Last Friday, the federal government released the next round of
proposed amendments to the Pension Benefits
Standards Regulations, which will change or enact new provisions
regarding plan investments, defined contribution (DC) pension
plans, and disclosure to plan members.
The proposed regulations, which have been released for public
comment, with a 30 day consultation period commencing on September
27, 2014, include the following proposed amendments:
A number of changes are proposed to the pension investment rules in
Schedule III of the Regulations, including changing the test under
the 10% rule from "book value" to "market
value", amending the exceptions to the "related party
rules" and repealing the exception for transactions that are
nominal and immaterial. (For a more detailed description of the
proposed changes to the pension investment rules, see our
prior blog post.). Pension plans subject to the federal
investment rules will have to ensure compliance with these changes
Under the proposed changes, DC plans will be permitted to provide
variable benefits, which will allow pensioners to withdraw variable
amounts from their pension fund each year. Federal plan sponsors
may wish to consider plan amendments to permit variable benefits
from the plan, once these changes are implemented. This type of
change arguably adds value to the decumulation phase of DC
Information:Under the proposed amendments, plans that
permit members to make pension plan investment decisions (usually
DC plans) will have to provide members with specified information,
a detailed description of each investment option;
type of investments and the degree of
top 10 holdings by market value
indication that its past performance
is not necessarily an indication of its future performance
the benchmark that best reflects its
the fees, levies and other charges
associated with it that reduce return on investment expressed as a
percentage or a fixed amount
target asset allocation
a description of how the person's
funds are currently invested; and
any timing requirements that apply to
the making of an investment choice.
will have to provide retirees and other former pension plan members
with an annual statement (as they currently do for active members).
In addition, there is some new information that must be included in
annual statements, which varies depending upon the type of pension
plan (e.g., whether it is a DC, defined benefit or negotiated
Sponsors and administrators of federally registered plans should
monitor these proposed changes so that their administrative
practices can be modified to comply.
The proposed amendments to the pension investment rules,
however, will have much wider application, as many Canadian
jurisdictions – Ontario, British Columbia, Alberta,
Saskatchewan and Manitoba – have adopted the investment rules
under Schedule III of the Regulations, "as amended from time
to time". While these amendments indicate that plan
administrators will have five years from the date the changes come
into force to comply with the new pension investment rules,
administrators may want to begin to review their investment
practices in order to ensure compliance with these coming
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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