The Association of Canadian Pension Management is reiterating its support for fully enabling automatic features in retirement savings plans, including defined contribution pensions, group registered retirement savings plans and group tax-free savings accounts.
In a letter to the Ontario government, the association said the province’s employers want to implement automatic features that reduce red tape for their plan members and help them save more easily for retirement. However, it noted current legislative barriers are preventing this from happening.
“British Columbia recently moved forward with proposed amendments to its pension legislation to facilitate automatic contribution increases,” said the letter. “We are urging you to include automatic features as part of the 2024 spring budget, signalling that the government will work to enable automatic features in workplace pension and savings plans.”
Read: Automatic features in DC pension plans may benefit members: FSRA
In 2021, the Financial Services Regulatory Authority of Ontario released guidance on automatic features for DC plans, which affirmed that the Pension Benefits Act and its regulations don’t prohibit the use of automatic features.
While this may be the case, the ACPM said the province’s Employment Standards Act creates uncertainty and limits an employer’s ability to fully apply these features to their plans by creating burden and red tape; in particular, making it challenging to apply automatic features to existing employees due to the need to collect express employee consent.
“As a result of the requirements, a significant portion of Ontario workers are not fully benefitting from their workplace pension and savings plan. Some are not enrolled at all, causing them to miss out on the benefits of their workplace pension and savings plan, such as company matching contributions, and many are not maximizing their savings opportunities, including maximizing the employer contribution.”
Read: A look at the landscape for automatic features in Canadian pension plans