The Manitoba government has proposed changes to the provincial Pension Benefits Act that will allow the creation of in-plan solvency reserve accounts for defined benefit pension plans registered in the province.
The amendments would permit plan sponsors to withdraw funds from the reserve account when the plan is in surplus and would prohibit them from transferring “any other account” within the fund to the reserve account.
The province is also moving to allow DB pension plans to permit plan members who are still employed past the plan’s normal retirement age to stop being active members or making contributions.
On the plan member side, the amendments would make it simpler for individuals to unlock their locked-in retirement accounts in certain situations. People with funds in locked-in accounts with a financial institution will be able to unlock their funds under “certain financial hardships.” And those over age 65 will be able to fully unlock their locked-in accounts to give them more flexibility to manage their retirement funds.
Under the proposed amendments, people over age 55 will also be able to make a one-time 50 per cent transfer to a prescribed registered retirement income fund, and will no longer be required to get approval from the pension commission to do so.
“We have seen members insisting on more flexibility, in terms of unlocking and accessing funds,” said Scott Anderson, regional vice-president of employee benefits at Hub International Ltd., in an email to Benefits Canada. “I am sure this is in response to public sentiment.”
The government’s proposals would also allow for greater flexibility in dividing up pension assets in the event of a relationship breakdown. Currently, the parties must choose between a 50-50 split or no division. The proposed changes would also allow a plan member to name their separated spouse or common-law partner as their beneficiary for the purpose of survivor benefits.