Vol. 149, No. 6 — March 25, 2015

Registration

SOR/2015-60 March 13, 2015

PENSION BENEFITS STANDARDS ACT, 1985
POOLED REGISTERED PENSION PLANS ACT

Regulations Amending Certain Regulations Relating to Pensions

P.C. 2015-306 March 12, 2015

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 39 (see footnote a) of the Pension Benefits Standards Act, 1985 (see footnote b) and section 76 of the Pooled Registered Pension Plans Act (see footnote c), makes the annexed Regulations Amending Certain Regulations Relating to Pensions.

REGULATIONS AMENDING CERTAIN REGULATIONS RELATING TO PENSIONS

PENSION BENEFITS STANDARDS ACT, 1985

PENSION BENEFITS STANDARDS REGULATIONS, 1985

1. (1) The definitions “mutual fund” or “pooled fund” and “simplified pension plan” in subsection 2(1) of the Pension Benefits Standards Regulations, 1985 (see footnote 1) are repealed.

(2) Subsection 2(1) of the Regulations is amended by adding the following in alphabetical order:

“investment fund” means a fund — established by a corporation, limited partnership or trust — the purpose of which is to invest the moneys of two or more investors and the shares or units of which are allocated to each investor in proportion to the interest of the investor in the assets of the fund; (fonds de placement)

“marketplace” means

“member choice account” means an account in relation to which a member, former member, survivor or former spouse or former common-law partner of the member or former member is permitted to make investment choices under a plan referred to in subsection 8(4.2) of the Act; (compte accompagné de choix)

“PRPP” means a plan registered under section 12 of the Pooled Registered Pension Plans Act; (RPAC)

2. (1) The portion of subsection 7.1(1) of the Regulations before paragraph (a) is replaced by the following:

7.1 (1) The administrator of a plan shall, before the day on which the plan is registered, establish a written statement of investment policies and procedures that pertain to the plan’s portfolio of investments and loans, other than those relating to any member choice account, including policies and procedures pertaining to

(2) Paragraph 7.1(1)(g) of the Regulations is replaced by the following:

3. The Regulations are amended by adding the following after section 7.2:

MEMBER CHOICE ACCOUNTS

7.3 (1) The administrator shall annually provide to any person who is permitted by a plan to make investment choices under subsection 8(4.2) of the Act a written statement that

4. (1) Paragraph 11(1)(g) of the Regulations is repealed.

(2) Subsection 11(4) of the Regulations is replaced by the following:

(4) Any actuarial report referred to in paragraph (1)(d) that is prepared in respect of a negotiated contribution plan shall, if the funding of the plan fails to meet the standards of solvency referred to in section 8, contain the options available in respect of such funding that would result in the funding of the plan meeting the standards for solvency.

5. The heading before section 11.1 and sections 11.1 to 11.3 of the Regulations are repealed.

6. Paragraph 16(2)(e) of the Regulations is replaced by the following:

7. The Regulations are amended by adding the following after subsection 18(3):

(3.1) The consent referred to in subsection 26(2.1) of the Act shall be in Form 3.1 of Schedule II.

8. Section 19.1 of the Regulations is replaced by the following:

19.1 For the purposes of sections 16.4 and 26 of the Act, a life income fund, a restricted life income fund and a locked-in registered retirement savings plan are retirement savings plans into which a pension benefit credit may be transferred.

9. Subparagraph 20.1(1)(l)(i) of the Regulations is replaced by the following:

10. Subparagraph 20.2(1)(d)(i) of the Regulations is replaced by the following:

11. (1) Subparagraph 20.3(1)(l)(i) of the Regulations is replaced by the following:

(2) Subparagraph 20.3(1)(n)(i) of the Regulations is replaced by the following:

12. The Regulations are amended by adding the following after section 21:

VARIABLE BENEFIT

21.1 (1) A member or former member who has elected to receive a variable benefit may decide the amount that they are to receive as a variable benefit for any calendar year.

(2) The variable benefit shall be not less than the minimum amount determined under subsection 8506(5) of the Income Tax Regulations and, for any calendar year before the year in which the former member or their survivor, as the case may be, reaches 90 years of age, not more than the amount determined by the formula

C/F

where

C is the balance in the former member’s account

F is the value, at the beginning of the calendar year, of a pension benefit of which the annual payment is $1, payable on January 1 of each year between the beginning of that calendar year and December 31 of the year in which the member, former member or their survivor, as the case may be, reaches 90 years of age, established using an interest rate that is

(3) For the calendar year in which the former member or their survivor, as the case may be, reaches 90 years of age and for all subsequent calendar years, the amount of the variable benefit shall not exceed the value of the funds held in the fund immediately before the time of the payment.

(4) The minimum amount determined under subsection 8506(5) of the Income Tax Regulations shall be paid as a variable benefit for a calendar year if

(5) If, for the calendar year in which the variable benefit is established, part of the account was composed of funds that had been held in a life income fund of the holder earlier in the calendar year in which the variable benefit was established, the amount determined by the formula set out in subsection (2) and the value of the funds referred to in subsection (3) is deemed to be zero in respect of that part of the account for that calendar year.

(6) For the first calendar year that the variable benefit is paid, the amount to be paid shall be multiplied by the number of months remaining in that year and then divided by 12, with any part of an incomplete month counting as one month.

13. The Regulations are amended by adding the following after section 22:

22.1 For the purpose of subparagraph 28(1)(a)(ii) of the Act, the written explanation shall include, in the case of a negotiated contribution plan, a description of the funding arrangement, including an indication that

14. (1) Paragraph 23(1)(m) of the Regulations is replaced by the following:

(2) Clause 23(1)(q)(i)(A) of the Regulations is replaced by the following:

(3) Subparagraph 23(1)(q)(ii) of the Regulations is replaced by the following:

(4) Subsection 23(1) of the Regulations is amended by adding the following after paragraph (q):

(5) Section 23 of the Regulations is amended by adding the following after subsection (1):

(1.1) The written statement to be given in accordance with paragraph 28(1)(b.1) of the Act shall show

(6) Subsections 23(3) to (5) of the Regulations are replaced by the following:

(3) The written statement referred to in paragraph 28(1)(d) of the Act, in the case of a plan member who ceases to be a member of the plan for any reason other than the termination of the whole or part of the plan or retirement, shall be given in Form 2 of Schedule IV.

(4) The written statement referred to in paragraph 28(1)(e) of the Act shall be given in Form 3 of Schedule IV.

15. The Regulations are amended by adding the following after section 23.2:

INFORMATION TO BE PROVIDED — VARIABLE BENEFITS

23.3 The notification of consent of the spouse or common-law partner required under paragraph 16.2(2)(a) of the Act shall be made in Form 5.2 of Schedule IV.

16. The Regulations are amended by adding the following after section 23.3:

INFORMATION ON PLAN TERMINATION

23.4 (1) The written statement required under paragraph 28(2.1)(a) of the Act shall be given in Form 2.1 of Schedule IV.

(2) The written statement required under paragraph 28(2.1)(b) of the Act shall be given in Form 2.2 of Schedule IV.

17. The Regulations are amended by adding the following after section 24.1:

ELECTRONIC COMMUNICATIONS

25. (1) For the purposes of paragraph 31.1(1)(a) of the Act, the addressee may consent in writing, in paper or electronic form, or orally.

(2) Before an addressee consents, the administrator shall notify the addressee

(3) The addressee shall revoke their consent in writing, in paper or electronic form, or orally.

25.1 If an electronic document is provided on a generally accessible information system, such as a website, the administrator shall provide to the addressee written notice, in paper or electronic form, of the electronic document’s availability and location.

25.2 An electronic document is considered to have been provided to an addressee when it is entered into or made available on the information system designated by the addressee.

25.3 (1) If an administrator has reason to believe that an addressee has not received an electronic document or the notice required under section 25.1, the administrator shall mail a paper copy of the document to the addressee.

(2) The mailing of a paper copy does not affect when the electronic document is considered to have been provided under section 25.2.

18. Schedule II to the Regulations is amended by adding the following section reference after the heading “FORM 2”:

(Section 13)

19. Form 3 of Schedule II to the Regulations is replaced by Forms 3 and 3.1 in Schedule 1 to these Regulations.

20. The definition “public exchange” in section 1 of Schedule III to the Regulations is repealed.

21. Paragraph 2(c) of Schedule III to the Regulations is replaced by the following:

22. Section 4 of Schedule III to the Regulations is repealed.

23. (1) Subsections 9(1) and (2) of Schedule III to the Regulations are replaced by the following:

9. (1) The administrator of a plan shall not, directly or indirectly, lend or invest moneys of the plan to or in any one person, any associated persons or any affiliated corporations if

(1.1) The administrator of a plan shall not, directly or indirectly, lend or invest funds that are in a member choice account to or in any one person, any associated persons or any affiliated corporations if

(2) Subsections (1) and (1.1) do not apply in respect of moneys of a plan held by a bank, trust company or other financial institution to the extent that the moneys are fully insured by the Canada Deposit Insurance Corporation, by Assuris or by any similar provincial body established for the purpose of providing insurance against loss of deposits with trust companies or other financial institutions.

(2) The portion of subsection 9(3) of Schedule III to the Regulations before paragraph (b) is replaced by the following:

(3) Subsections (1) and (1.1) do not apply in respect of investments in

(3) Paragraph 9(3)(f) of Schedule III to the Regulations is replaced by the following:

(4) Section 9 of Schedule III to the Regulations is amended by adding the following after subsection (3):

(4) Subsections (1) and (1.1) do not apply in respect of investments that involve the purchase of a contract or agreement in respect of which the return is based on the performance of a widely recognized index of a broad class of securities traded at a marketplace.

24. The portion of subsection 12(1) of Schedule III to the Regulations before paragraph (a) is replaced by the following:

12. (1) The administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a real estate corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation, unless the administrator obtains and deposits with the Superintendent an undertaking by the corporation that, while those securities are held, the corporation will

25. The portion of subsection 13(1) of Schedule III to the Regulations before paragraph (a) is replaced by the following:

13. (1) The administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a resource corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation, unless the administrator obtains and deposits with the Superintendent an undertaking by the corporation that, while those securities are held, the corporation will

26. The portion of section 14 of Schedule III to the Regulations before paragraph (a) is replaced by the following:

14. The administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of an investment corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation, unless the administrator obtains and deposits with the Superintendent an undertaking by the corporation that, while those securities are held, the corporation will

27. Paragraph 16(1)(a) of Schedule III to the Regulations is replaced by the following:

28. Section 17 of Schedule III to the Regulations is replaced by the following:

17. (1) The administrator of a plan may enter into a transaction with a related party for the operation or administration of the plan if

(2) Section 16 does not apply in respect of investments

(3) The administrator of a plan may enter into a transaction with a related party on behalf of the plan if the value of the transaction is nominal or the transaction is immaterial to the plan.

(4) For the purposes of subsection (3), in assessing whether the value of a transaction is nominal or whether a transaction is immaterial, two or more transactions with the same related party shall be considered as a single transaction.

(5) If an administrator of a plan is in contravention of section 16 as a result of a transaction that was entered into by someone other than the administrator or an entity controlled by the administrator, the administrator has five years to comply with section 16 from the day of the contravention.

17.1 An administrator of a plan who does not comply with section 16 on the day on which this section comes into force shall comply with that section before the end of the five-year period that begins on that day.

29. Forms 1 to 4 of Schedule IV to the Regulations are replaced by the Forms 1 to 3 set out in Schedule 2 to these Regulations.

30. Form 5.1 of Schedule IV to the French version of the Regulations is amended by replacing “participant ancien” with “ancien participant” with any necessary modifications.

31. Schedule IV to the Regulations is amended by adding, after Form 5.1, the Form 5.2 set out in Schedule 3 to these Regulations.

32. Section 4 of Form 1 of Schedule V to the Regulations is replaced by the following:

4. Amount Sought for Withdrawal

A Expected income in the calendar year determined in accordance with the Income Tax Act. $________________    
B Total financial hardship withdrawals made during the calendar year from all federally regulated locked-in registered retirement savings plans, life income funds, restricted life income funds and restricted locked-in savings plans. $________________    
B(i): total low income component of B is $________________    
B(ii): total medical and disability-related income component of B is $________________    
C 50% of the Year’s Maximum Pensionable Earnings as defined in the Pension Benefits Standards Act, 1985. $________________    
Calculation of Low Income Component of Withdrawal
(To be completed only if seeking withdrawal under this component.)
D Low income withdrawal component.      
D(i) A - B $________________  
D(ii) 66.6% of D(i) $________________  
D(iii) C - D(ii) $________________  
D(iv) D(iii) - B(i) $________________  
Enter amount from D(iv) if greater than zero, otherwise enter "0"     $________________
Calculation of Medical and Disability-Related Component of Withdrawal
(To be completed only if seeking withdrawal under this component.)
E E(i) Total expected medical and disability-related expenditures in the calendar year that a medical doctor certifies are required.   $________________  
E(ii) A - B $________________  
E(iii) 20% of E(ii) $________________  
E(iv) If E(i) is greater than or equal to E(iii), enter E(i), otherwise enter "0" $________________  
E(v) Total expected medical and disability-related expenditures for which unlocking is being sought. Enter the lesser of E(iv) and C $________________  
Enter amount from E(v)     $________________
Calculation of Financial Hardship Withdrawal
F Total amount eligible for financial hardship withdrawal.      
F(i) D + E $________________  
F(ii) C - B $________________  
F(iii) Enter the lesser of F(i) and F(ii) $________________  
Enter amount from F(iii)     $________________
G Total amount sought for withdrawal.
Enter F or a lesser amount		     $________________
SOLVENCY FUNDING RELIEF REGULATIONS

33. Subsection 6(4) of the Solvency Funding Relief Regulations (see footnote 2) is replaced by the following:

(4) Despite the fact that the special payments referred to in subsection (1) may be made over a period that exceeds the period applicable under Part 1, for the purposes of subsection 8(1) of the Act, the amount by which the aggregate amount of special payments that would have been remitted to the pension fund in accordance with that Part from the day on which the initial solvency deficiency emerged, as adjusted to take into account the reductions in special payments resulting from the application of the Pension Benefits Standards Regulations, 1985, plus interest, exceeds the aggregate amount of special payments made to the pension fund in accordance with this Part, plus interest, shall be considered to be an amount accrued to the pension fund.

34. Paragraph 8(1)(g) of the Regulations is repealed.

35. Section 13 of the French version of the Regulations is replaced by the following:

13. Si le régime affiche un passif supérieur à son actif à la date de sa cessation totale, le moindre du montant calculé conformément au paragraphe 6(4) ou de la différence entre l’actif et le passif est remis sans délai au fonds de pension.

36. (1) Subparagraph 17(1)(a)(ii) of the French version of the Regulations is replaced by the following:

(2) Subparagraph 17(1)(a)(v) of the English version of the Regulations is replaced by the following:

(3) Subparagraph 17(1)(b)(ii) of the French version of the Regulations is replaced by the following:

37. Section 22 of the French version of the Regulations is replaced by the following:

22. Si la valeur nominale des lettres de crédit obtenues ou maintenues pour un exercice donné aux termes de la présente partie est inférieure à la somme exigée aux termes du paragraphe 19(2) pour cet exercice, l’employeur comble la différence soit en augmentant la valeur nominale des lettres de crédit, soit en versant des paiements supplémentaires au fonds de pension au plus tard le jour du prochain versement effectué conformément au paragraphe 9(14) du Règlement de 1985 sur les normes de prestation de pension.

38. (1) Paragraphs 23(2)(c) and (d) of the French version of the Regulations are replaced by the following:

(2) The portion of paragraph 23(2)(f) of the French version of the Regulations before subparagraph (i) is replaced by the following:

(3) Paragraph 23(2)h) of the French version of the Regulations is replaced by the following:

39. Section 24 of the Regulations and the heading before it are repealed.

40. Subsection 29(1) of the French version of the Regulations is replaced by the following:

29. (1) En cas de défaut, est versé sans délai au fonds de pension l’excédent du total des paiements spéciaux qui auraient été versés au fonds de pension en application de la partie 1 depuis la survenance du déficit initial de solvabilité — lesquels paiements sont ajustés pour tenir compte des réductions de paiements spéciaux résultant de l’application du Règlement de 1985 sur les normes de prestation de pension et majorés de l’intérêt applicable — sur le total des paiements spéciaux versés au fonds de pension en application de la présente partie et des intérêts.

41. Paragraph 30(1)(b) of the French version of the Regulations is replaced by the following:

SOLVENCY FUNDING RELIEF REGULATIONS, 2009

42. Subsection 9(1) of the French version of the Solvency Funding Relief Regulations, 2009 (see footnote 3) is replaced by the following:

9. (1) Le déficit d’un régime ne peut continuer d’être capitalisé conformément à la partie 1 après l’exercice 2009 que si moins du tiers des participants et moins du tiers des bénéficiaires qui ne sont pas des participants s’y opposent dans le délai indiqué dans l’énoncé visé à l’alinéa 10(1)j).

43. (1) Paragraph 10(1)(g) of the Regulations is repealed.

(2) Paragraph 10(1)(j) of the French version of the Regulations is replaced by the following:

44. Section 15 of the French version of the Regulations is replaced by the following:

15. Si le régime affiche un passif supérieur à son actif à la date de sa cessation totale, la moins élevée de la somme calculée conformément au paragraphe 5(4) ou de la différence entre l’actif et le passif est remise sans délai au fonds de pension.

45. (1) Subparagraph 19(1)(a)(ii) of the French version of the Regulations is replaced by the following:

(2) Subparagraph 19(1)(a)(v) of the English version of the Regulations is replaced by the following:

(3) Subparagraph 19(1)(b)(ii) of the French version of the Regulations is replaced by the following:

46. Subparagraph 22(1)(d)(vi) of the French version of the Regulations is replaced by the following:

47. Section 24 of the French version of the Regulations is replaced by the following:

24. Si la valeur nominale des lettres de crédit obtenues ou maintenues pour un exercice donné aux termes de la présente partie est inférieure à la somme exigée aux termes du paragraphe 21(3) pour cet exercice, l’employeur comble la différence soit en augmentant la valeur nominale des lettres de crédit, soit en versant des paiements supplémentaires au fonds de pension au plus tard le jour du prochain versement effectué conformément au paragraphe 9(14) du Règlement de 1985 sur les normes de prestation de pension.

48. (1) Paragraphs 25(2)(c) and (d) of the French version of the Regulations are replaced by the following:

(2) The portion of paragraph 25(2)(f) of the French version of the Regulations before subparagraph (i) is replaced by the following:

(3) Paragraph 25(2)(h) of the French version of the Regulations is replaced by the following:

49. Section 26 of the Regulations and the heading before it are repealed.

50. The portion of section 27 of the English version of the Regulations before paragraph (a) is replaced by the following:

27. When the administrator provides the written statement under paragraph 28(1)(b) of the Act, the administrator shall also provide the following information:

51. Subsection 31(1) of the French version of the Regulations is replaced by the following:

31. (1) En cas de défaut, est versé sans délai au fonds de pension l’excédent du total des paiements spéciaux qui auraient été versés au fonds de pension en application de l’article 9 du Règlement de 1985 sur les normes de prestation de pension depuis la survenance du déficit — lesquels paiements sont rajustés pour tenir compte des réductions de paiements spéciaux résultant de l’application de ce règlement et majorés des intérêts applicables — sur le total des paiements spéciaux versés au fonds de pension en application de la partie 1 et de la présente partie, majorés des intérêts applicables.

52. Paragraph 32(1)(b) of the French version of the Regulations is replaced by the following:

CANADIAN PRESS PENSION PLAN SOLVENCY DEFICIENCY FUNDING REGULATIONS, 2010

53. Subsection 2(2) of the English version of the Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010 (see footnote 4) is replaced by the following:

(2) Subsection 6(1) and sections 11 and 12 of the Solvency Funding Relief Regulations do not apply to the Canadian Press pension plan.

54. Subparagraph (i) of the description of B in paragraph 7(c) of the Regulations is replaced by the following:

(i) the number of years in the period beginning on the valuation date and ending on December 31, 2023,

55. Subsection 10(1) of the French version of the Regulations is replaced by the following:

10. (1) Si la valeur totale de la partie subventionnée des prestations de retraite anticipée accordée depuis le 1er janvier 2009 réduit de plus de 10 % le ratio de solvabilité — établi au 31 décembre 2008 — du régime de retraite de la Presse canadienne, l’employeur verse sans délai au fonds de pension une somme qui permet de rétablir le ratio de solvabilité à sa valeur au 31 décembre 2008 moins 10 % et en avise sans délai, par écrit, le surintendant.

56. Subsection 11(2) of the French version of the Regulations is replaced by the following:

(2) Si l’employeur ne respecte pas le paragraphe (1), il en avise par écrit sans délai le surintendant et verse sans délai au fonds de pension une somme égale au total des paiements spéciaux différés. Le présent règlement cesse alors d’avoir effet.

POOLED REGISTERED PENSION PLANS ACT

POOLED REGISTERED PENSION PLANS REGULATIONS

57. Subsections 37(2) and (3) of the Pooled Registered Pension Plans Regulations (see footnote 5) are replaced by the following:

Parameters

(2) The payment shall be not less than the minimum amount determined under subsection 8506(5) of the Income Tax Regulations and, for any calendar year before the year in which the member reaches 90 years of age, not more than the amount determined by the formula

C/F

where

C is the balance in the member’s account

F is the value, at the beginning of the calendar year, of an annual $1 payment, payable on January 1 of each year between the beginning of that calendar year and December 31 of the year in which the member reaches 90 years of age, established using an interest rate that is

Default amount

(3) The minimum amount determined under subsection 8506(5) of the Income Tax Regulations is to be paid as a variable payment for a calendar year if

Amount deemed to be zero

(3.1) If, for the calendar year in which the variable payment is established, part of the account was composed of funds that had been held in a life income fund of the holder earlier in the calendar year in which the variable payment was established, the amount determined by the formula set out in subsection (2) is deemed to be zero in respect of that part of the account for that calendar year.

58. (1) The portion of subsection 39(1) of the French version of the Regulations before paragraph (a) is replaced by the following:

Régime d’épargne immobilisé restreint

39. (1) Tout régime d’épargne immobilisé restreint prévoit :

(2) Subsection 39(1) of the English version of the Regulations is replaced by the following:

Prescribed restricted locked-in savings plan

39. (1) A restricted locked-in savings plan must

59. Paragraph 40(1)(d) of the Regulations is replaced by the following:

C/F

where

C is the balance in the holder’s account

F is the value, at the beginning of the calendar year, of an annual $1 payment, payable on January 1 of each year between the beginning of that calendar year and December 31 of the year in which the holder reaches 90 years of age, established using an interest rate that is

60. Paragraph 41(1)(d) of the Regulations is replaced by the following:

C/F

where

C is the balance in the holder’s account

F is the value, as at the beginning of the calendar year, of an annual $1 payment, payable on January 1 of each year between the beginning of that calendar year and December 31 of the year in which the holder reaches 90 years of age, established using an interest rate that is

COMING INTO FORCE

61. (1) Subject to subsection (2), these Regulations come into force on the day on which subsection 196(3) of the Sustaining Canada’s Economic Recovery Act, chapter 25 of the Statutes of Canada, 2010, comes into force.

(2) Subsection 1(1), sections 3, 7 and 13, subsections 14(1) to (5) and sections 16 and 20 to 28 of these Regulations come into force on July 1, 2016.

SCHEDULE 1
(Section 18)

FORM 3
(Subsection 18(3))

APPLICATION TO TRANSFER PENSION BENEFIT CREDITS UNDER SECTIONS 16.4 AND 26 OF THE PENSION BENEFITS STANDARDS ACT, 1985
1. Applicant

I, ________________, am a (member, former member, survivor) ___________________ of the registered pension plan known as _______________________________________

and I apply to

2. Transfer or Purchase (check one)
(a) __________ transfer my pension benefit credit to a locked-in registered retirement savings plan of the kind described in section 20 of the Pension Benefits Standards Regulations, 1985;
(b) __________ transfer my pension benefit credit to a life income fund of the kind described in section 20.1 of the Pension Benefits Standards Regulations, 1985;
(c) __________ transfer my pension benefit credit to a restricted life income fund of the kind described in section 20.3 of the Pension Benefits Standards Regulations, 1985;
(d) __________ use my pension benefit credit to purchase an immediate life annuity of the kind described in section 21 of the Pension Benefits Standards Regulations, 1985;
(e) __________ use my pension benefit credit to purchase a deferred life annuity of the kind described in section 21 of the Pension Benefits Standards Regulations, 1985;
(f) __________ transfer my pension benefit credit to a pension plan of which I am currently a member, which is known as ___________________; or
(g) transfer my pension benefit credit to a PRPP.
3. Signatures

Signature of member (or former member or survivor) ______________________________

Name of member (or former member or survivor) _________________________________

Signature of witness _______________________________________________________

Name of witness __________________________________________________________

Address of witness ________________________________________________________

Signed at ________ on ________, 20________.

4. Confirmation of the request received by the financial institution for (check one)
(a) _________ a transfer of the funds to a locked-in registered retirement savings plan of the kind described in section 20 of the Pension Benefits Standards Regulations, 1985;
(b) _________ a transfer of the funds to a life income fund of the kind described in section 20.1 of the Pension Benefits Standards Regulations, 1985;
(c) _________ a transfer of the funds to a restricted life income fund of the kind described in section 20.3 of the Pension Benefits Standards Regulations, 1985;
(d) _________ the use of the funds to purchase a deferred life annuity of the kind described in section 21 of the Pension Benefits Standards Regulations, 1985; or
(e) _________ the use of the funds to purchase an immediate life annuity of the kind described in section 21 of the Pension Benefits Standards Regulations, 1985, the funds of which shall be only used to purchase another immediate life annuity that meets the requirements of those Regulations.
5. Signatures

Signature of applicant ______________________________________________________

Name of applicant _________________________________________________________

Signature of officer of financial institution _______________________________________

Name of financial institution _________________________________________________

Signed at ________ on ________, 20________.

FORM 3.1
(Subsection 18(3.1))

SPOUSE’S OR COMMON-LAW PARTNER’S CONSENT FOR THE TRANSFER OF A PENSION BENEFIT CREDIT

I, _________________________________, hereby certify that I am the spouse or common-law partner as defined by the Pension Benefits Standards Act, 1985, of _________________________________.

I understand that my spouse or common-law partner has elected to transfer their pension benefit credit and that my written consent is required to enable my spouse or common-law partner to do so.

I understand that

I further understand that transferring the pension benefit credit to a retirement savings plan of the prescribed kind will allow my spouse or common-law partner to withdraw some of the funds each year, subject to any minimum and maximum withdrawal limits. I understand, however, that the amount of pension income or survivor benefit available to me in later years may be significantly reduced if

Nevertheless, I consent to the transfer of the pension benefit credit to a retirement savings plan of the prescribed kind and certify that

To consent to the transfer, I sign this consent form at ____________________________________ on ___________, 20___________.

Name and registration number of pension plan of my spouse or common-law partner

_________________________________

Signature of spouse or common-law partner ___________________________________

Address of spouse or common-law partner ______________________________________

(home telephone number) ___________________________________

(work telephone number) ___________________________________

STATEMENT OF WITNESS

I certify that

Signature of witness _________________________________

(home telephone number) _________________________________

(work telephone number) _________________________________

SCHEDULE 2
(Section 28)

FORM 1
(Subsection 23(2) and paragraph 23.2(a))

STATEMENT TO BE PROVIDED TO A RETIRING MEMBER

Statement date___________________________________________________________

Member’s name __________________________________________________________

Date of birth ____________________________

Spouse’s or common-law partner’s name _______________________________________

Date of birth ____________________________

Designated beneficiary _____________________________________________________

Date employment began ___________________________________________________

Date credited service began _________________________________________________

Date pensionable age reached _______________________________________________

Date of first entitlement to early retirement pension _______________________________________________________________________

Credited service __________________________________________________________

Additional voluntary contributions of member

Required contributions of member

Employer contributions, in respect of a defined contribution provision, if any,

Transfers into the pension plan

Pension benefit payable to the member

Pension benefit payable for a limited period

Survivor benefit $ _________________________________________________________

Solvency ratio ____________________________________________________________

Formula, if any, for indexing the pension benefit _________________________________

FORM 2
(Subsection 23(3))

STATEMENT TO BE PROVIDED IF A MEMBER CEASES TO BE A MEMBER OF THE PLAN FOR ANY REASON OTHER THAN THE TERMINATION OF THE WHOLE OR PART OF THE PLAN OR RETIREMENT

Statement date __________________________________________________________

Member’s name __________________________________________________________

Date of birth ____________________

Spouse’s or common-law partner’s name _______________________________________

Date of birth ____________________

Designated beneficiary _____________________________________________________

Date employment began ____________________________________________________

Date credited service began _________________________________________________

Date pensionable age reached _______________________________________________

Date of first entitlement to early retirement pension ______________________________

Credited service __________________________________________________________

Additional voluntary contributions of member

Required contributions of member

Employer contributions, in respect of a defined contribution provision, if any,

Transfers into the pension plan

Pension benefit payable to the member

Pension benefit payable for a limited period

Survivor benefit prior to retirement

Pension benefit credit for transfer purposes

Solvency ratio ____________________________________________________________

Schedule of transfer payments (if solvency ratio is less than 1) ______________________

Formula, if any, for indexing the pension benefit or for calculating the pension benefit credit ____________________________________

Portability options available (transfer to another pension plan, a locked-in registered retirement savings plan, a life income fund or restricted life income fund, or purchase of an immediate or deferred life annuity) ____________________________________________

FORM 2.1
(Subsection 23.4(1))

STATEMENT TO BE PROVIDED WITHIN 30 DAYS AFTER THE TERMINATION OF THE WHOLE OF THE PLAN

Statement date ___________________________________________________________

Plan termination date ______________________________________________________

Member’s or former member’s name ___________________________________________

Date of birth ________________________________

Spouse’s or common-law partner’s name_______________________________________

Date of birth ________________________________

Designated beneficiary _____________________________________________________

Each member, former member and the spouse or common-law partner of each member or former member may examine, at the plan administrator’s offices, or order photocopies of, on condition of payment of any reasonable fee that the administrator may fix, all documents that have been filed with the Superintendent under subsection 10(1) or 10.1(1) or section 12 of the Pension Benefits Standards Act, 1985 or any regulations made under paragraph 39(i) of that Act.

Pension benefits will continue to be paid to retirees as they fall due.

Other pension benefits cannot be distributed until the termination report is approved by the Superintendent.

FORM 2.2
(Subsection 23.4(2))

STATEMENT TO BE PROVIDED WITHIN 120 DAYS AFTER THE TERMINATION OF THE WHOLE OF THE PLAN

Statement date ___________________________________________________________

Member’s or former member’s name ___________________________________________

Date of birth ________________________________

Spouse’s or common-law partner’s name _______________________________________

Date of birth ________________________________

Designated beneficiary _____________________________________________________

Date employment began ____________________________________________________

Date credited service began _________________________________________________

Date pensionable age reached _______________________________________________

Date of first entitlement to early retirement pension ______________________________

Credited service __________________________________________________________

Additional voluntary contributions of member

Required contributions of member

Employer contributions, in respect of a defined contribution provision, if any,

Transfers into the pension plan

Pension benefit payable to the member

Pension benefit payable for a limited period

Survivor benefit prior to retirement

Pension benefit credit for transfer purposes

Solvency ratio ____________________________________________________________

Schedule of transfer payments (if solvency ratio is less than 1) ______________________

Formula, if any, for indexing the pension benefit or for calculating the pension benefit credit __________________________________________

Portability options available (transfer to another pension plan, a locked-in registered retirement savings plan, a life income fund or restricted life income fund, or purchase of an immediate or deferred life annuity) ____________________________________________

The member or former member must give notice of the transfer option that they have chosen.

A description of any adjustments to benefits and the reasons for these adjustments __________________________________________

FORM 3
(Subsection 23(4))

STATEMENT TO BE PROVIDED WHEN A MEMBER OR FORMER MEMBER DIES

Statement date ______________________________

Member’s or former member’s name ___________________________________________

Date of birth ________________________________

Spouse’s or common-law partner’s name _______________________________________

Date of birth ________________________________

Designated beneficiary _____________________________________________________

Date employment began ____________________________________________________

Date credited service began _________________________________________________

Credited service __________________________________________________________

Additional voluntary contributions of member

Required contributions of member

Employer contributions, in respect of a defined contribution provision, if any,

Transfers into the pension plan

Pension benefit credit payable to the member’s or former member’s spouse or common-law partner

Solvency ratio ____________________________________________________________

Schedule of transfer payments (if solvency ratio is less than 1) ______________________

Formula, if any, for indexing benefit or for calculating the pension benefit credit _________

Portability options available (transfer to another pension plan, a locked-in registered retirement savings plan, a life income fund or restricted life income fund, or purchase of an immediate or deferred life annuity) ____________________________________________

SCHEDULE 3
(Section 30)

FORM 5.2
(Section 23.3)

SPOUSE’S OR COMMON-LAW PARTNER’S CONSENT TO THE ELECTION TO RECEIVE A VARIABLE BENEFIT FROM A DEFINED CONTRIBUTION PROVISION

I, _________________________, hereby certify that I am the spouse or the common-law partner, as defined in the Pension Benefits Standards Act, 1985, of ____________________.

I understand that my spouse or common-law partner has elected to receive a variable benefit directly from the pension plan, and that my written consent is required to enable my spouse or common-law partner to do so.

I understand that

I further understand that before purchasing a life annuity, the pension plan will allow my spouse or common-law partner to withdraw some of the funds each year, subject to minimum and maximum withdrawal limits. I understand, however, that the amount of pension income or survivor benefit available to me in later years may be significantly reduced if

Nevertheless, I consent to the receipt of variable benefits directly from the pension plan, and certify that

To consent to the transfer, I sign this consent form at _______________________________ on ________________, 20__________________.

Signature of spouse or common-law partner ____________________________________

Address of spouse or common-law partner _____________________________________

(home telephone number) ____________________________

(work telephone number) _____________________________

STATEMENT OF WITNESS

I certify that

(home telephone number) ____________________________

(work telephone number)______________________________

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In October 2009, the Minister of Finance announced a series of measures to strengthen the legislative and regulatory framework for federally regulated private pension plans (http://www.fin.gc.ca/n08/09-103-eng.asp). A number of amendments to the Pension Benefits Standards Act, 1985 (the PBSA) were made in the Jobs and Economic Growth Act, which received royal assent in July 2010, and in the Sustaining Canada’s Economic Recovery Act, which received royal assent in December 2010. To implement many of these measures, amendments to the Pension Benefits Standards Regulations, 1985 (the PBSR) were made in June 2010 and March 2011. The amendments to the PBSR are the third tranche of amendments forming part of the measures announced in 2009.

As of December 14, 2012, the federal Pooled Registered Pension Plan Act (the PRPP Act) and the Pooled Registered Pension Plan Regulations (the PRPP Regulations) are in force. The technical amendments to the PRPP Regulations included in this package are intended to ensure consistency with the PBSR.

In March 2010, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR) identified inconsistencies between the English and French versions of the Solvency Funding Relief Regulations and the Solvency Funding Relief Regulations, 2009. In September 2013, the SJCSR also identified inconsistencies between the English and French versions of the Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010. The amendments address these inconsistencies, and make other technical changes.

Background

Under the PBSA, the federal government regulates private pension plans covering areas of employment under federal jurisdiction, such as telecommunications, banking and interprovincial transportation. Under the PRPP Act, the federal government regulates pooled registered pension plans (PRPPs) offered to employers and employees in industries that are federally regulated, as well as PRPPs offered to employers, employees, and the self-employed in the Yukon, Northwest Territories and Nunavut. The Office of the Superintendent of Financial Institutions (OSFI) is responsible for the supervision of private pension plans and PRPPs that are within federal jurisdiction.

The PBSA and the PRPP Act set out minimum standards for registered pension plans and PRPPs, respectively. These minimum standards apply to issues such as the investment of funds, membership eligibility, locking-in requirements, portability of benefits, death benefits, and rights to information. For defined benefit pension plans, the PBSA requires that promised benefits be funded in accordance with the standards provided for under the PBSR.

The regulatory amendments to the PBSR (i.e. to the Solvency Funding Relief Regulations, Solvency Funding Relief Regulations, 2009 and Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010) fall under the statutory authority of the PBSA. The regulatory amendments to the PRPP Regulations fall under the statutory authority of the PRPP Act.

Objectives

The amendments to the PBSR seek to achieve three main objectives: (1) improve the regulatory framework for defined contribution plans; (2) modernize the pension fund investment rules; and (3) enhance disclosure and protection of plan members’ and former members’ pension benefits.

The amendments to the PRPP Regulations provide consistency with corresponding provisions in the PBSR.

The amendments to the Solvency Funding Relief Regulations, Solvency Funding Relief Regulations, 2009 and Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010 address inconsistencies between the English and French versions and make other technical changes.

Description

Improving the regulatory framework for defined contribution pension plans

Currently, upon retirement, members of a defined contribution pension plan must opt for either a life annuity purchased for them by the pension plan administrator or they may transfer their pension benefit credit into a prescribed savings vehicle, such as a locked-in registered retirement savings plan (locked-in registered retirement savings plan [RRSP]) or a life income fund. In 2010, the PBSA was amended to allow defined contribution plans to offer members and former members who are eligible to transfer their funds out of a pension plan (e.g. individuals who have reached retirement age) the option to receive variable annual payments (variable benefits) directly from the plan. The annual variable payment amount must be within a minimum amount determined by the Income Tax Act, and a maximum amount prescribed by the amendments. The maximum annual payment for individuals between 55 and 90 years of age depends on the individual’s account balance, age, and an interest rate based on the yield on Government of Canada marketable bonds for the first 15 years in which an individual receives variable payments, and 6% thereafter. After 90 years of age, there is no maximum on the variable payment amount that can be withdrawn. The payment amount is calculated using a formula which is consistent with the formula used for calculating payment amounts from life income funds under the PBSR. If a member does not choose a payment amount for a year, the minimum amount, as determined under the Income Tax Act, applies.

In order for a former member to receive variable payments, the PBSA requires consent from the former member’s spouse or common-law partner. The amendments prescribe a form for obtaining the required consent by signature from the spouse or common-law partner. The form indicates that there are minimum and maximum annual withdrawal limits from the pension plan. The form also indicates that if the maximum amount is withdrawn each year or if the investment performance of the fund is poor, the amount of pension income or survivor benefit available to a spouse or common-law partner in later years may be significantly reduced.

The amendments to the PBSR clarify the responsibilities of plan parties involved in defined contribution (DC) pension plans that offer investment choices to members or former members or their beneficiaries with a defined contribution account or an account maintained for additional voluntary contributions. In particular, the amendments require plan administrators who offer investment choices to provide members or former members with a written notice, at least annually, that includes any timing restrictions that apply to making an investment choice and a description of each investment choice that includes the choice’s investment objective, performance history, and fees. In order to minimize duplication, the requirement for plan administrators to establish a written statement of investment policies and procedures is no longer required for the assets of a pension plan that are held in respect of a member choice account, since the choices are subject to their own disclosure requirements, as noted above.

Modernizing the investment rules

The PBSA provides for a prudent portfolio standard supplemented by the PBSR investment rules. As part of the amendments to the PBSR, definitions applicable to the investment rules have been updated. The definition of the term “public exchange” was outdated, as it included exchanges that no longer exist. As a result, the term “public exchange” is replaced with “marketplace,” to reflect that pension plan investments may be bought and sold on a public exchange as well as a quotation and trade-reporting system, or other platforms that are maintained to bring together the buyers of securities or derivatives. The definitions of “mutual fund” and “pooled fund” are also repealed and replaced with the term “investment fund” to capture both these types of funds, as well as clarify that these funds could be established by a corporation, limited partnership or trust.

The PBSR investment rules prohibit plan administrators from investing or lending more than 10% of the total value of the plan’s assets in a single entity. The amendments to the PBSR amend a number of aspects of this concentration limit. The amendments modify the 10% limit so that it is based on the current value or “market value” of a pension plan’s assets rather than the “book value.” The book value can be outdated as it reflects the original purchase price. The amendments also clarify that the 10% limit applies when investments or loans are made and applies to the aggregate value of debt and equity in an entity. The 10% rule applies at the member level for a plan that allows a member to make investment choices. In addition, there is a carve-out to the 10% rule for investment fund and segregated fund holdings related to member choices. This is intended to be consistent with the exemption to the 10% rule for the PRPPs investment holdings.

The PBSR investment rules prohibit plan administrators from investing in a related party to the plan, such as an employer who participates in the plan, subject to specific exemptions. One exemption permitted the administrator to purchase securities of a related party if those securities were acquired at a public exchange. The amendments remove the public exchange exemption and instead allow the administrator to invest in the securities of a related party if the securities are held in an investment fund or segregated fund in which investors other than the administrator and its affiliates may invest and that complies with certain quantitative limits. The amendments also clarify that the administrator may enter into a transaction with a related party for the administration of the plan, such as hiring a related party to act as a broker dealer. Administrators of pension plans that currently hold securities of related parties will be given five years to divest themselves of these securities in order to comply with the related party rules.

Improving protection for plan members and beneficiaries

When a member leaves employment, they may transfer their accumulated pension benefit credit to a prescribed retirement savings plan, such as a locked-in RRSP or a life income fund. The 2010 legislative amendments to the PBSA require the member to obtain the consent of their spouse or common-law partner before being eligible to transfer their pension benefit credit to a prescribed retirement savings vehicle. The amendments prescribe a form for obtaining the required consent by signature from the spouse or common-law partner. The form indicates that if the pension benefit credit is transferred to a prescribed retirement savings vehicle, there may be minimum and maximum withdrawal limits. The form also indicates that if the maximum amount is withdrawn each year or if the investment performance of the fund is poor, the amount of pension income or survivor benefit available to a spouse or common-law partner in later years may be significantly reduced.

The PBSA includes provisions that allow, under certain conditions, for the refund of all or part of a surplus. The amendments to the PBSR extend the waiting period on surplus distributions from 14 to 40 days following consent by the Superintendent. This is intended to ensure that the surplus is not distributed until plan members, former members and any other person who is entitled to a pension benefit under the terms of the plan have had the opportunity to submit to the Federal Court a request for judicial review of the Superintendent’s decision.

Enhancing disclosure

Pension plan administrators are required under the PBSA to provide members and their spouses or common-law partners with an annual statement that includes prescribed information, such as the member’s pensionable age, name of their spouse or common-law partner on file, the plan member’s contributions to the plan for the year, and for defined benefit pension plans, the plan’s funded status. The amendments expand the annual statement requirements to include the plan’s 10 largest asset holdings and target asset allocation, and for defined benefit plans, the valuation date and the solvency ratio reported in the most recent actuarial report, the total value of solvency assets and liabilities on the valuation date, and the employer’s total payments made to the plan for the plan year.

The amendments to the PBSR require that administrators provide former members (i.e. retirees and other former members) and their spouses or common-law partners with an annual statement similar to the annual statement sent to active members, including the proposed amendments to the annual statement for members.

Negotiated contribution plans are multi-employer defined benefit pension plans under which the employer’s contributions are negotiated and limited by agreement. Under these arrangements, pension benefits or pension benefit credits may be reduced in situations where negotiated contributions are insufficient to meet the prescribed solvency standards. The administrator may amend the plan to reduce pension benefits or pension benefit credits, subject to the Superintendent’s authorization. Plan administrators under the PBSA are currently required to provide members and former members of negotiated contribution plans with the same annual statement that they provide to all defined benefit plan members and former members. The annual statement requirements for negotiated contribution plans are expanded to include a description of the funding arrangement. The amendments require similar disclosure requirements for the written explanation of the pension plan’s terms and conditions which are provided to employees who are eligible to join the plan.

For members and former members who elect to receive variable benefits, the amendments to the PBSR require that the annual statement include the date of birth used to determine minimum payments, the minimum and maximum annual payments permitted, the payment frequency over the year, an indication of how the recipient may change the amount they receive and how they can change the investments from which the payments are coming from, and the transfer options available to them, such as to an annuity, locked-in RRSP and life income fund.

Legislative amendments to the PBSA made in 2010 allow information to be provided in electronic form, such as the annual statement provided to members. The regulatory amendments to the PBSR set out that the addressee (i.e. member, former member, spouse or common-law partner) may consent in writing, in paper or electronic form, or orally to receive information electronically, and that the addressee has the right to revoke their consent at any time. If electronic documents are available on a generally accessible information system, such as a Web site, the amendments require that the administrator provide addressees with notice of the document’s availability and its location.

The July 2010 legislative amendments to the PBSA require pension plan administrators to provide notification to beneficiaries (members or former members and their spouse or common-law partner) following a plan termination. This includes providing beneficiaries with a written statement within 30 days of termination or any longer period permitted by the Superintendent, indicating that the plan has terminated; and providing beneficiaries with a written statement within 120 days of termination or any longer period permitted by the Superintendent, informing them of their pension benefits payable. The amendments to the PBSR prescribe the form for these two statements and the information contained in them. The amendments require that the statement provided to beneficiaries within 30 days of termination include the termination date, the member or former member’s name and date of birth, designated beneficiary, and indicate the rights of certain beneficiaries to examine plan documents filed with the Superintendent. The amendments require that the statement provided to beneficiaries within 120 days include information such as the credited pensionable service, pensionable age, information about member and employer contributions, pension benefit payable, survivor benefit payable, the plan’s funded status and the beneficiaries’ portability options.

Additional technical regulatory amendments

To ensure pension savings are available throughout retirement, an individual’s funds accumulated in a pension plan or PRPP can generally not be accessed until retirement (i.e. funds are “locked-in”) and payments are subject to a maximum annual payment based on the fund holder’s age. The maximum annual variable payments and maximum life income fund payments under the PRPP Act are intended to be the same as the maximum payments from life income funds under the PBSR. Amendments to the PRPP Regulations adjust the maximum variable payment and life income fund payment formulas to clarify that the permitted maximums are the same as what applies to life income funds under the PBSR.

The PRPP Regulations previously allowed individuals to transfer their funds directly from a PRPP to a restricted locked-in savings plan, which is a locked-in RRSP that does not permit a one-time unlocking of up to 50% of the funds in the account at the age of 55 or older. Individuals that are 55 or older are only permitted to unlock up to 50% of their holdings from a restricted life income fund. Funds in the life income fund that are from a restricted locked-in savings plan may not be included in the amount that can be unlocked from a life income fund. Under the PRPP Regulations there may have been circumstances where a member or former member transferred their PRPP funds to a restricted locked-in savings plan unintentionally restricting the individual’s ability to use the one-time 50% unlocking provision. In order to ensure that individuals have a one-time opportunity to exercise the 50% unlocking provision and for consistency with the PBSR, the amendments remove the provision in the PRPP Regulations that allowed funds to be transferred directly from a PRPP to a restricted locked-in savings plan.

The amendments to the PBSR also remove the regulatory provisions related to simplified pension plans, a form of defined contribution plan administered by a financial institution. Those provisions were rendered invalid when their enabling legislative provisions in the PBSA were repealed. Simplified pension plans are similar in nature to PRPPs and are therefore no longer needed as a result of the coming into force of the PRPP Act and its associated regulations. Existing simplified pension plans are able to continue to operate.

The amendments to the Solvency Funding Relief Regulations, Solvency Funding Relief Regulations 2009, and Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010 address inconsistencies between the English and French versions and make other technical changes.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as the amendments do not result in any changes in administrative costs to business.

Small business lens

The small business lens does not apply, as the amendments do not impose costs on small business.

Consultation

On January 9, 2009, the Government released a discussion paper entitled “Strengthening the Legislative and Regulatory Framework for Private Pension Plans Subject to the Pension Benefits Standards Act, 1985.” This was followed by a series of public meetings, led by Mr. Ted Menzies, the former Parliamentary Secretary to the Minister of Finance, in Ottawa, Halifax, Montréal, Toronto, Vancouver, Whitehorse, Edmonton and Winnipeg. Concerned stakeholders were afforded the opportunity to make their views known to the Government by speaking at one of the public meetings or by making a written submission. Although the deadline for written submissions was initially March 16, 2009, this was extended to May 31, 2009, based on the level of interest and stakeholder engagement.

The Government received a wide range of views during the consultation. Over 200 submissions were made on behalf of a range of stakeholders, including plan sponsors, industry associations, pension actuaries, members of the legal profession, labour unions, pensioner organizations and plan members. In addition, dozens of individuals made their views known at the various public meetings. Stakeholders were supportive of permitting variable payments and member choices to improve the framework for defined contribution plans. However, many of the technical details in the Regulations to implement these options were beyond the scope of the consultation.

The amendments were set out in the proposed Regulations that were published for a 30-day comment period in Part I of the Canada Gazette on September 27, 2014. The Department of Finance received 19 written submissions regarding the Regulations during the consultation period. The submissions were from plan sponsors, a retiree association, pension fund managers, industry associations, and members of the legal and actuarial professions.

The majority of comments on the proposed amendments to the Regulations were focused on the PBSR investment rules. Several stakeholders sought greater clarity on the rule that prohibits plans from investing or lending more than 10% of the plan’s assets in any one entity. In particular, their view was that the PBSR, including the proposed amendments, were unclear as to whether the prohibition was intended to apply to transactions that result in the plan exceeding the limit, or whether it is an ongoing test that would require the plan to divest assets if investment holdings grew to more than 10% of the plan’s holdings. The rule was clarified by providing that the plan administrator shall not lend or invest in a person, associated persons or affiliated corporations if the transaction would result in the plan having lent or invested, in total, 10% or more of the plan’s assets in that person, associated persons or affiliated corporations. A few stakeholders raised questions regarding the interpretation of definitions, which are questions that should be addressed to the Office of the Superintendent of Financial Institutions.

Stakeholders generally support the prohibition of plans from investing in or lending money to a related party, subject to certain exemptions, which is an existing requirement under the PBSR. However, stakeholders were concerned that the proposed elimination of the nominal and immaterial exemption from the prohibition would result in significant administrative burden and may impact administrators’ ability to invest in a prudent manner. As a result, the nominal and immaterial exemption has been retained in the PBSR.

A few stakeholders raised the issue that some transactions for the operation or administration of the plan, such as the rental of office space, should be exempt from the prohibition from plans investing in, or lending money to, a related party, since these transactions do not involve lending or investing the plan’s money. This is the policy intent, as such, the proposed exemption to the related party rule for services was updated to reflect that transactions for the operation or administration of the plan, other than lending or investing the plan’s money, are exempt from the related party rule as long as the transaction is under terms and conditions no less favourable to the plan than market terms and conditions.

A few stakeholders raised the concern that the proposed exemption to the related party rule and 10% concentration limit for investments that involve the purchase of a contract or agreement that is based on the performance of a widely recognized index may not capture the purchase of certain investment funds. The Regulations clarify that investment funds are included in this exemption since this is the policy intent. In addition, as a result of a stakeholder comment, the proposed provision allowing plans five years to be compliant with the related party rule as a result of transactions by the employer was broadened to include any transaction that is not with the administrator. This is intended to provide the administrator time to comply with the related party rule where non-compliance was not a result of his or her actions, such as a merger or acquisition of an entity that does not involve the administrator.

The majority of stakeholders support enhanced disclosure requirements, including the new requirement that administrators provide former members and their spouses and common-law partners with an annual statement. However, two plan sponsors raised the concern that the requirement to include personal information in the former members’ annual statement may impose an administrative cost. No amendments were made in this regard because these requirements are intended to promote transparency. In addition, the amendments permit electronic communications, which may offset potential costs related to enhanced disclosure for former members.

In response to a number of technical comments on the disclosure requirements and forms, adjustments and clarifications were made to the Regulations. For example, the wording in the statement to members and former members regarding investment choices was adjusted to reflect that information on available investment choices be provided at least annually. In addition, the Regulations also clarify that the annual statement to members and former members must include the plan’s target asset allocation. In addition, the form used to obtain consent from a spouse or common-law partner to transfer a pension benefit credit includes several technical amendments.

A number of stakeholders indicated that there should be a delay in the coming into force of the disclosure requirements and investment rules so that plan administrators have time to adjust their compliance systems. In this regard, the coming-into-force date for the disclosure requirements and investment rules as part of these amendments is set to July 1, 2016, while the remaining provisions come into force on April 1, 2015.

Rationale

The regulatory amendments are intended to protect the rights and interests of pension plan members, retirees and their beneficiaries. In this regard, the amendments to the PBSR contain the details relating to a number of amendments made to the PBSA through the Jobs and Economic Growth Act and to the Sustaining Canada’s Economic Recovery Act. In particular, the amendments include the details required to permit variable benefits and member choices in order to improve the framework for defined contribution plans. The enhancements to disclosure (e.g. annual statements to former members; new disclosure requirements for negotiated contribution plans; additional details in annual statements) improve member awareness and understanding of their pension benefits and will facilitate informed discussions on these matters between plan members and sponsors. Requiring spousal consent for transfers out of a pension plan, and extending the waiting period for surplus distributions provide greater protections for members and former members. Permitting electronic dissemination of information enhance disclosure to members and former members, while also reducing plan costs. The enhancements to the terminology in the investment rules are intended to modernize the rules based on common practices and provide greater clarity on the rules to protect plan members’ and former members’ benefits.

The intent of the amendments to the PRPP Regulations is to ensure consistency with the portability options and locking-in provisions under the PBSR.

The amendments to the Solvency Funding Relief Regulations, Solvency Funding Relief Regulations, 2009 and Canadian Press Pension Plan Solvency Deficiency Funding Regulations, 2010 address inconsistencies between the English and French versions.

Implementation, enforcement and service standards

OSFI is responsible for the control and supervision of the administration of the PBSA and the PRPP Act. As a result, the Superintendent is responsible for enforcing the Regulations.

Contact

Lisa Pezzack
Director
Financial Sector Division
Department of Finance Canada
90 Elgin Street, 13th Floor
Ottawa, Ontario
K1A 0G5
Email: Lisa.Pezzack@fin.gc.ca