Summer 2021 Is Almost Over: Pensions & Benefits Update

Over the summer months, the Blakes team has been closely monitoring both federal and provincial legislative and regulatory updates. Our bulletin provides pertinent information in this regard.

This bulletin discusses:

Ontario

• Guidance on Plan Administrators Roles and Responsibilities
• Calculation of Pension Benefit Guarantee Fund Exposure
• Refund Of Overcontributions

Manitoba

• Amendments to The Pension Benefits Act

Department of Finance (Canada)

• Fixing Contribution Errors in Defined Contribution Pension Plans

 
In addition to the updates discussed in this bulletin, there have been many legislative and regulatory changes across Canada in 2021. While we have outlined certain notable updates in various Blakes insights as they have arisen, we have prepared an infographic that provides a high-level summary of the key changes across the country. We will continue to update the infographic as further legislative and regulatory updates develop.

ONTARIO

GUIDANCE ON PLAN ADMINISRATORS ROLES AND RESPONSIBILITIES

On July 28, 2021, the Financial Services Regulatory Agency (FSRA) issued Guidance No. PE0296INT: Pension Plan Administrator Roles and Responsibilities (Plan Administration Guidance). FSRA noted that the Plan Administration Guidance is a refresh and consolidation of four inherited guidance documents to improve the regulatory efficiency and effectiveness of the pension sector, and reflect FSRA's transition to a principles-based regulatory approach.

Although not intended to be a complete and comprehensive guide for administrators, the Plan Administration Guidance outlines FSRA's interpretation of the roles and responsibilities of pension plan administrators. The Plan Administration Guidance notes that as fiduciaries in an ever-changing world, administrators are responsible for prudently managing risks in their pension plans, making decisions in the best interest of pension plan beneficiaries and administering the plan in accordance with the filed plan documents and all applicable laws.  The Plan Administration Guidance discusses a number of specific topics, including fiduciary duties, third-party service providers, administration expenses and governance policies. 
 

CALCULATION OF PENSION BENEFIT GUARANTEE FUND EXPOSURE

Effective September 1, 2021, Ontario Regulation 909, made under the Ontario Pension Benefits Act (Ontario PBA), was amended by Ontario Regulation 529/21 to require administrators of pension plans' with Pension Benefit Guarantee Fund (PBGF) liabilities of C$10-million or greater to calculate and report their plan's PBGF claim exposure and information regarding the distribution of its pension benefits. Proposed amendments in this respect were posted for consultation in the Spring of 2021 after a review of the PBGF found that there is a need for better data to estimate the PBGF's exposure to potential future claims and the appropriate level of funding by employer sponsors. This review of the PBGF was discussed in the Government of Ontario's 2021 budget, released on March 24, 2021.

The additional information in respect of PBGF claim exposure, and the distribution of pension benefits, is required to be included by plan administrators in each valuation report filed in respect of a PBGF-eligible pension plan on or after September 1, 2021.
 

REFUND OF OVER-CONTRIBUTIONS

FSRA announced in its July 2021 Pension Update (July Pension Update) that it had revised the requirements for refunds of over-contributions under sections 47(13) to (16) of Regulation 909.  Sections 47(13) to (16) of Regulation 909 allow for the refund of an over-contribution without FSRA approval if the refund is needed to avoid the plan being revocable under the Income Tax Act (Canada) (ITA). These sections require that FSRA be notified at least 60 days prior to carrying out such refund.

Policy A400-500 (Policy) sets out what FSRA expects plan administrators to include in the notice to FSRA regarding the refund. The Policy indicates that FSRA expects to receive a copy of a letter from the Canada Revenue Agency (CRA) confirming that the plan will be revocable if the refund is not made. 

FSRA noted in the July Pension Update that the description of information that should be set out in the notice to FSRA remains the same, except as follows:

1. FSRA no longer requires a letter from the CRA confirming the plan will be revocable if the refund is not made; and,
2. FSRA will accept confirmation in writing from the plan administrator or their advisor that the plan would be revocable under the ITA if the refund is not made.

FSRA also noted that a similar change applies for plan amendments where an exemption from the void amendment rule in section 14 of the Ontario PBA is needed pursuant to section 47(11) and (12) of Regulation 909.
 

MANITOBA

AMENDMENTS TO THE MANITOBA PENSION BENEFITS ACT

On August 11, 2021, the Lieutenant Governor of the Province of Manitoba proclaimed that Bill 8, The Pension Benefits Amendment Act (Bill 8), which amends Manitoba's The Pension Benefits Act (Manitoba PBA) and The Pooled Registered Pension Plans (Manitoba) Act, will come into force on October 1, 2021, except for certain provisions mainly related to solvency reserve accounts. Bill 8 received Royal Assent on May 20, 2021.

Bill 8 makes several changes to the Manitoba PBA, including to:

1. allow a pension plan to permit a member that continues to be employed after reaching normal retirement age to stop contributing to the plan and accruing benefits;
2. clarify how ancillary benefits are to be determined;
3. allow a person who transfers their pension benefit credit to a locked-in retirement account or life income fund to unlock all or part of the amount, subject to certain conditions;
4. allow the use of solvency reserve accounts by an employer to fund a solvency deficiency;
5. establish a new category of specified multi-employer plans;
6. allow rules to address a vacancy on a pension committee involving an inactive plan member;
7. allow greater flexibility in dividing pension assets after a relationship breakdown;
8. clarify that the small pension commutation rule applies to a division of assets;
9. allow a separated spouse or common-law partner to be named as a beneficiary for the purpose of survivor benefits; and
10. clarify that a person claiming to be entitled to receive a pension or other benefit has the onus of proving entitlement.

On August 12, 2021, Regulation 63/2021 to amend the Manitoba Pension Benefits Regulation was registered. Regulation 63/2021 supports provisions of Bill 8 and makes other changes, including providing for the refund of employer overpayments. Regulation 64/2021 to amend Manitoba's The Pooled Registered Pension Plans Regulation was also registered on August 12, 2021. Such regulations will come into force on October 1, 2021. 

In addition, the Manitoba Office of the Superintendent – Pension Commission posted a new Policy Bulletin #14 on Financial Hardship Withdrawals from Locked-in Retirement Accounts and Life Income Funds, which is effective October 1, 2021.
 

DEPARTMENT OF FINANCE (CANADA)

FIXING CONTRIBUTION ERRORS IN DEFINED CONTRIBUTION PENSION PLANS

As discussed in our April 2021 Blakes Bulletin, 2021 Federal Budget: Selected Pensions, Benefits and Executive Compensation Measures, the federal government's 2021 budget (2021 Federal Budget) proposed to provide more flexibility to plan administrators of defined contribution registered pension plans (RPPs) to correct for both under-contributions and over-contributions. The proposals would permit certain types of errors to be corrected via additional contributions to an employee's account under a defined contribution RPP to compensate for an under-contribution error made in any of the preceding five years, subject to a dollar limit. The proposals would also permit plan administrators to correct for pension over-contribution errors in respect of an employee for any of the five years prior to the year in which the excess amount is refunded to the employee or employer, as the case may be, who made the contribution.

Draft legislation on this matter has not been released to date. We are continuing to monitor the release of the anticipated draft legislation. 

For permission to reprint articles, please contact the bulletin@blakes.com Marketing Department.

© 2025 Blake, Cassels & Graydon LLP.

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.