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Pension Bulletin 2022-03 – Proclamation of amendments to the Pension Benefits Act and the General Regulation under the Pension Benefits Act

Bulletins and notices.

When the Act to Amend the Pension Benefits Act received Royal Assent on December 17, 2021, some of the amendments came into force immediately while others required amendments to the General Regulation under the Pension Benefits Act before they could be proclaimed. 

Specifically, the amendments that were awaiting proclamation included:

  • enhancing communication with former members
  • allowing for the statutory discharge of annuity buy-outs, and
  • allowing for reserve accounts.

The regulatory amendments required to complete the modernization of the Pensions Benefits Act were posted for public comment in June 2022. On October 1, 2022, the provisions relating to reserve accounts and the statutory discharge for annuity buy-outs were proclaimed into force and the accompanying regulations filed.

The provisions respecting enhanced communication with former members will come into force on January 1, 2024, to give administrators sufficient time to prepare their processes and systems for issuing statements to former members.

These amendments will improve communication between all parties, decrease uncertainty for employers, and add a level of efficiency.

Statutory discharge of annuity buy-outs

Please note that additional parameters for the statutory discharge of annuity buy-outs are currently under consideration and may be introduced at a later date. In the meantime, it is the Superintendent of Pensions’ expectation that the following parameters be followed by pension administrators for the statutory discharge: 

  • A notice of the purchase should be sent to the individuals in respect of whom a purchase is made. The notice should include:
    • A statement that the administrator has purchased a deferred pension, or a pension, as applicable, for the individual from an insurance company.
    • A statement that the deferred pension, or pension, as applicable, is the same as what would have been provided under the pension plan had the purchase not been made.
    • The date of the purchase.
      • The insurance company’s group policy number and the certificate number issued by the insurance company that confirms the purchase.
    • The name and contact information of the insurance company.
    • A statement that if the administrator is discharged under Section 33 of the Pension Benefits Act, the individual has no further rights or entitlement to any payment from the pension plan, except in certain circumstances where the below statement would apply.
    • A statement, if at the date of the purchase, the individual would be entitled to payment of surplus on wind-up of the pension plan, that states that if the pension plan is wound up during the first three years immediately after the date of purchase, the individual would be entitled to participate in the allocation of any surplus of the pension plan.
  • The following funding test should be met:
    • On the day after the date of purchase, the solvency ratio of the pension plan should be,
      • at least 1.0, if the solvency ratio of the pension plan as set out in the most recently filed actuarial valuation report for the plan before the date of purchase was at least 1.0, or
      • at least equal to the greater of 0.85 and the solvency ratio of the pension plan as set out in the most recently filed actuarial valuation report for the plan before the date of purchase, if the solvency ratio was less than 1.0.
    • If the solvency ratio after the date of purchase is less than the ratio noted above, the employer should pay into the pension fund, within 90 days after the date of the purchase, an amount sufficient to raise the solvency ratio so that it is at least equal to the solvency ratio noted above.

For any questions about the above, please contact the Pension Division of FCNB at 1-866-933-2222 or by email at info@fcnb.ca.