On October 21, 2008, the Canadian Association of Pension Supervisory Authorities (CAPSA) released a Proposed Agreement Respecting Multi-Jurisdictional Pension Plans (Proposed Agreement). If adopted by pension standards regulators across Canada, the Agreement would replace the Memorandum of Reciprocal Agreement (Current Agreement) and other bilateral agreements which set out rules for the regulation of Multi-Jurisdictional Pension Plans—pension plans with members employed in more than one pension-standards jurisdiction.


The federal government and each Canadian province (except P.E.I.) regulate pension plans. Since 1968, the Current Agreement and other bilateral agreements between pension regulators have eliminated the need for pension plan sponsors with employees working in more than one pension-standards jurisdiction to register separate pension plans. A pension plan is registered in the jurisdiction where a “plurality” of members is employed, i.e. the jurisdiction in which more members are employed than in any other. Under the Current Agreement, the jurisdiction of registration is the “major authority”; other jurisdictions in which members are employed are “minor authorities”. A convention has developed whereby the major authority applies the rules of the jurisdiction of employment to a member’s benefit entitlements and the rules of the major authority govern funding, investment and plan registration.

Proposed Agreement

Only five pages long, the Current Agreement is essentially a statement of guidelines. By comparison, the Proposed Agreement presents a detailed framework for regulation of Multi-Jurisdictional Pension Plans. It is 30 pages long and accompanied by a 72-page Commentary that provides explanatory notes. The Proposed Agreement’s seven Parts and two Schedules contain general provisions defining terms and establishing the application of the Proposed Agreement as well as rules for determining applicable legislation and the major authority’s role; for allocating assets among jurisdictions; for relations among supervisory authorities; for addition and withdrawal of a jurisdiction; and for amending the Proposed Agreement.

Implications for Pension Plans

The Proposed Agreement codifies some practices that developed under the Current Agreement. For example, benefit entitlements would continue to be governed by a member’s province of employment whereas the rules of the major authority would continue to govern plan funding and investments. Its adoption would not constitute a major change for most plan sponsors and administrators. Anyone who expected that a new agreement would allow a plan to apply the rules of the plan’s jurisdiction of registration to all plan matters, including member’s benefit entitlements, will be disappointed.

However, if the Proposed Agreement is adopted, some new features will be welcomed by pension plan sponsors and administrators for bringing greater clarity to rules governing Multi-Jurisdictional Pension Plans:

• New rules for allocating assets among jurisdictions could reduce uncertainty and delay in obtaining regulatory approval of asset splits when there is an asset transfer or partial wind-up.
• A non-Quebec pension plan would not be required to have a pension committee for Quebec members.
• The Proposed Agreement would resolve a long-standing question as to whether benefit entitlements of members who have worked in more than one jurisdiction should be regulated using a “checkerboard” or “final location” approach by explicitly adopting the easier-to-administer final location approach. However, administrators would be required to keep a record of members’ benefit accrual in Ontario for purposes of determining benefits protected by Ontario’s Pension Benefits Guarantee Fund.

Consultation Process

CAPSA will conduct consultations sessions regarding the Proposed Agreement in various locations across Canada in November/December 2008 and seeks comments from stakeholders by January 30, 2009. The Régie des rentes du Québec will conduct a separate consultation process. It is expected that that the Proposed Agreement, as revised following the consultation process, will be submitted to governments for consideration and adoption.

Click here for a copy of the Proposed Agreement on the CAPSA website.

James Pierlot is a lawyer and Senior Consultant with Towers Perrin in Toronto.