Canada Gazette, Part I, Volume 160, Number 14: Regulations Amending Certain Regulations Concerning Pensions

April 4, 2026

Statutory authorities
Pension Benefits Standards Act, 1985
Pooled Registered Pension Plans Act

Sponsoring department
Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues

Unlocking pension funds

At retirement, members of federally regulated defined contribution pension plans may opt to use their pension funds to purchase a life annuity, transfer their funds to a locked-in retirement savings vehicle or, if available, receive variable benefits from the pension plan. Pension funds are referred to as “locked-in” funds, as they are subject to maximum annual withdrawal limits to help ensure that the funds last throughout retirement.

For funds transferred to a locked-in retirement savings vehicle, the Pension Benefits Standards Regulations, 1985 (PBSR) allow members to “unlock” up to 50% of their locked-in pension funds on a one-time basis, providing flexibility to meet early retirement needs and/or have funds available for unplanned expenses.

Currently, the only way for members to access the 50% unlocking option is by transferring their funds out of the pension plan into an eligible locked-in fund (i.e. a restricted life income fund). Therefore, members who choose to keep their funds in their plan and receive variable benefits do not have access to the same unlocking options as those who choose to transfer their pension benefits out of the plan.

Life annuities

The Budget Implementation Act, 2019, No. 1 amended the Pension Benefits Standards Act, 1985 (PBSA) to allow federally regulated defined benefit pension plans to fully transfer the responsibility to provide pensions to retirees, deferred vested members (i.e. individuals have earned benefits in the plan and have ceased membership but are not yet eligible to receive a pension), and survivors, to a regulated life insurance company through the purchase of life annuities (i.e. “buy-out” annuities). This will improve the benefit security of beneficiaries for whom “buy-out” annuities are purchased, as their pensions would be provided by a regulated life insurance company and would no longer be subject to the risk of a future employer insolvency. In addition, it will help improve defined benefit plan sustainability by allowing plan administrators to de-risk their plans through the purchase of these types of annuities. Amendments to the PBSR are needed to prescribe the conditions that a life annuity purchased by a plan administrator must meet in order for the plan administrator to satisfy the obligation under the plan to provide a pension benefit, including the kinds of annuities that may be purchased and the information the plan administrator must provide to the former member, their spouse or common-law partner, and/or the survivor.

Other amendments

Lastly, a few technical amendments to the PBSR, Pooled Registered Pension Plans Regulations (PRPP Regulations), and Assessment of Pension Plans Regulations (Assessment Regulations) are needed to clarify existing provisions and update a reference to pre-empt any future name changes.

Background

The PBSA, PBSR, Pooled Registered Pension Plans Act (PRPP Act), and PRPP Regulations apply to pension plans linked to employment in federally regulated industries. This includes, for example, areas such as navigation and shipping, banking, and inter-provincial transportation, as well as employment in certain federal Crown corporations and all private sector employment in the territories. This does not include the federal public service, Canadian Forces or Royal Canadian Mounted Police pension plans. Approximately 7% of private pension plans in Canada are federally regulated; the remaining 93% are provincially regulated.

The Office of the Superintendent of Financial Institutions (OSFI) is responsible for the supervision of federally regulated pension plans under the PBSA and PRPP Act. Plan administrators are responsible for the administration of their pension plan and for ensuring that their plan complies with the PBSA and PRPP Act as well as with their regulations, and with the terms of the plan. OSFI recovers the cost of supervising federally regulated pension plans through assessment fees that are charged to pension plans, based on plan size (as measured by the number of plan beneficiaries). The Assessment Regulations prescribe how the amount of assessment fees is determined.

Unlocking pension funds

Federally regulated pension plans are typically either defined benefits or defined contributions. In the case of a defined benefit plan, members are provided regular payments from the plan throughout retirement, usually based on their salary and years of service. In a defined contribution plan, employer and/or employee contributions are usually a fixed percentage of salary, and the pension is determined based on accumulated contributions and investment income. Upon retirement, defined contribution plan members are entitled to the funds in their individual accounts, which they must then manage throughout retirement.

Under the PBSA, pension funds are considered “locked-in”; that is, there are rules in place to help ensure that members’ pensions can be a lasting source of income throughout retirement. Therefore, the PBSR sets annual maximum withdrawal limits to help ensure sufficient income throughout retirement. Pension funds are required to be locked-in after two years of continuous membership in a plan, although some plans may provide that funds are locked-in earlier.

There are certain conditions under which a pension plan member can “unlock” their locked-in funds, which are set out in the PBSR. Unlocking options are available for those members that experience decreased life expectancy, encounter severe financial hardship, cease residency in Canada for at least two years, or hold a small account balance. Additionally, members and retirees are allowed a one-time unlocking option of up to 50% of their pension funds, if they are over the age of 55 and the pension funds have been transferred from the plan or an eligible retirement savings vehicle to a restricted life income fund (RLIF), which is a type of locked-in retirement savings vehicle. This provision balances the objectives of preserving pension funds as a source of income throughout retirement while providing retirees with some flexibility as to when and how they use their retirement savings.

At retirement, plan members must make a decision on how to receive their pension benefits. Defined contribution plan members may use the funds to purchase a life annuity from an insurance company, transfer their account balance to a locked-in vehicle — such as a life income fund (LIF), locked-in registered retirement savings plan (RRSP), or RLIF — or, if it is offered by their plan, keep the funds in the defined contribution plan and withdraw them as variable benefits in retirement. Locked-in retirement savings vehicles are generally administered by financial institutions or insurance companies and may have associated administration costs. Variable benefits, in contrast, are paid out directly by the plan. Locked-in vehicles and variable benefit arrangements are similar in that they provide retirees with the flexibility to manage the drawdown of their retirement income (subject to minimum and maximum withdrawal rules under the Income Tax Act and PBSR).

In order to unlock pension funds under the options available in the PBSR, the plan member must provide an attestation that their spouse or common-law partner agrees to the unlocking. The attestation is set out in Form 2 of Schedule V of the PBSR. The form must be submitted to the plan administrator in order for the funds to be unlocked.

Life annuities

The PBSA permits defined benefit pension plan administrators to de-risk their plans, meaning to reduce the financial risk related to plan liabilities, either through the purchase of life annuities as an investment of the plan (“buy-in annuities”) or through the purchase of life annuities for retirees where a life insurance company makes payments directly to the beneficiary instead of the plan providing the pension payments (“buy-out annuities”). The life annuity payments are required to match the pension payments promised by the employer. De-risking by annuitizing pension benefits can help reduce funding volatility for the employer(s) as well as improve the administration of the plan and the sustainability of benefits for plan members and retirees.

Annuitizing pension benefits can improve the sustainability and benefit security of defined benefit plans by allowing them to reduce the overall size of plan liabilities and better protect retirees’ benefits against the risk of employer insolvency.

However, given the contractual nature of pension plans between the employer and the employee, it has been understood that with “buy-out” life annuities, an ongoing liability associated with the pension benefits remains with the pension fund and ultimately with the employer. Stakeholders, such as employers and industry associations, raised the concern that this contingent liability or “boomerang risk” associated with these annuities reduces the incentive for plan administrators to annuitize benefits through “buy-out” annuities.

Amendments to the PBSA were introduced in the Budget Implementation Act, 2019, No. 1, to allow defined benefit plan administrators to fully transfer the obligation to provide a pension for former members (e.g. deferred vested members and retirees) and survivors to a regulated life insurance company through the purchase of life annuities, subject to certain conditions set out in the PBSA and prescribed in its regulations. Other Canadian jurisdictions, such as British Columbia, Quebec, Ontario, Nova Scotia, and New Brunswick, have similarly addressed the issue of boomerang risk by introducing legislative provisions discharging plan sponsors from their pension liabilities upon the purchase of qualifying “buy-out” life annuities.

Other amendments

Under the PBSR, OSFI may request any information that the Handbook of the Canadian Institute of Chartered Accountants requires to be set out in a financial statement of a pension plan. The accounting principles set out in the handbook are in accordance with generally accepted accounting principles, which are an accepted set of accounting rules and procedures. OSFI supervises pension plans and has the authority to calculate and collect assessments (fees) from those pension plans in order to recover its expenses. The assessment calculation is determined in part by the number of beneficiaries in a pension plan, which is set out in the Assessment Regulations.

Objective

The objectives of the proposed amendments are

• to provide defined contribution plan members more flexibility in managing their pension funds in retirement by allowing those who choose to receive variable benefits (if offered by their plan) with the same option to unlock up to 50% of their funds within the plan as currently exists for members who transfer their funds out of the plan at retirement;
• to allow defined benefit plan administrators to purchase life annuities for former members and survivors that transfer their responsibility to provide pensions to a life insurance company by setting out notification requirements related to the purchase of life annuities and establishing the types of annuities that may be purchased; and
• to update and clarify the PBSR, the PRPP Regulations, and the Assessment Regulations with other minor amendments.

Description

Unlocking pension funds

The proposed amendments would provide members who elect to receive variable benefits from their defined contribution plan with a one-time opportunity to unlock up to 50% of their pension funds and transfer that amount to an unlocked portion of their variable benefit account, with the remaining funding being held in a locked-in portion of their account. The unlocked portion of the account would not be subject to the maximum withdrawal limits and would continue to be managed by the plan administrator. This would provide defined contribution plan members who choose to keep their funds within the plan after retirement the same access to the one-time 50% unlocking option available to those who choose to transfer their funds from the plan to a locked-in retirement savings vehicle.

The proposed amendments would also require the consent of a member’s spouse or common-law partner in order to unlock funds within a variable benefit account and would add a new Form 5.3 to Schedule IV of the PBSR to obtain that consent.

The proposed amendments would also amend Form 3 of Schedule II (Application to transfer funds out of a pension plan) to include statements that the member understands that funds in a RLIF are not eligible for the one-time 50% unlocking if any portion of the funds comes from a variable benefit account from which funds have already been unlocked.

Life annuities

The proposed amendments set out the kinds of “buy-out” life annuities that must be purchased by defined benefit plan administrators in order to fully transfer the responsibility of providing a pension to a regulated life insurance company. In particular, the benefits provided by the life annuities may not be assigned, charged or given as security or be surrendered or commuted (i.e. convert future pension payments into an immediate lump sum) during the lifetime of the annuitant or their spouse/common-law partner as applicable. This is to protect retirement security and ensure the life annuity can only be used by the individual entitled to it in order to provide retirement income.

In addition, with respect to immediate “buy-out” life annuities (purchased for retirees or survivors who are already receiving their pensions or are eligible to receive their pensions), which are annuities that begin payments within one year after the annuity’s purchase, the life annuity must provide the same options as those provided by the pension plan. For example, if a retiree is currently receiving a monthly pension payment based on a joint and survivor option, the monthly payment from the immediate life annuity must also be based on the same joint and survivor option.

With respect to deferred “buy-out” life annuities (purchased for former members or survivors who are not yet eligible to receive their pension), which are annuities that begin payments no earlier than one year after the annuity’s purchase, the deferred life annuity must offer the same benefits or options the former member or survivor would have been entitled to if the former member had remained a member of the plan until pensionable age. Specifically, this includes

• the option to receive an immediate and reduced pension benefit if they retire early;
• the option to receive post-retirement benefits in the different forms provided by the plan;
• the pre-retirement death benefits that a survivor is entitled to and the options to receive it in different forms;
• that the benefits that a spouse, former spouse, or former common-law partner, or survivor receive shall not stop just because they marry or enter into a common-law partnership;
• the options for how a pension benefit can be distributed between a former member and their spouse, former spouse or former common-law partner on divorce, annulment, separation or breakdown of common-law partnership; and
• that the benefits cannot be based on the sex of a former member or of their spouse or common-law partner.

The proposed amendments also set out that for the purposes of meeting the conditions in the PBSA to allow the full transfer of the pension through a life annuity purchase, the plan administrator must

• provide each former member (and their spouse or common-law partner) and survivor entitled to a pension a written explanation of any amendments to the plan to allow for the purchase of life annuities within 60 days of the amendments; and
• provide notice of the purchase of a life annuity, within 60 days of the purchase, to each former member (and their spouse or common-law partner) and survivor for whom a life annuity was purchased.

The proposed amendments also set out the information required in the notice, which is intended to ensure that the former member (and their spouse or common-law partner) or survivor for whom the life annuity has been purchased has all the necessary information to understand how and when their pensions will be paid by the life insurance company. The notice also sets out descriptions of the pension benefits they are entitled to under the plan, including any entitlements to any future surplus, and how those same pension benefits and/or options will be provided by the life insurance company.

Lastly, the proposed amendments make a consequential amendment to the Assessment Regulations to adjust the definition of “beneficiary” to no longer include former members for whom a “buy-out” life annuity has been purchased, as these former members are no longer in the pension plan and should no longer be included when calculating the pension plan’s assessment fees.

Other amendments

The proposed amendments replace a reference to the “Handbook of the Canadian Institute of Chartered Accountants” with a reference to “generally accepted accounting principles used in Canada.” This amendment eliminates the reference to an actual document title along with the need to update the reference should that title change.

In addition, the proposed amendments amend paragraph 22(a) of the PBSR to remove the term “plan” before the term “members” to ensure consistency between the English and the French versions, and amend paragraph 22(b) of the PBSR to include former members, to ensure former members are able to receive the information required under section 28(1) of the PBSA by mail at their place of residence.

Lastly, the proposed amendments would also amend Form 2 of Schedule V of the PBSR and Form 2 of the PRPP Regulations to clarify which spouses and common-law partners are required to complete the forms. Consent to unlock pension funds is not required from a spouse that has no rights as determined by a court order or distribution agreement to the funds in the locked-in plans or a spouse or from the spouse of a survivor or someone to whom a distribution of property or assignment was made. Otherwise, a spouse or common-law partner must consent and complete Form 2.

Regulatory development

Consultation

Stakeholder groups representing employers and plan administrators have expressed interest over the past several years in improving the options available to members of defined contribution pension plans when they reach retirement. In particular, one pension industry association has indicated their support for allowing the unlocking of funds within variable benefits accounts, and a large federal employer has explicitly advocated for the change in relation to variable benefits offered by the plan with the intention of being able to provide members with more flexibility in managing their retirement income.

The life annuity provisions enacted through the Budget Implementation Act, 2019, No. 1, were consulted on in 2015 during an informal consultation process conducted by the Department of Finance. The informal consultation was shared with 13 stakeholders representing employers, retiree groups, and industry experts, and responses were received from 10. These 10 stakeholders were supportive of allowing “buy-out” annuities to improve risk management and benefit security. They were also overall supportive of the proposed conditions.

Views mainly differed on what information should be provided and when to provide it in relation to the purchase of an annuity, as well as how plan surplus should be treated regarding individuals for whom a “buy-out” life annuity had been purchased. Industry experts and employers thought information about an annuity transaction was not necessary or should be given after the transaction, while retiree groups thought it should be given prior. Industry experts and employers were divided on whether individuals for whom an annuity was purchased should have a right to any future surplus distribution. Retiree groups and employers thought surplus rights should be determined by the plan text or legislation. These responses were considered in the development of the buy-out annuity framework. While the legislation does not provide the regulatory authority to set out rights with respect to surplus, it does require the regulations to set out the information that must be provided in the required notice following the purchase of annuities. To ensure that individuals are aware of any surplus rights, the regulations require that this information be provided in the notice.

Consultations have not been held on the other proposed amendments, as they are minor and/or technical in nature. The 30-day pre-publication comment period in the Canada Gazette, Part I, will provide an opportunity for stakeholders to comment on the proposed amendments.

Indigenous engagement, consultation and modern treaty obligations

Following the completion of the assessment of modern treaty implications, no adverse impacts on potential or established Indigenous or treaty rights, which are recognized and affirmed in section 35 of the Constitution Act, 1982, were identified.

The proposed amendments only impact Indigenous people to the extent that they have workplace pension plans and would improve flexibility and retirement security.

Instrument choice

The requirements for variable benefits and unlocking pension benefits are set out in the PBSR. To allow for 50% unlocking for variable benefit accounts, amendments must be made to the existing provisions.

The Budget Implementation Act, 2019, No. 1, amended the PBSA to allow pension plan administrators that provide life annuities to transfer the responsibility to provide pensions to a life insurance company. The proposed amendments are required to operationalize the legislative amendments. Therefore, no other instruments were considered.

Regulatory analysis

Benefits and costs

Baseline scenario

• At retirement, members of defined contribution plans may choose to use their pension funds to purchase a life annuity, transfer their funds to a locked-in retirement vehicle, or, if offered by the plan, continue to stay in the plan and receive them as variable benefits from the pension plan. For funds transferred to a locked-in retirement savings vehicle, the PBSR allows members to “unlock” up to 50% of their locked-in pension funds on a one-time basis, providing flexibility to meet early retirement needs and/or have funds available for unplanned expenses.
• Plan administrators of defined benefit plans may purchase life annuities for beneficiaries where a life insurance company makes payments directly to the beneficiary, but the responsibility of providing the benefit remains with the pension fund.
• Everyone has access to previous versions of the PBSR, PRPP Regulations, and the Assessment Regulations.

Regulatory scenario

• Retired members of defined contribution pension plans who elect to receive variable benefits have a one-time opportunity to unlock up to 50% of their pension funds and transfer that amount to an unlocked portion of their variable benefit account, with the remaining funding being held in a locked-in portion of their account. This would provide the members who choose to keep their funds within the plan after retirement with the same access to the one-time 50% unlocking option available to those who choose to transfer their funds from the plan to a locked-in retirement savings vehicle.
• Plan administrators of defined benefit plans may purchase life annuities for former members and survivors that fully transfer the responsibility of providing a pension to a regulated life insurance company.
• Everyone has access to clearer and updated versions of the PBSR, the PRPP Regulations, and the Assessment Regulations following minor amendments.

The proposed amendments are not expected to impose any significant costs on employers, administrators, members or retirees. They would also not impose any costs on the federal government.

Businesses

For unlocking pension funds, defined contribution plan administrators already have the option of whether to offer variable benefit arrangements to their members at retirement. The proposed amendments would allow administrators to also offer the one-time 50% unlocking opportunity within the plan. Plan members who elect to unlock funds within their defined contribution plan would be required to complete a form indicating their election, similar to the form that is already required for unlocking through an RLIF. As a result, any costs borne by plan administrators or members associated with the unlocking of variable benefits within the plan would be similar to those associated with transferring funds out of the plan and would also be borne on a voluntary basis.

For life annuities, defined benefit plan administrators are already permitted to purchase life annuities on behalf of former members and survivors, although these purchases do not allow the plan to satisfy its obligation to provide a pension. The proposed amendments will enable the operationalization of the new section 17.2 of the PBSA, which relates to permitting defined benefit pension plan administrators to fully transfer the obligation to provide pensions to former members and survivors through the purchase of life annuities. As this transfer will also satisfy the obligation to provide pensions to those individuals, thereby relieving plans of the associated liability, it is expected to help encourage the use of “buy-out” life annuities. This in turn would help improve the sustainability of defined benefit plans by allowing plans to transfer their pension liabilities and associated risks to a life insurance company.

The new section 17.2 of the PBSA also requires plan administrators to satisfy certain conditions in order for the pension liabilities to be transferred to a life insurance company. The proposed amendments would help protect benefits by setting out the requirements for the kinds of annuities that can be purchased and would also introduce notice requirements to ensure former members (and their spouse or common-law partner) and survivors are informed when an administrator amends a plan to allow for the purchase of these life annuities and when administrators purchase “buy-out” annuities in respect of the former member or survivor’s pension obligations. This is information that the plan administrator already has (e.g. name and date of birth of the former member or survivor), information that they would have by virtue of having purchased a life annuity (e.g. name of the annuity issuer), or statements about how they are complying with the requirements. Therefore, any costs associated with providing the notice would be for the benefit of former members and survivors for whom a “buy-out” life annuity has been purchased; these notices are not required to be submitted to OSFI.

Government

OSFI’s supervision of pension plans operates on a cost-recovery basis and there would be no incremental costs for OSFI associated with the proposed amendments.

For life annuities, the proposed amendments could help provide more sustainable benefits while a defined benefit plan is ongoing, as well as reduce the supervisory burden for OSFI to the extent that there is less risk to the funded status of a defined benefit plan that purchases annuities to de-risk their plan.

The other proposed technical amendment is to update a term to reflect a name change to the referenced product and to eliminate the need to update the reference for any future name changes.

Canadians/Consumers

For unlocking pension funds, the proposed amendments would provide recipients of variable benefits with the same flexibility to “unlock” up to 50% of their pension funds on a one-time basis as those who choose to transfer their funds out of the defined contribution plan to a locked-in retirement savings vehicle. Through a variable benefit arrangement that allows for 50% unlocking, members may be able to plan their retirement spending more efficiently. For example, a retiree may choose to improve their retirement security by deferring their Canada Pension Plan (CPP) and/or Old Age Security benefits to age 65 or 70 — allowing them to receive higher monthly benefits — and to withdraw higher amounts from their unlocked defined contribution pension funds during the deferral period to maintain their living standards. In addition, as the unlocked funds would be transferred to a different portion of the same account within the pension plan, members would be able to keep their funds invested with a familiar provider with likely lower fees than those offered by third-party financial institutions.

To unlock their funds, the member would need to complete a form and have it signed by a notary public, commissioner, or other person authorized to take affidavits, which would be expected to cost between $20 to $40.

For life annuities, it would also improve the benefit security of those former members and survivors for whom the annuities were purchased, as their pensions would no longer be subject to the risk of employer insolvency. Further, regulated life insurance companies are subject to prudential capital and supervision by OSFI, providing additional protections.

Small business lens

Analysis under the small business lens concluded that the proposed amendments will not impact Canadian small businesses. The proposed amendments would provide additional options for administrators of defined benefit pension plans and large defined contribution plans who chose to offer variable benefits. These types of pension plans are not offered by small businesses.

One-for-one rule

The proposal would not introduce or repeal any regulatory titles.

The proposed amendments generally provide plan administrators with additional options that they could undertake to de-risk their defined benefit plan or improve the retirement security of their members and retirees. While there may be minimal costs associated with choosing these new options, they are already available to other beneficiaries and participation is voluntary (i.e. the proposed amendments do not require plan administrators to purchase life annuities or allow 50% unlocking within a defined contribution plan). While there are additional forms and notices, they do not need to be submitted to OSFI. Therefore, there is no increased administrative burden on plan administrators.

Regulatory cooperation and alignment

This proposal is not part of a formal regulatory cooperation initiative; however, upon operationalization, two of the proposed amendments would increase alignment of the federal pension framework with certain provincial regulations.

The rules related to the unlocking of pension benefits vary across federal and provincial jurisdictions. The federal PBSA and the pension legislation of Ontario, Alberta, Manitoba, Saskatchewan, and New Brunswick allow plan members to unlock at least part of their pension funds on a one-time basis. In addition, both Alberta and Manitoba currently allow plan members to unlock 50% of their funds without a requirement to first transfer funds to a RLIF account.

The provinces of British Columbia, Quebec, Ontario, Nova Scotia, and New Brunswick currently allow pension liabilities to be transferred through the purchase of life annuities in their respective pension legislation.

International obligations

This proposal is not subject to obligations in Canada’s international trade agreements.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

A gender-based analysis plus assessment was undertaken for this proposal and the results indicate that it is not expected to have differential impacts on any particular group.

Implementation, compliance and enforcement, and service standards

Implementation

The proposed amendments would come into force upon registration. Once in effect, federally regulated defined contribution plan administrators would be able to design and operate variable benefits arrangements that incorporate the new rules for unlocking variable benefits. Additionally, federally regulated defined benefit plan administrators would be able to purchase life annuities that fully transfer their obligation to provide a pension to former members and survivors to a life insurance company.

Compliance and enforcement

OSFI supervises federally regulated private pension plans and ensures they are in compliance with the PBSA and PBSR, well as the PRPP Act and PRPP Regulations. Under the PBSA and the PRPP Act, the Superintendent is required to report annually to Parliament on the operations of the acts during the year.

Contact

Kathleen Wrye
Director, Pensions Policy
Financial Crimes and Security Division
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street, 13th Floor
Ottawa, Ontario
K1A 0G5
Email: re-pension@fin.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending Certain Regulations Concerning Pensions under section 39^{footnote a} of the Pension Benefits Standards Act, 1985 ^{footnote b} and section 76 of the Pooled Registered Pension Plans Act ^{footnote c}.

Interested persons may make representations concerning the proposed regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Kathleen Wrye, Director, Pensions Policy, Financial Crimes and Security Division, Financial Sector Policy Branch, Department of Finance, 90 Elgin Street, Ottawa, Ontario K1A 0G5 (email: re-pension@fin.gc.ca).

Ottawa, March 27, 2026

Janna Rinaldi
Acting Assistant Clerk of the Privy Council

Regulations Amending Certain Regulations Concerning Pensions

Pension Benefits Standards Act, 1985

Pension Benefits Standards Regulations, 1985

1 (1) The portion of the definition deferred life annuity before paragraph (a) in subsection 2(1) of the Pension Benefits Standards Regulations, 1985 ^{footnote 1} is replaced by the following:

deferred life annuity,

other than a deferred life annuity referred to in section 17.1, means a life annuity that

(2) The portion of the definition immediate life annuity before paragraph (a) in subsection 2(1) of the Regulations is replaced by the following:

immediate life annuity,

other than an immediate life annuity referred to in section 17.1, means a life annuity that

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

variable benefit account

means an account that relates to a variable benefit and that is composed of a locked-in portion and a non locked-in portion. (compte à prestation variable)

2 Subparagraph 15(1)(c)(ii) of the Regulations is replaced by the following:

• (ii) any information that, according to generally accepted accounting principles used in Canada, must be set out in a financial statement of a pension plan, and

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

Purchase of Life Annuity

17.1 (1) For the purposes of paragraph 17.2 (1)(b) of the Act, the life annuity must provide that

• (a) except as provided in subsection 23(5) or 25(4) of the Act,
  • (i) no benefit – and no related right or interest — provided under the annuity is to be assigned, charged, anticipated or given as security, and any transaction that assigns, charges, anticipates or gives as security such a benefit, right or interest is void or, in Quebec, null, and
  • (ii) no benefit – and no related right or interest — provided under the annuity is to be surrendered or commuted during the lifetime of the annuitant or of their spouse or common-law partner, except in the case of an unexpired period of a guaranteed life annuity when the annuitant is deceased and any transaction that surrenders or commutes such a benefit, right or interest is void or, in Quebec, null;
• (b) in the case of an immediate life annuity, options are offered that achieve the same effects as the options for assignment, distribution and adjustment of benefits set out in section 25 of the Act; and
• (c) in the case of a deferred life annuity,
  • (i) a former member is entitled to any other benefit or option, adapted as required, based on their period of employment and salary up to the time of cessation of membership, and calculated in a similar manner and payable on the same terms and conditions as the benefit or option to which, if they had remained a member of the pension plan until pensionable age, they would have been entitled under the terms of the plan that are required or permitted by subsections 16(2), (4) and (6) and sections 22 to 25 and 27 of the Act and that are in place on the day of the purchase, and
  • (ii) the option set out in paragraph 18(2)(b) of the Act is offered if the plan provides for it on the day of the purchase.

(2) For the purposes of paragraph 17.2(1)(d) of the Act, the administrator must provide

• (a) to each former member who is entitled to a pension benefit under the plan, their spouse or common-law partner and each survivor who is so entitled, a written explanation of any amendment to the plan that authorizes the purchase of an immediate life annuity or deferred life annuity in satisfaction of the obligation under the plan to provide a pension benefit to a former member or survivor, within 60 days after the amendment is made; and
• (b) to each former member and their spouse or common-law partner, or to each survivor, for whom an immediate life annuity or deferred life annuity has been purchased, written notice, within 60 days after the purchase, that includes:
  • (i) the date of the notice,
  • (ii) the name of the former member or survivor,
  • (iii) the date of birth of the former member or survivor,
  • (iv) the name of the spouse or common-law partner of the former member listed on the records of the administrator,
  • (v) the date of birth of that spouse or common-law partner,
  • (vi) the name of any designated beneficiary listed on the records of the administrator,
  • (vii) a statement that the administrator has purchased an immediate life annuity or deferred life annuity for the former member or survivor,
  • (viii) the date of purchase of the life annuity,
  • (ix) the name of the life annuity issuer,
  • (x) the mailing address, telephone number and email address of the issuer,
  • (xi) a statement that the purchase of the annuity, in accordance with the provisions of the plan and the Act, satisfies an obligation under the plan to provide all or part of the pension benefit and that the issuer is responsible for payment of the annuity,
  • (xii) if the former member’s or survivor’s entire pension benefit is to be provided by the issuer, a statement that the former member and their spouse or common-law partner, or survivor will no longer receive annual statements in respect of the plan,
  • (xiii) a statement indicating whether the former member or survivor could be entitled to any surplus despite the purchase of the life annuity and, if so, a description of that entitlement,
  • (xiv) in the case of an immediate life annuity,
    • (A) the date of retirement or death of the former member, and
    • (B) the date of commencement of the annuity benefits to the former member or survivor,
  • (xv) in the case of a deferred life annuity,
    • (A) the date on which the former member attains pensionable age or the date on which the survivor becomes entitled to an unreduced pension,
    • (B) the date on which the former member or survivor will be eligible to receive an early retirement pension, and
    • (C) a description of the pre-retirement death benefit of the former member or survivor,
  • (xvi) a statement providing a description of the pension benefit and any other benefit or option to which the former member or survivor is entitled under the plan, including whether they are entitled to a bridging benefit, a post-retirement survivor benefit, a guarantee period or indexation of the pension benefit,
  • (xvii) a statement indicating the monthly pension benefit payable to the former member or survivor under the plan, including the amount of any bridging benefit and the period for which it is provided,
  • (xviii) a statement indicating whether the annuity issuer will pay the entire pension benefit or whether part of the pension benefit it will still be paid by the plan,
  • (xix) a statement indicating the monthly amount payable by the issuer on the date that the annuity payments commence and any monthly pension benefit or other benefit or option that remains payable by the plan on that date,
  • (xx) in the case of an immediate life annuity, a statement indicating that the totalamount payable referred to in subparagraph (xix) is in the same amount as the pension benefit and any other related benefit or option referred to in subparagraphs (xvi) and (xvii), to which the former member or survivor would have been entitled under the terms of the plan that were in place on the day of the purchase, and
  • (xxi) in the case of a deferred life annuity, a statement indicating that the total amount payable referred to in subparagraph (xix) is in the same amount as the pension benefit, and any other related benefit or option referred to in subparagraphs (xvi) and (xvii), to which the former member or survivor would have been entitled under the terms of the plan that were in place on the day of the purchase.

4 Paragraph 20.3(1)(n) of the Regulations is amended by striking out “and” at the end of subparagraph (i) and by replacing subparagraph (ii) with the following:

• (ii) the holder gives a copy of Form 2 of Schedule V to the financial institution with which the contract or arrangement for the restricted life income fund was entered into, and
• (iii) none of the funds in the restricted life income fund come from a variable benefit account in which funds were transferred under subsection 21.2(1); and

5 Section 21.1 of the Regulations is replaced by the following:

21.1 (1) A member or former member who has elected to receive a variable benefit or a survivor who is entitled to such a benefit may, for any calendar year, decide the amount that they are to receive as a variable benefit from the locked-in and non locked-in portions of the variable benefit account.

(2) The variable benefit must not be less than the minimum amount determined under subsection 8506(5) of the Income Tax Regulations.

(3) For any calendar year before the year in which the former member or survivor reaches 90 years of age, the variable benefit from the locked-in portion of the variable benefit account must not be more than the amount determined by the formula

C ÷ F

where

C

is the balance in the locked-in portion

• (a) at the beginning of the calendar year, or
• (b) if the balance at the beginning of the calendar year is zero, on the day on which the election was made; and

F

is the value, at the beginning of the calendar year, of a pension benefit whose 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 survivor reaches 90 years of age, established using an interest rate that is

• (a) for each of the first 15 years, not more than the monthly average yield on Government of Canada marketable bonds of maturity over 10 years, as published by the Bank of Canada, for the month of November before the beginning of the calendar year, and
• (b) for any subsequent year, not more than 6%.

(4) For the calendar year in which the former member or survivor reaches 90 years of age and for all subsequent calendar years, the amount of the variable benefit must not exceed the value of the funds held in the variable benefit account immediately before the time of the payment.

(5) The minimum amount determined under subsection 8506(5) of the Income Tax Regulations must be paid as a variable benefit for a calendar year and withdrawn first from the non locked-in portion of the variable benefit account, then, in the absence of sufficient funds in that portion, from the locked-in portion if

• (a) the member, former member or survivor has not notified the administrator of the amount to be paid as a variable benefit for the calendar year before the beginning of that year, or
• (b) the amount determined by the formula set out in subsection (3) for that year is less than that minimum amount.

(6) The funds held in the non locked-in portion of the variable benefit account are exempt from the application of paragraph 18(1)(c) of the Act.

(7) If, for the calendar year in which the member or former member elects to receive a variable benefit, part of the locked-in portion of the variable benefit account was composed of funds that had been held in a life income fund of the member or former member earlier in that year, the amount determined by the formula set out in subsection (3) and the value of the funds referred to in subsection (4) are deemed to be zero in respect of those funds for that year.

(8) For the first calendar year that the variable benefit is paid, the amount to be paid must 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.

21.2 (1) A member, former member or survivor may elect to transfer, on a one-time basis, up to 50% of the amount — as at the date of the election — held in the locked-in portion of the variable benefit account to the non locked-in portion.

(2) A member or former member may make the transfer only if their spouse or common-law partner consents.

(3) The notification of consent must be made in Form 5.3 of Schedule IV.

6 (1) The portion of section 22 of the Regulations before paragraph (a) is replaced by the following:

22 The written explanation, information and written statement to be given under paragraphs 28(1)(a) to (b.1) of the Act must be addressed to the member, former member or employee who is eligible to join the pension plan, to their the spouse or common-law partner, and to any survivor who is entitled to pension benefits under the plan, using the names and addresses shown on the records of the administrator and must be

(2) Paragraph 22(a) of the English version of the Regulations is replaced by the following:

• (a) given to the member or employee at the place of employment; or

(3) Paragraph 22(b) of the Regulations is replaced by the following:

• (b) mailed to the residence of the member, former member, employee or survivor.

7 Paragraph 2(c) of Form 3 of Schedule II to the Regulations is replaced by the following:

(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 with the understanding that any funds held in the restricted life income fund are ineligible for the 50% transfer option available under paragraph 20.3(1)(n) if any portion of those funds comes from a variable benefit account in which funds were transferred from the locked-in portion to the non locked-in portion under subsection 21.2(1);

8 Paragraph 4(c) of Form 3 of Schedule II to the Regulations is replaced by the following:

(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, which funds will be ineligible for the 50% transfer option available under paragraph 20.3(1)(n) if any portion of those funds comes from a variable benefit account in which funds were transferred from the locked-in portion to the non locked-in portion under subsection 21.2(1);

9 Schedule IV to the Regulations is amended by adding the following after Form 5.2:

FORM 5.3

(Subsection 21.2(3))

Attestation Regarding the Transfer of Funds Within a Variable Benefit Account

This form is not to be completed by an individual who receives a variable benefit from a pension plan either as a survivor or as a spouse, former spouse or former common-law partner to whom a distribution of property or assignment was made on divorce, annulment, separation or breakdown of a common-law partnership as permitted under section 25 of the Pension Benefits Standards Act, 1985.

1 Attestation of applicant

I, (insert name) , of (insert street address) , in the city of , in the province of , attest to the following:

I receive a variable benefit from (insert name of plan) . Under section 21.2 of the Pension Benefits Standards Regulations, 1985, I elect to transfer $   — which is not more than 50% of the funds held in the locked-in portion of my variable benefit account — from the locked-in portion to the non locked-in portion of that account.

On the day on which I sign this Attestation: (check one option):

• (a) I do not have a spouse or common-law partner, as defined in subsection 2(1) of the Pension Benefits Standards Act, 1985.
• (b) I have a spouse, as defined in subsection 2(1) of the Pension Benefits Standards Act, 1985, and it has been determined, through a court order or agreement relating to the distribution of property on separation, that my spouse has no rights with respect to the funds held in the pension plan identified above.
• (c) I have a spouse or common-law partner, as those terms are defined in subsection 2(1) of the Pension Benefits Standards Act, 1985, to whom paragraph (b) does not apply, and that spouse or common-law partner consents to the transfer of the amount specified above to the non locked-in portion of my variable benefit account. (If you check this option, your spouse or common-law partner must complete the Attestation of Spouse or Common-law Partner in item 4 below.)

2 Acknowledgements

I understand that I may need to seek professional advice about the financial and legal implications of such a transfer.

3 Signatures

Sworn (or affirmed) before me, on the day of , 20, at , in the province of .

Signature of applicant

A notary public, commissioner or other person authorized to administer an oath or solemn affirmation

4 Attestation of Spouse or Common-law Partner

I, (insert name) , of (insert street address) , in the city of , in the province of , attest to the following:

I am the spouse or common-law partner of the person identified in item 1.

I understand that

(a) the applicant has elected to transfer the funds specified in item 1 from the locked-in portion of their variable benefit account to the non locked-in portion, and that this transfer is not permitted under subsection 21.2(2) of the Pension Benefits Standards Regulations, 1985 unless the applicant obtains my consent;

(b) the transfer of funds to the non locked-in portion allows the applicant to withdraw those funds immediately, without being subject to maximum withdrawal limits;

(c) as long as these funds are kept in the variable benefit account — regardless of the portion in which they are held — I may have a right to a share of these funds if there is a breakdown in our relationship or if the applicant dies;

(d) if any funds are withdrawn from the variable benefit account, I may lose any right that I have to a share of the funds withdrawn;

(e) when funds are withdrawn from the variable benefit account, the funds may be taxable under the Income Tax Act or other legislation; and

(f) I may need to seek professional advice about the financial and legal implications of such a withdrawal or transfer.

5 Consent of Spouse or Common-law Partner

I consent to the transfer specified in item 1.

6 Signatures

Sworn (or affirmed) before me, on the day of , 20 , at , in the province of .

Signature of spouse or common-law partner

A notary public, commissioner or other person authorized to administer an oath or solemn affirmation

10 Paragraphs 3(a) and (b) of Form 2 of Schedule V to the Regulations are replaced by the following:

• (a) I own the federally regulated locked-in plan(s) identified in item 2 as a survivor or as a spouse, former spouse or former common-law partner to whom a distribution of property or assignment was made on divorce, annulment, separation or breakdown of a common-law partnership, as permitted under section 25 of the Pension Benefits Standards Act, 1985; (If you check this option, your spouse or common-law partner does not need to complete the Attestation of Spouse or Common-law Partner in item 6 below.)
• (b) I do not have a spouse or common-law partner, as those terms are defined in subsection 2(1) of the Pension Benefits Standards Act, 1985;
• (c) I have a spouse, as defined in subsection 2(1) of the Pension Benefits Standards Act, 1985, and it has been determined, through a court order or agreement relating to the distribution of property on separation, that my spouse has no rights with respect to the funds held in the locked-in plan(s) identified in item 2; (If you check this option, your spouse does not need to complete the Attestation of Spouse or Common-law Partner in item 6 below.)
• (d) I have a spouse or common-law partner, as those terms are defined in subsection 2(1) of the Pension Benefits Standards Act, 1985, to whom paragraph (c) does not apply, and that spouse or common-law partner consents to the withdrawal or transfer of the amount specified above from the locked-in plan(s) identified in item 2. (If you check this option, your spouse or common-law partner must complete the Attestation of Spouse or Common-law Partner in item 6 below.)

11 Item 4 of Form 2 of Schedule V to the Regulations is amended by adding the following after the second paragraph:

I understand that any funds in a restricted life income fund are ineligible for the 50% transfer option available under paragraph 20.3(1)(n) if any portion of those funds comes from a variable benefit account in which funds were transferred from the locked-in portion to the non locked-in portion under subsection 21.2(1).

I understand that a consolidation of funds from various accounts could result in the funds becoming ineligible for the 50% transfer option available under paragraph 20.3(1)(n).

Assessment of Pension Plans Regulations

12 The definition beneficiary in subsection 1(1) of the Assessment of Pension Plans Regulations ^{footnote 2} is replaced by the following:

beneficiary

means

• (a) in respect of a pension plan that has been registered under section 12 of the Pooled Registered Pension Plans Act, a person who is a member, as defined in subsection 2(1) of that Act; or
• (b) in respect of a pension plan that has been registered or is filed for registration under section 10 of the Pension Benefits Standards Act, 1985, a person who is a member, as defined in subsection 2(1) of that Act, and any other person who is entitled to pension benefits under the plan, but does not include a person
  • (i) who has transferred all of their pension benefit credit or purchased an immediate life annuity or deferred life annuity under section 26 of that Act,
  • (ii) for whom, after approval of the plan’s termination report under subsection 29(10) of that Act, an immediate life annuity or deferred life annuity has been purchased, or
  • (iii) for whom an immediate life annuity or deferred life annuity has been purchased under subsection 17.2(1) of that Act in satisfaction of all of the plan’s obligations with respect to their pension benefits or to any other benefit or option referred to in paragraph 17(b) of that Act. (bénéficiaire)

Pooled Registered Pension Plans Act

Pooled Registered Pension Plans Regulations

13 Paragraph 3(b) of Form 2 of the schedule to the Pooled Registered Pension Plans Regulations ^{footnote 3} is replaced by the following:

• (b) I have a spouse, as defined in subsection 2(1) of the Pooled Registered Pension Plans Act, and it has been determined, through a court order or agreement relating to the distribution of property on separation, that my spouse has no rights with respect to the funds held in the locked-in plan(s) identified in item 2. (If you check this option, your spouse does not need to complete the Certification of Spouse or Common-law Partner in item 6 below.)
• (c) I have a spouse or common-law partner, as those terms are defined in subsection 2(1) of the Pooled Registered Pension Plans Act, to whom paragraph (b) does not apply, and that spouse or common-law partner consents to the withdrawal or transfer of the amount specified above from the locked-in plan(s) identified in item 2. (If you check this option, your spouse or common-law partner must complete the Certification of Spouse or Common-law Partner in item 6 below.)

Coming into Force

14 These Regulations come into force on the day on which section 147 of the Budget Implementation Act, 2019, No. 1, chapter 29 of the Statutes of Canada, 2019 comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

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