The Pension Commission of Manitoba has raised the possibility of allowing for shared-risk plans as the province announces consultations on pension reforms ahead of planned legislative changes.
As part of a statutorily required review of the Pension Benefits Act, the commission released a report this month that addresses a number of issues. They include new plan designs, solvency funding rules, locking-in provisions and compulsory membership.
When it comes to new plan designs, the report referred to reforms in a number of jurisdictions, including target-benefit plans in Alberta and British Columbia and New Brunswick’s shared-risk framework. As a result, Manitoba’s consultations, which will take place online over a six-week period, will consider whether the province should allow for a new target-benefit or shared-risk design. As part of that consideration, the consultations will look at whether the new plan design should be available to both single- and multi-employer plans and if the rules should allow for converting future benefit accruals only.
Besides the issue of plan design, the report refers to solvency reforms across the country, including in Quebec and Ontario. The options for a new defined benefit funding framework include eliminating solvency funding and enhancing going-concern requirements (through, for example, a shorter amortization period of mandating a provision for adverse deviation) and introducing solvency reserve accounts. Also on the table are the options of eliminating solvency funding altogether without going-concern changes or maintaining the current rules.
When it comes to locking-in rules, the report raises the possibility of developing a framework to allow people to access funds due to financial hardship. And on the issue of compulsory plan membership, the report refers to possibly allowing plan members to opt out or allowing them to set their contribution rate to zero per cent if a specified period, such as 12 months, has passed since they started contributing.
The closing date for submissions to the consultations is Feb. 21. Legislation aimed at strengthening the pension system will follow, said Manitoba Finance Minister Cameron Friesen in a news release.
“We know how important it is for Manitobans to have secure income and certainty in their retirement,” said Friesen. “We look forward to receiving feedback on the proposed reforms, with a view toward improving pension benefits and building a stronger financial future for Manitobans.”