On July 22, 2014 the Government of Alberta approved the much
anticipated regulations (the
"Regulations") to accompany the new Employment Pension Plans Act (the "New
Act"). The New Act, together with the
Regulations, will come into force on September 1, 2014.
The focus of the New Act is on facilitating new plan designs and
on modernizing plan governance, risk management and disclosure.
Pension plan sponsors and administrators will have to be fully
familiar with the legal requirements of the New Act and
Regulations, including any timelines for compliance.
In the coming weeks, we will provide additional commentary and
analysis of the New Act and Regulations by way of written material
and in-person presentations. This Bulletin is designed to provide a
high level overview of the changes being implemented by the New Act
with details now provided through the release of the
These changes include:
New Plan Designs and Governance Structures:
The New Act contemplates a wide variety of new pension plan designs
and governance structures. Of particular note, the New Act permits
target benefit provisions in both new and existing plans, albeit
currently with some limitations. The Regulations provide the
formula and the tests to be used in administering a target benefit
provision, introducing the concept of the "provision for
Governance Policies: Every pension plan will
be required to have a written governance policy that meets
prescribed criteria. The Regulations tell us what topics must be
covered in the policy including, among other things: structures and
processes in place for overseeing, managing and administering the
plan; authorized decision makers and their roles; performance
measures; code of conduct and conflict procedures; educational and
skills requirements; and internal risk management controls.
Funding Policies: Pension plans with defined
benefit or target benefit provisions will be required to have a
written funding policy that meets prescribed criteria. The
Regulations say that the policy must, among other things, set out
funding objectives, tolerances and internal controls for material
Compliance Assessments: A pension plan's
legal administrator will be required to perform governance and
rules self-assessments. The Regulations require these assessments
to be performed annually.
Solvency Reserve Accounts: A solvency reserve
account for a defined benefit provision can be established
exclusively for payments in respect of a solvency deficiency, with
the ability to later withdraw amounts in accordance with prescribed
rules. With the release of the Regulations we now know that the
administrator may apply to the Superintendent for consent to
withdraw an amount that is not more than 20% of the
"accessible solvency excess" per year over three
Disclosure: The Regulations set out a number
of new disclosure statements that will be required, including for
persons receiving pensions, and specify new data requirements in
respect of existing disclosure statements.
Vesting: A member's entitlement to receive
a pension will vest immediately on termination of active
Locking-in: Locking-in will be based on a
threshold commuted value and will no longer be based on years of
Membership Classes: Classes for pension plan
membership will no longer be limited to the classes prescribed in
the current regulations.
Termination and Wind-up: Partial terminations
and wind-ups will be eliminated.
Although the release of the Regulations represents a significant
milestone in Alberta's pension reform initiative, the process
is not quite complete. Bill 10, the Employment Pension (Private
Sector) Plans Amendment Act, 2014 was introduced in the
Alberta Legislature this April and proposed several amendments to
the New Act. While many of the amendments in Bill 10 are minor and
technical, there are a number that are more substantive, including
provisions that would allow annuity buy-outs and permit conversions
of accrued defined benefits to target benefits.
In response to feedback, the Alberta government decided to refer
Bill 10 to the Standing Committee on Alberta's Economic Future
for additional review, with the Committee expected to report back
in early fall, 2014. In the interim the Government is still
proceeding to implement the New Act. However, the legislation
taking effect on September 1 will not include any of Bill 10's
amendments, whether minor or substantive.
With some exceptions, the New Act reflects an intention to
harmonize pension rules between Alberta and British Columbia.
Accordingly, it is noteworthy that amending legislation similar to
Bill 10 has already received royal assent in B.C.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).