Yes, points from a cancelled reservation will be returned to your account. If the reservation was cancelled more than 30 days before arrival, any current points may be banked into the next Use Year based on normal banking deadlines.
If the points had already been banked- they cannot be banked again and will expire at the end of the current Use Year unless used. If they were borrowed opints - they must also be used since they cannot be banked.
If you cancel 30 days or less before arrival, the points are returned to your account but they will be in "Holding Account" status which means they may be used only for reservations made within 60 days of arrival. They will expire at the end of the current Use Year.