Canada: Alberta’s New Pension Legislation – Will You Be Ready?

In December 2012, the Alberta government gave royal assent to Bill 10, the new Employment Pension Plans Act (New Act). The New Act is to come into force on a date yet to be proclaimed. The most significant hold-up to implementation has been the drafting of the accompanying regulations to the New Act. The New Act takes a much more principles-based approach to the legislation than the current act, with the more rules-based provisions to be contained in the regulations.

The latest word from Alberta Treasury Board and Finance (Alberta Finance) is that the regulations are expected to be released in the next short number of weeks (pending cabinet approval), with the New Act and regulations then set to take effect as soon as 30 days later. If all goes according to plan, Alberta's new legislation will be in operation before summer 2014.

Faced with this timeline, it is appropriate for plan sponsors and administrators, along with their service providers, to refresh their memories on what is different in the New Act from the existing legislation and what questions remain to be resolved in the regulations.


The New Act is the result of the November 2008 report of the Alberta–British Columbia Joint Expert Panel on Pension Standards (JEPPS) (of which current Blakes Partner Chris Brown served as the Alberta co-chair), appointed by the governments of the two provinces to conduct an independent expert review of their pension standards legislation. With the significant events in the economy since the JEPPS report was released, and the resulting impact on pension plans, it is expected that the regulations will also be reflective of those developments, which accounts for part of the delay in the regulations being published.


As a reminder, the following summarizes a number of the more significant changes made in the New Act.

Plan Designs and Governance Structures

The New Act includes several new definitions applicable to specific plan designs and governance structures. Specifically, the legislation will now contemplate:

  • benefit formula provisions, including both defined benefit (DB) provisions and target benefit (TB) provisions, as distinct from defined contribution provisions
  • single employer plans, as distinct from multi-employer plans, which now specifically include both collectively bargained multi-employer plans and non-collectively bargained multi-employer plans (similar to specified multi-employer plans and multi-unit plans under the old legislation, respectively)
  • jointly sponsored plans and negotiated cost plans

These new definitions provide clarity on the permissibility of existing concepts not directly addressed in the old legislation. The New Act contains some guidance on how these concepts can be combined in developing plan benefit and governance structure designs. For example, a jointly sponsored plan must contain a benefit formula (DB or TB) provision and must be jointly funded by employers and active members. Other combinations of the concepts, not directly addressed in the New Act, should also be permissible, with discretion granted to the Superintendent to approve new designs and attach conditions to that approval.

Governance Requirements

The New Act requires the administrator of every plan to ensure that a written governance policy is established for the plan. Further, the administrator of every plan that contains a benefit formula provision must ensure that a written funding policy is established.

The New Act will also require the administrator of every plan to conduct a periodic review and prepare a written assessment of the administration of the plan. The assessment must address the plan's regulatory compliance, governance, funding, pension fund investment and the performance of trustees, administrative staff and agents.

Plan Funding

For plans with defined benefit provisions, the New Act will permit the use of solvency reserve accounts. These accounts will hold solvency special payments separate from the primary pension fund and excess in the account may be withdrawn by the employer (with Superintendent approval) when the plan's solvency deficiency no longer exists, without regard to surplus entitlement provisions in the plan or primary funding vehicle.

Administrative Requirements

The New Act makes a number of changes to plan administration matters. Many of the changes are designed to reduce administrative complexity, including explicit recognition of the rule of final location, elimination of partial plan wind-ups, elimination of prescriptive classes for plan membership, allowing voluntary plan terminations, and auto-enrolment of members. Other changes will have an impact on benefit entitlements and plan costs. Benefits will be subject to immediate vesting, and will be locked in when the commuted value of the member's benefits exceeds 20 per cent of the year's maximum pensionable earnings.

Regulatory Powers

With the change under the New Act to a more principles-based approach in the regulatory system, the Superintendent will be granted enhanced regulatory powers. For example, the Superintendent will have the discretion to attach conditions to the approval of new plan designs and to grant extensions to time limits imposed by the legislation. In addition, the Superintendent will have the authority to impose administrative penalties for non-compliance, such as increased fines.

Appeals Tribunal

To establish some checks and balances on the increased powers of the Superintendent, the New Act provides for the creation of the Alberta Employment Pensions Tribunal, which will rule on appeals from decisions of the Superintendent.


The principles-based approach taken in the New Act means that the more rules-oriented detail will need to be contained in the as-yet unreleased regulations. There are a number of pending questions to be resolved by the regulations, including but not limited to:

Who can be an administrator?

The New Act removes the provisions contained in the old legislation which specify the party or parties required to be the administrator of a pension plan. It is anticipated that the regulations will permit greater flexibility around the nature of parties who can act as a plan's administrator.

What benefit/funding/governance model combinations will be permissible?

As described above, the New Act speaks to certain plan designs. However, the extent to which the regulations will contain prescriptive rules or allow for innovation in the development of hitherto unknown models remains to be seen.

How may plans convert from old benefit designs to new ones?

There is considerable interest in the potential for single-employer target benefit designs to replace existing defined benefit plans. The ability to convert past-service DB benefits to target benefits, and any associated conditions for doing so, are key issues expected to be resolved in the regulations. However, in recent public statements Alberta Finance officials have indicated that such rules may not be contained in the regulations when first released and are likely to be added at a later date.

What will be the requirements for governance and funding policies and for the periodic plan administration review?

The New Act provides virtually no guidance on the content requirements for governance and funding policies or whether content will be driven by the plan's sponsor or administrator, nor for the scope or nature of the required plan administration review. Those details are expected to be contained in the regulations. Again, indications from Alberta Finance are that the regulations will take a "topic heading" approach to the contents of those policies, similar to that applicable to statements of investment policies and procedures under the current regulations.

Plan sponsors and administrators will need to understand the potential impact of disclosing the results of such reviews and whether any findings can be made subject to legal privilege.

What funding rule changes will be made for defined benefit and target benefit plans?

The Alberta government has spent considerable time studying potential changes to the funding rules applicable to DB and TB plans. Getting those rules right will go a long way towards determining the continued viability of DB plans and the potential future success of TB plans.

With respect to solvency reserve accounts, statements from Alberta Finance indicate that the regulations are likely to prescribe the maximum amount of funding excess which can be withdrawn and that withdrawals will be required to be made over time rather than in a single lump sum.

When will compliance with the New Act and regulations be required?

Given the numerous changes resulting from the New Act and regulations, it is anticipated that the requirement for compliance with the new legislation – from necessary plan amendments to development of governance and funding policies to establishment of solvency reserve accounts or otherwise – will be phased in over time. Further guidance in that regard is expected to be contained in the regulations.


EPPA Amendment Act

Alberta Finance has indicated that in the course of developing the Regulations certain desirable changes to the New Act have been identified. As a result, they expect that a further act amending the New Act before it comes into force will be introduced in the spring sitting of the Alberta legislature.

British Columbia's New Legislation

The JEPPS process also resulted in the passage of a new Pension Benefits Standards Act in British Columbia in 2012. That legislation, too, is not yet in force as the two governments have continued to work together on the development of their respective regulations. The B.C. government has already introduced its own amending act for purposes similar to the expected Alberta amending act. The best available information is that B.C. is likely to introduce its regulations after Alberta, sometime later in 2014, and that the legislation will likely take effect in 2015. It is still anticipated that the new legislation in the two provinces will be largely harmonized, though some differences between the two new acts are already known and others may yet appear in the regulations. Blakes will continue to monitor British Columbia's progress.

Agreement Respecting Multi-Jurisdictional Pension Plans

To date, Ontario and Quebec remain the only signatories to the new multi-jurisdictional agreement developed by the Canadian Association of Pension Supervisory Authorities. We understand that certain changes to the agreement are currently being developed and other jurisdictions will not be signing on to the agreement until those changes are finalized. It will be interesting to observe whether the significant changes to the regulatory approach contained in both Alberta's New Act and B.C.'s new legislation will have any impact on the agreement.


Once Alberta's regulations under the New Act are released, Blakes will prepare a comprehensive analysis of the new legislation. Blakes will also be hosting a series of seminars, starting with an overview of the new legislation and supplemented by sessions specific to the most relevant facets of the legislation for plan sponsors and administrators.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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