In 2012, the federal government passed Bill C-38, the Jobs, Growth and Long-term Prosperity Act, which among other things amends the Canada Labour Code (the Code) to implement insurance requirements for long-term disability (LTD) plans in the federally-regulated private sector, as previously discussed here.
Federally-regulated employers (that is, those in industries such as telecommunications and banking) will be required to obtain insurance for any LTD plans they offer to employees, thus providing employees on disability with some protection should the employer become bankrupt. The new provisions will come into force on July 1, 2014. Continue Reading
To address concerns about pension coverage in Canada, the federal government introduced the concept of the pooled registered pension plan (PRPP) in late 2011 through Bill C-25, the Pooled Registered Pension Plan Act (PRPP Act). The PRPP is intended to provide a “low cost” and accessible retirement savings vehicle for Canadians who do not currently participate in an employer sponsored pension plan.
On December 14, 2012, the federal PRPP regime came into force with the passage of the second and final set of regulations to the PRPP Act. While PRPPs are not yet available in any jurisdiction other than the federal jurisdiction, as I discuss below, a number of provinces have either drafted legislation introducing PRPPs or have indicated that they are considering introducing legislation to implement them. Continue Reading
The President’s recent budget proposal would impose a new cap on tax-favored retirement benefits.
Annual contributions and accruals under tax-favored plans are already limited, but this would be a complex new limit determined by how much of a pension could be provided by your IRA and your 401(k) accounts and qualified pension plans of ALL of your employers. To the extent you exceeded the amount necessary to fund the maximum annuity in a qualified pension plan, which the budget proposal estimates at approximately $3.4 million today, you would be barred from making any additional contributions or earning any additional benefits. Continue Reading
In today’s budget, the Ontario government announced that it is continuing with its pension reform agenda, but it is not all “old news”. Perhaps of most interest to employers and plan administrators will be the government’s intention to review the implications of the recent Carrigan case and its expanded interest in alternative plan designs. Continue Reading
Back in the fall of 2011, an expert committee chaired by Alban D’Amours was mandated by the Quebec government to analyze the state of the Quebec retirement income system and to make recommendations on how to improve it in light of the new economic and demographic realities.
The Committee released a voluminous report on April 17, 2013 entitled Innovating for a Sustainable Retirement System – A Social Contract to Strengthen the Financial Security of All Québec Workers. The 220-page report was published in French only, but a summary of the report is available in English. Continue Reading
Most 401(k) plans that have qualified default investment funds (QDIA’s) have chosen target date funds as their default investments. Target date funds change their mix of investments to become more conservative over time in relation to a projected retirement age.
Despite their popularity, target date funds are not well understood by either the fiduciaries who select them or the participants whose accounts are invested in them by default or by choice. For example, two funds that are designed for participants retiring in 2020 may have different proportions of fixed income and equity investments and different assumptions about when the participant will actually begin receiving pension payments. Continue Reading
In our March 13 webinar on de-risking defined benefit pension plans, I stated that the U.S. litigation launched by a group of Verizon retirees challenging the annuitization of their pensions was not dead, even though a federal district court refused to stop the purchase of annuities from Prudential, and the annuities were purchased in 2012. (For those of you who missed it, here is a link to the podcast of our U.S. webinar covering de-risking.) There have been some new developments in the Verizon litigation of interest to all sponsors considering de-risking through transferring liabilities to insurance companies. Continue Reading
Pension plan sponsors may be surprised to learn that information provided to pension regulators pursuant to statutory filing obligations could be more widely disclosed through an “access to information” request. In a recent decision, the B.C. Assistant Information and Privacy Commissioner ordered the B.C. Financial Institutions Commission (FICOM), which regulates B.C. registered pension plans, to disclose information related to benefits paid under and the funded status of various multi-employer pension plans (MEPPs) pursuant to a request under the B.C. Freedom of Information and Protection of Privacy Act (FIPPA). Continue Reading
This morning, the Supreme Court of Canada dismissed the application for leave to appeal in Carrigan v. Carrigan Estate. As a result, the Ontario Court of Appeal’s new interpretation of the priority scheme for the payment of pre-retirement death benefits under the Ontario Pension Benefits Act (the PBA) is now settled law. It would appear that the only remaining option for stakeholders hoping to avoid the Ontario Court of Appeal’s conclusions is to seek an amendment to the PBA. Continue Reading
The Ontario Divisional Court’s recent judgment in Ontario Pension Board v. Ratansi has overturned an earlier decision of the Financial Services Tribunal and restored an understanding established by previous Tribunal precedents. Employees who have transferred to a new employer as a part of a sale of business or divestment are not entitled to receive pension benefits from their predecessor employer while they continue working for the new employer, because their employment is deemed to continue for purposes of the Ontario Pension Benefits Act (PBA). Continue Reading