Number: CS 06-07
Date: January 8, 2007
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
City Contribution to Elected Officials Registered Retirement
Savings Plan (RRSP)
Recommendation:
1. That Report CS 06-07 from the Director, Corporate Services & Treasurer be
received;
2. That Council approve the amendments to the Council Compensation and
Communications Policy, Section 12 as indicated in this report, effective January 1,
2006; and,
3. That the appropriate City of Pickering officials be authorized to take the necessary
actions to give effect thereto.
Executive Summary: The current Council policy providing for an annual
contribution to an elected officials RRSP contains a potential inequity that should be
corrected. The Recommendations above will make the policy equally applicable in
dollar amount to all Members of Council, regardless of their personal employment
situation.
Financial Implications: There are no financial implications in addition to those
under the existing policy.
Sustainability Implications: The Recommendations are reasonable and will ensure
equitability in the treatment of this matter.
Background: The existing Council Compensation Policy provides, under Section 12,
for the City to match a member's RRSP contribution up to a maximum of 13% of the
member's earned salary. At the time of approving this provision Council did not foresee
a potential conflict with the Income Tax Act in regards to the maximum contribution one
can make. As explained below there is an inequity that needs to be corrected.
Report CS 06-07
v.._"...,_."......"__._...,....._____~_____.>.
January 8, 2007
Page 2
228
Subject: City Contribution to Elected Officials Registered Retirement
Savings Plan (RRSP)
The Income Tax Act sets a contribution limit of 18 percent of earned income up to a
maximum ojf $16,500 for RRSP contribution purposes. If an elected official's only
source of income is the City's compensation then for example, with a total salary and
per diem of $30,197 (2006), the 13 percent maximum equates to a City matching
contribution of $3,925 which would require a total member contribution to his/her RRSP
of $7,850. However, under the 18 percent rule the maximum the member can
contribute is $5,435 ($30,197 x 18%). This rule, by default, becomes the governing
factor thereby limiting the City's matching contribution to $2,718 and preventing the
elected official from receiving the City's maximum matching contribution of $3,718. In
this instance the City's contribution is only 9 percent of earned salary to the member's
RRSP not 113% as is allowed under the Policy. Removal of the City's matching
requirement then makes the contribution a straight 13 percent of earned salary with no
matching provision. It is also recommended that the City's contribution will be directly
deposited into the member's RRSP. All of the foregoing assumes the member has
sufficient contribution room. The member must provide the Treasurer with such
confi rmation.
The current Section of the policy with amendments noted can be found below.
Deletions arE! crossed out and additions are in bold:
"12.a)
b)
A Member may contribute maintain a Registered Retirement Savings
Plan (RRSP), either own or spousal, under Federal legislation to which
the Corporation shall match to contribute a maximum of 13% of the
Member's earned salary each year.
i)
Written confirmation that a member has sufficient contribution
room, as provided by the Canada Revenue Agency on their
notice of assessment, to accommodate the City's contribution
evidence of a contribution by a Momber towards an RRSP as set
out in Section 12(a) shall be provided made to the Treasurer no
later than December 31 st in any given year and the City's
contribution shall be made directly to that RRSP no later than
January 31st of the next calendar year.
ii)
A Member of Council must give evidence to the Treasurer that a
contribution includes both the Membor's portion of the RRSP and
the City's portion. The Member shall then be reimbursed for the
City's portion.
For the 2006/2007 transition only, if the member has already
made the contribution to the RRSP reimbursement may be
made to that member.
ii)
Report CS 06-07
January 8, 2007
Subject: City Contribution to Elected Officials Registered Retirement
Savings Plan (RRSP)
Page 3
227
c) The word "salary" shall mean the annual base salary, prorated for a
Member not holding office for an entire calendar year, of the Mayor and
Councillors and it excludes all taxable benefits with the exception that for
Councillors only, salary shall include the per diem paid under Section 2 of
this policy. The contribution to an RRSP is a taxable benefit regardless of
whether it is paid to the Member of Councilor the financial institution.
d) The City shall make its contribution only in the month of January of the
next calendar year regardless of '.vhen tho Member of Council mado a
contribution, except when a Member of Council ceases to hold office
during the year in which case the contribution may be made earlier."
This change will put all elected officials on the same basis in dollar terms, in regards to
the City's amount of contribution to their individual RRSPs.
Attachments:
Not applicable
Approved I Endorsed By:
<-~p~--"
Gillis A. Paterson
Director, Corporate Services & Treasurer
GAP:vw
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickering City Council 1/
-'/
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