The federal government and several provinces are signing a new agreement regarding administration and regulation of multi-jurisdictional pension plans.

The provincial governments of British Columbia, Alberta, Saskatchewan, Ontario, Quebec, New Brunswick and Nova Scotia are all on board with the agreement, which replaces the 2016 version, only signed by some provinces; a 1968 reciprocal agreement signed between all provinces except Prince Edward Island; and former federal-provincial bilateral agreements, in as much as they previously applied to older agreements between the governments signing on to the fresh 2020 version.

Developed by the Canadian Association of Pension Supervisory Authorities, the 2o20 agreement extends the legal framework established in the 2016 iteration over the administration and regulation of the large majority of Canadian MJPPs. Previous agreements will remain in place for Manitoba and Newfoundland and Labrador.

Read: Five provinces enter into multi-jurisdictional pension agreement

In the new agreement, an MJPP is only required to apply the major authority’s legislated pension funding rules for its ongoing funding requirements, and a major authority that has legislated funding rules for annuity discharges can now apply those rules in place of any minor authority’s rules. As well, to accommodate recent changes to solvency funding requirements in some jurisdictions, the requirements around the allocation of plan assets between jurisdictions upon the plan’s windup or other major plan events have been amended.

An upcoming change of major authority can be cancelled if the existing major authority’s jurisdiction has the plurality of active plan members before the effective date of the upcoming change of major authority. Governments party to the agreements can now withdraw after 18 months, rather than three years.

“CAPSA is pleased that the 2020 agreement respecting multi-jurisdictional pension plans will apply to the vast majority of multi-jurisdictional plans in Canada and establishes a clear legal framework for the administration and regulation of these plans,” said Leah Fichter, chair of the CAPSA and deputy superintendent of pensions for the financial and consumer affairs authority of Saskatchewan, in a press release. “The new agreement will continue to protect member entitlements and ease the regulatory burden for pension plans in Canada.”

Read: Pension plan sponsor appetite strong for new innovative design options

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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