Pension and retirement security issues are a hot topic right now across Canada. There are seven consultations and bills we are anxiously watching both federally and in the provinces of Ontario, Manitoba, Alberta, and Nova Scotia.
1. Enhancing Retirement Security for Canadians
In November 2018, the Canadian government launched consultations inviting Canadians to share their thoughts on enhancing retirement security, particularly for Canadians with workplace pension plans.
Possible options to address retirement security issues include:
- Pension, corporate governance and insolvency policies.
- Measures to help ensure that employers maintain well-funded pension plans.
- Restrictions on corporate behaviour to better align corporate decision-making with pensioner and employee interests.
- Increased transparency and fairness in insolvency proceedings through increasing information and the opportunity for pensioners and employees to participate in proceedings at critical stages.
The consultations closed on December 21, 2018. Since the consultations, the government amended the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) for corporations, with the goal of increased transparency, fairness, and accessibility for pensioners.
The amendments took effect November 1, 2019 and include:
- Changes to the statutory introduction of the duty of good faith insolvency proceedings (CCAA and BIA).
- Greater protections for intellectual property users (CCAA and BIA).
- Expansion of director liability (BIA).
- Limitation of relief in initial applications under the CCAA (CCAA).
- Disclosure of economic interests (CCAA).
We are still waiting for additional announcements and legislative proposals.
2. Ontario Proposed Funding Rules for Multi-Employer Pension Plans that Offer Target Benefits
On April 4, 2018, the Ontario government released a document, Target Benefit Multi-Employer Pension Plans: Description of Proposed Funding Framework, describing proposed regulations related to the funding framework for eligible multi-employer pension plans that provide target benefits (TB MEPPs), announced by the government on June 29, 2017.
The document includes:
- Descriptions of the new going concern rules, including how the provision for adverse deviations will be determined and applied.
- Funding rules for benefit improvements.
- The contribution sufficiency test.
- The new basis for determining commuted value payments and transition rules.
- Other matters related to the target benefit framework.
The Ministry of Finance launched a consultation seeking feedback on all aspects of the proposed TB MEPP funding rules in order to best achieve the government’s objectives of helping to ensure that the pension plans are sustainable over the long term.
The consultation closed May 4, 2018. We are waiting for legislative proposals resulting from this consultation.
3. Manitoba Bill 8 – The Pensions Benefits Amendment Act
On January 10, 2018, the Manitoba Minister of Finance released a consultation paper on strengthening Manitoba’s pension system. The consultation ended February 21, 2018.
On November 27, 2019, the Manitoba government responded to recommendations made by the Manitoba Pension Commission and interested stakeholders by introducing Bill 8 – The Pension Benefits Amendment Act.
- Allows greater flexibility for unlocking pension funds and dividing pension assets following the breakdown of a spousal or common-law relationship.
- Permits plan members employed after reaching the normal retirement age to begin pension distribution without having to terminate employment.
- Allows the use of solvency reserve accounts to fund plan solvency deficiencies.
- Introduces amendments to permit specified multi-employer pension plans.
The bill excludes target benefit plans. The Manitoba government has maintained its decision not to move forward with the recommendation to allow a new target benefit/shared risk plan design for single employer and multi-employer plans.
We are still waiting for Bill 8’s Royal Assent and government regulations related to funding reform.
4. Alberta Fair Deal Panel
The Government of Alberta set up a Fair Deal Panel for Albertans to share their thoughts on several issues, including creation of an Alberta Pension Plan by withdrawing from the Canada Pension Plan. Several Fair Deal Panel town hall meetings were held. On February 28, 2020, the Fair Deal Panel launched an online public survey to consult with Albertans on how to give Alberta a bigger voice within the Canadian federation. The survey is available until March 15, 2020.
The Fair Deal Panel will submit a final report of recommendations by March 31, 2020. Any major proposals will require approval by Albertans though a referendum.
5. Nova Scotia Pension Funding Framework Review
In September 2017, the Nova Scotia government launched a review of the funding for, and other regulatory issues affecting, pension plans. As a result of the review, several reforms were developed. In Spring 2019, legislative amendments were made related to some of the proposed reforms and were published in the paper Improved Funding Framework for Nova Scotia Pension Plans: The Road Forward. Feedback from stakeholders in response to this paper helped shape the newly proclaimed regulations.
On February 24, 2020, the Nova Scotia Government released regulations establishing a new defined benefit pension funding framework.
Key provisions in the regulations include:
- Funding reform by reducing the solvency funding to 85%.
- Funding reform by enhancing going concern funding and incorporating federally permitted investment rules.
- New restrictions on contribution holidays.
- Exempt individual pension plans (IPPs).
- Payments into reserve accounts.
- Discharge of liability for annuity buy-outs.
- Loosening restrictions on benefit improvements for solvency exempt plans.
The amendments to the Pension Benefits Regulations come into effect April 1, 2020.
6. Ontario Bill 132 – Amendments to the Pension Benefits Act: Electronic Communications
On August 6, 2019, the Ontario Ministry of Finance released draft legislative amendments that would permit pension plan administrators to use electronic communications as the default method (i.e., no consent required) for sending documents to current members and former members if they meet certain conditions. Comments were due August 27, 2019.
On October 28, 2019, Bill 132, the Better for People, Smarter for Business Act, 2019 was introduced, making changes from the consultation document. The part of Bill 132 dealing with electronic communications says pension plan administrators may send documents required under the Pension Benefits Act electronically to members and former members of a pension plan subject to the following specific requirements:
- Plan administrators must notify members via mail the date when electronic distribution will begin and the email address currently on file for the member.
- A reminder notice must be sent to members transitioning to retired member status.
- Administrators are required to notify members that they can opt out of electronic communications at any time.
- Members who do not opt out after receipt of the required notice via mail are considered to be consenting to receive communications electronically.
- Documents containing a member’s personal information can only be sent electronically via a secure system.
- The member must comply with any other prescribed conditions.
On December 10, 2019, Bill 132 received Royal Assent. We are now waiting for government regulations on electronic communications.
7. Ontario Bill 100 – Expanding the Target Benefit Framework
On April 11, 2019, the Ontario government released its budget, accompanied by Bill 100 – Protecting What Matters Most Act (Budget Measures), 2019. The government affirmed its intention to expand Ontario’s target benefit plan framework to allow multi-employer pension plans to provide target benefits beyond collectively bargained arrangements, including in the non-unionized not-for-profit sector. The government did not propose expanding the framework to apply to single employer plans, but it announced its intention to work with stakeholders to implement a permanent framework for target benefit plans.
On May 29, 2019, Bill 100 received Royal Assent. We are waiting for government regulations on the target benefit plan framework.
Register Now for the Canadian Legal and Legislative Update
Stay informed on recently enacted and proposed legislation as well as regulations pertaining to pensions and benefits when you attend the Canadian Legal and Legislative Update, May 27-28 in Nashville, Tennessee. You’ll have the opportunity to learn from and interact with industry experts and to develop your understanding of the most critical issues in Canada. Register now for early bird pricing!
- Canadian Legislative Scorecard, International Foundation of Employee Benefit Plans
- New Pension Benefits Regulations coming into force effective April 1, 2020 – Nova Scotia Finance and Treasury Board, February 26, 2020
- Bill 8, The Pension Benefits Amendment Act – Eckler Ltd., December 5, 2019
- The 2019 Legislative Amendments to the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act – Miller Thomson, November 15, 2019
- Ontario’s Bill 132: Highlights of Key Proposed Changes to the Ontario Pension Benefits Act – Blakes, Cassels & Graydon, November 4, 2019
Amanda Wilke, CEBS
Information/Research Specialist at the International Foundation
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