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Pensions & Benefits Law

A Discussion of Canadian and U.S./Cross-Border Pension & Benefit Legal Issues

FSRA, Ontario’s new pensions regulator, takes shape

Posted in Legislation & Regulations

On November 16th, the Ontario government introduced draft framework legislation to establish a new financial services and pensions regulator, the Financial Services Regulatory Authority Act, 2016, as part of the omnibus bill (Bill 70) that followed the recent Fall Economic Statement. The hope is that the new regulator will bring more effective, coordinated and active regulation to both pensions and financial services in Ontario. Stakeholders, including pension plan administrators and sponsors, should pay close attention to how the new regulator takes shape. Continue Reading

On the Path to Change: Ontario Fall Economic Statement 2016

Posted in Canada Pensions & Benefits Law

Pensions report The direction of pensions law in Ontario just became a little clearer. In its Fall Economic Statement released on November 14, 2016, the Government of Ontario outlined a number of existing and new initiatives aimed at modernizing the province’s pensions regime. Through these reforms, the provincial government is attempting to address current obstacles to retirement security: declining participation in workplace pensions, increasing life expectancies, stagnant interest rates, and the difficulty faced by many Ontarians to save enough for a secure retirement. We discuss some of the highlights below. Continue Reading

Bill C-27 to add annuity purchase provisions to the PBSA

Posted in Canada Pensions & Benefits Law, De-Risking

Fountain pen resting on growth chartOn October 19, 2016, Bill C-27 was introduced in the House of Commons.  The big news from the introduction was that Bill C-27, if passed, would amend the federal Pension Benefits Standards Act, 1985 (PBSA) to permit federally-regulated employers (banks, railways, etc.) to establish target benefit plans.  For information on that proposed change, see our earlier blog post. Continue Reading

Target Benefit Plans Soon to be Available for Federally Regulated Employers

Posted in Target Benefit Plans

Dirty worker's glove holding a wrench key on a wooden plank in a workshopThe federal government announced yesterday proposed changes to the federal Pension Benefits Standards Act, 1985  (the “PBSA”) to permit federally-regulated employers to offer target benefit plans.  This is a welcome change by the federal government.  As discussed in prior posts (link1, link2, link3), we have seen target benefit legislation introduced in various jurisdictions across the country over the past few years.

The proposed legislation will introduce target benefit plans (or “TBPs”) as a plan design option, in addition to defined benefit and defined contribution plans.  The target benefit regime may apply to single employer plans (irrespective of whether there is a collective bargaining agreement in place) or multi-employer plans.  Notably, the legislation requires that target benefit plans must be established anew.  That is, an existing plan cannot be converted to a target benefit plan (although members can consent to surrender benefits under an existing plan in exchange for benefits under a new TBP). Continue Reading

CPP Enhancement is Coming

Posted in Canada Pensions & Benefits Law

Canadian pension plan application.

On October 6, 2016 the government introduced Bill C-26, which sets out amendments to enhance the Canada Pension Plan.  This follows the recent announcement by British Columbia that they would support the enhancement, along with the other provinces (other than Quebec, which will continue to operate its own plan, the Quebec Pension Plan).  Under the CPP Act, fundamental changes, such as changes to benefits, must have the support of 2/3 of the provinces representing 2/3 of the population.  With B.C. coming on board, there was sufficient support under the Canada Pension Plan Act to proceed with changes to the CPP. Continue Reading

Pension Announcements in the 2016 Federal Budget – What You Need to Know

Posted in Canada Pensions & Benefits Law

Canada saving concept with little hand dropping a coin into piggy bank overlaid with Canadian flagIn the 2016 Federal Budget (the “Budget”) released on March 22, 2016, the federal government made several announcements regarding the supervision of federally-regulated pension plans, possible enhancements to the Canada Pension Plan (“CPP”), and reforms to Old Age Security (“OAS”) and Guaranteed Income Supplement (“GIS”) benefits. Continue Reading

DC SIPPs and ESG Factors – FSCO Investment Guidance Notes Provide Useful Information for Plan Administrators (Part II)

Posted in Canada Pensions & Benefits Law, DC Plans, Investments

photo_937_20060126In Part I of this series, I discussed the Financial Services Commission of Ontario’s (FSCO) Investment Guidance Note IGN-003 which provides guidance on the preparation of a Statement of Investment Policies and Procedures (SIPP) for a member-directed defined contribution (DC) pension plan, in response to recent changes to federal pension standards legislation that is incorporated by reference into the Ontario pension standards legislation.

In this post, I will focus on FSCO Investment Guidance Note IGN-004, which provides guidance on the incorporation of environmental, social, and governance (ESG) factors into the SIPP.

Effective January 1, 2016, SIPPs for Ontario-registered pension plans will have to include information on whether ESG factors are incorporated into the SIPP and, if they are, how they are incorporated.  This requirement will be found in subsection 78(3) of the Pension Benefit Act (PBA) Regulations.  Continue Reading

Rethinking Plan Design & Funding: Pension Innovation in Canada

Posted in Canada Pensions & Benefits Law, DB Plan Funding, Innovation & Plan Design, Target Benefit Plans

Pension plan design possibilities are evolving in various jurisdictions across the country. This is happening at a time when many plan sponsors have been considering pension risk management and recognizing plan design as a key risk management tool.

Over the past several years, single-employer defined benefit (DB) plans have become increasingly unpopular among private sector employers as their sponsors respond to funding, investment, longevity and other risks associated with the traditional DB model. In view of these risks, legislatures across Canada have made some changes to facilitate pension design changes and innovation.  This blog post will discuss some of these recent legislative changes. Continue Reading

Recovering Pension Overpayments May Get Even Harder

Posted in U.S. Fiduciaries, U.S. Pensions & Benefits Law

Plan fiduciaries have become more aggressive in their attempts to recover mistaken overpayments to retirees. The plan may elect to recoup the overpayments by reducing future pension payments, but what if the participant received a lump sum or the recoupment method will not work, for example,  because the retiree is elderly and the value of the future payments is not large, or because the payee wasn’t really entitled to any vested pension?

Continue Reading

DC SIPPs and ESG Factors – FSCO Investment Guidance Notes Provide Useful Information for Plan Administrators (Part I)

Posted in Canada Pensions & Benefits Law, DC Plans, Investments

Buildings, View of the Sky As we noted in a previous blog post, effective January 1, 2016 pension plan administrators must file their Statement of Investment Policies and Procedures (SIPP) with the Financial Services Commission of Ontario (FSCO).

  • Existing pension plans will have to file their SIPP by March 1, 2016.
  • Plans registered on or after January 1, 2016 will have to file the SIPP within 60 days of registration.

Prior to this, while every pension plan registered in Ontario was required to have a SIPP, the SIPP did not have to be filed with the regulator.

In addition, the new legislative provisions require that all SIPPs must now include information about whether environmental, social, and governance (ESG) factors are incorporated into the SIPP and, if so, how the ESG factors are addressed in the plan’s investment strategy.

FSCO recently published two Investment Guidance Notes that will assist plan administrators in the preparation of their SIPP:

  • Investment Guidance Note IGN-003 provides guidance on the preparation of a SIPP for a member-directed defined contribution (DC) pension plan, in response to recent changes to federal pension standards legislation that is incorporated by reference into the Ontario pension standards legislation.
  • Investment Guidance Note IGN-004 provides guidance on the incorporation of ESG factors into the SIPP.

In Part I of this two-part series, I will discuss Investment Guidance Note IGN-003. Continue Reading