Manitoba’s Pension Benefits Act could be improved by allowing for more flexibility in transfers of locked-in funds, said the Association of Canadian Pension Management.
In its response to the province’s request for feedback on proposed changes to the PBA, the ACPM said the current legislation — which allows for a one-time transfer of up to 50 per cent of locked-in funds at age 55 within a pension plan — could be expanded, provided the pension plan permits the transfer to an unlocked account within the plan.
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“This approach would offer plan sponsors the option to provide this flexibility directly within their plan, thereby synchronizing with the existing ability to unlock funds from a [locked-in retirement account] or [life income fund] outside of a pension plan.”
The organization acknowledged potential challenges to the proposal, including additional administrative, communication and legal burdens on plan sponsors and administrators. It also noted plan members who unlock funds might later express dissatisfaction if those funds aren’t available for retirement purposes, potentially leading to questions or challenges directed back at the plan and the plan sponsor.
The ACPM also encouraged the province to consider allowing full unlocking of pension plan benefits at age 65, if permitted by the plan. The province currently allows plan members to fully unlock locked-in retirement accounts and life income funds at age 65.
“This change would reduce complexity for members by offering a direct route within or from the pension plan itself, rather than requiring transfers to a LIRA or LIF solely for the purpose of full unlocking at age 65.”
It also encouraged the province to review requirements for defined benefit pension plan sponsors’ audited financial statements. Currently, these statements must include all information in the Canadian Institute of Chartered Accountants’ handbook, requiring plan sponsors to undertake an additional actuarial valuation of the plan’s obligations.
The ACPM also proposed the establishment of a public registry of missing plan members and beneficiaries that would allow individuals to be identified while maintaining privacy and confidentiality.
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