Pension reform in Canada: A timeline

Jessica Bullock | February 06, 2012

With the federal government introducing pooled registered pension plans, the future of pensions is top of mind for plan sponsors, providers—and each of the provinces. Are we headed down the right path? Will Canada ever have a harmonized system? And were is pension reform at right now across Canada?

The timeline below outlines pension reform at the federal level. For details on each of the provinces, see our timelines for Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island and Quebec.

Jan. 9, 2009
Federal Minister of Finance releases discussion paper: Strengthening the Legislative and Regulatory Framework for Private Pension Plans Subject to the Pension Benefits Standards Act, 1985.

June 25, 2010
Federal government releases final regulations amending Pension Benefits Standards Regulations, 1985 (PBSR), in connection with Pension Benefits Standards Act, 1985 (PBSA) amendments under Bill C-9, Jobs and Economic Growth Act effective July 12, 2010.

Amendments to PBSR effective July 1, 2010:

• three-year average solvency ratio for funding purposes;
• contribution holidays restricted unless solvency ratio is 1.05 or more; and
• elimination of real estate and resource property restrictions from federal investment rules.

July 12, 2010
Bill C-9 receives Royal Assent.

Amendments to the PBSA effective July 12, 2010:

• new solvency funding requirements;
• MEPPs may be amended to reduce benefits; and
• elimination of voluntary partial plan windups.

Amendments to the PBSA effective April 1, 2011:

• use of letters of credit to satisfy solvency payments;
• requirement for full funding of pension benefits on plan termination;
• plan amendments causing solvency ratio to fall below 0.85 will be void;
• enhanced disclosure requirements; and
• distressed pension plan workout scheme.

Amendments to the PBSA effective July 1, 2011:

• immediate vesting; and
• various minimum standards requirements.

Amendments to the Income Tax Act (Canada) effective July 12, 2010:

• surplus threshold for contribution holidays increased from 10% to 25%.

Dec. 15, 2010
Bill C-47, the Sustaining Canada’s Economic Recovery Act, receives Royal Assent.

Amendments to the PBSA effective on a date to be proclaimed:

• “safe harbour” for member-directed DC plan investments meeting certain criteria;
• payment of LIF-type benefits from a DC plan;
• electronic communications permitted; and
• spousal consent required for portability transfers by members eligible for early retirement.

Dec. 16, 2010
Department of Finance releases a backgrounder entitled Framework for Pooled Registered Pension Plans.

April 1, 2011
Federal government releases regulations amending PBSR in connection with PBSA amendments under Bill C-9 effective April 1, 2011.

Nov. 17, 2011
Federal Government releases Bill C-25, Pooled Registered Pension Plans Act, setting out legal framework for t establishment and administration of pooled registered pension plans.

December 14, 2011
Department of Finance released draft amendments to the Income Tax Act and the Income Tax Regulations implementing changes required to permit pooled registered pension plans.

Jessica Bullock is in the pension and employee benefits group with Blake, Cassels & Graydon LLP.