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Pensions & Benefits Law

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

Big Changes for Alberta Public Sector Pension Plans

Posted in Canada Pensions & Benefits Law, Pension Reform, Public Sector Plans, Target Benefit Plans

On April 16, 2014, the government of Alberta tabled Bill 9, Public Sector Pension Plans Amendment Act, 2014 (Bill 9), which proposes significant changes to public sector pension plans in Alberta.

In this blog post, I will discuss proposed changes that, if passed, will impact the Management Employees Pension Plan (MEPP), Local Authorities Pension Plan (LAPP), Public Service Pension Plan (PSPP) and Special Forces Pension Plan (SFPP). (Note that Bill 9 also addresses the Universities Academic Pension Plan and Public Service Management (Closed Membership) Pension Plan.) Continue Reading

Amendments to Alberta’s Proposed New Employment Pension Plans Act

Posted in Canada Pensions & Benefits Law, De-Risking, Legislation & Regulations, Pension Reform, Target Benefit Plans

Alberta appears to be moving forward with its pension reform agenda. As you may recall, on December 10, 2012, Alberta’s new Employment Pension Plans Act (the Proposed New EPPA) received royal assent, but it has not yet been proclaimed in force. For an overview of the changes in the Proposed New EPPA, see our October 29, 2012 blog post.

Last week, on April 16th, certain changes to this proposed legislation were introduced as Bill 10, Employment Pension (Private Sector) Plans Amendment Act, 2014 (Bill 10). The majority of this Bill’s changes are quite minor and essentially clarify language in the Proposed New EPPA. In this blog post, I will address a couple of the more substantive changes contained in Bill 10 relating to:

  • coversions of plans with a defined benefit (DB) provision to a target benefit provision; and
  • annuity purchases. Continue Reading

Practical Issues in Pension Fund Investing – Execution of Subscription Agreements

Posted in Canada Pensions & Benefits Law, Investments

There is a famous phrase which is particularly apt in the area of pension fund investing – “the devil is in the details”. This is the first in a series on practical issues that arise in connection with investments by Canadian pension funds in alternative asset classes. The subject of this post is the execution of subscription agreements.

It is becoming common now for pension funds in Canada to invest in pooled funds. Such investments can take different forms. For example, a pooled fund may be structured as a limited partnership or a trust. Whatever the structure, the investor is typically required to complete and sign a “subscription agreement”. An issue that frequently comes up is: what entity should execute the subscription agreement? Continue Reading

The Teflon Fiduciary: Could Your U.S. Adviser Avoid Responsibility For Bad Advice?

Posted in U.S. Pensions & Benefits Law

Ronald Reagan was referred to years ago as “the Teflon President” because voters never seemed to hold him responsible for his administration’s missteps. A significant decision on fiduciary status has just been issued by the Court of Appeals for the 5th Circuit. Tiblier v. Dlabal which created what I call the “Teflon Fiduciary.”

Why is this Important?

This decision deserves lots of attention because it provides a blueprint for investment advisers to avoid responsibility for self-dealing and bad advice. The decision also constitutes a persuasive argument why the U.S. Department of Labor needs to continue its controversial efforts to update its regulations on when giving investment advice makes a person a fiduciary. Continue Reading

CAPSA Releases Final Guideline re DC Plans – Plan Administrators May Need to “Up Their Game” Regarding Communication of De-Accumulation Options

Posted in Canada Pensions & Benefits Law, DC Plans, Regulator Policies & Communications

On March 28, 2014, the Canadian Association of Pension Supervisory Authorities (CAPSA) released the Defined Contribution (DC) Pension Plans Guideline (CAPSA previously released a draft for comment in July 2012). While CAPSA’s guidelines do not have the force of law, these guidelines may be used as a benchmark by the courts and/or regulators to assess whether a DC plan administrator has fulfilled its fiduciary obligations. Continue Reading

The ABC’s of Target Benefit Plans – Part III

Posted in Canada Pensions & Benefits Law, De-Risking, Target Benefit Plans

This is my third blog post in a series on target benefit plans. In the first post, I discussed the basics of target benefit plans (TBP), also referred to as defined ambition plans.

In the second post, I discussed New Brunswick’s shared risk model, a type of TBP. As discussed in that post, New Brunswick is the first jurisdiction in Canada to implement a comprehensive TBP regime as a design option for single and multi-employer plans and union and non-union workforces. (Target benefits for multi-employer plans already exist in most jurisdictions.)

In this post, I will discuss the status of single employer TBPs across Canada – outside of New Brunswick. Continue Reading

New Brunswick Reforms MLAs Pensions to Shared Risk

Posted in Canada Pensions & Benefits Law, De-Risking, Innovation & Plan Design, Pension Reform, Public Sector Plans, Target Benefit Plans

On March 26, 2014, the New Brunswick legislature introduced for first reading Bill 51, An Act Respecting Members’ Pensions, which proposes to move Members of the Legislative Assembly (MLAs) to the shared risk pension plan currently available for other public sector employees in New Brunswick. (As discussed in a prior blog post, New Brunswick recently introduced shared risk pension plans, a type of target benefit plan, in the province.)

With the introduction of Bill 51, the New Brunswick government continues its innovative pension reform initiatives. Continue Reading

The ABC’s of Target Benefit Plans – Part II

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

This is my second blog post in a series regarding target benefit plans (TBPs) (for Part I, which provides a general overview of TBPs, see my March 10, 2014 post). In this post I will focus on New Brunswick, as the first jurisdiction that has implemented comprehensive target benefit legislation.

In 2012, New Brunswick introduced legislation and regulations for shared risk plans (SRPs), a type of TBP. New Brunswick’s approach was to introduce SRPs as a design option outside of traditional defined benefit (DB) and defined contribution plans. The legislation could apply to public or private sector plans, single or multi-employer plans and in a unionized or non-unionized environment. There have been several plans in New Brunswick, both in the public and private sector, that have converted to shared risk under the new legislation. Continue Reading

Quebec Releases Draft Voluntary Retirement Savings Plan Regulations

Posted in Canada Pensions & Benefits Law, DC Plans, Innovation & Plan Design, Pension Reform

On March 12, 2014, the Quebec government released draft regulations (pdf) that are required to complete the new legal framework for the establishment of voluntary retirement savings plans (VRSPs) in Quebec effective July 1, 2014.

The Quebec government adopted Bill 39 (the VRSP Act) last December, which defines the main characteristics of the VRSP design. One particularly important characteristic is that employers with five or more employees who have at least one year of continuous service and who do not have a registered pension plan or a registered retirement savings plan or a tax-free savings account for which payroll deductions could be made will have to automatically enroll those employees in a VRSP (although there is a transition period during which enrolment will remain voluntary). Continue Reading

Amendment to the 10% Rule for Ontario-Registered Plans Now in Force

Posted in Canada Pensions & Benefits Law, Investments, Public Sector Plans

We had reported a few weeks ago that the Ontario Government had posted for public consultation a proposed exemption to the 10% rule. The 10% rule limits the percentage of plan assets that can be invested in, or loaned to, any one company or group of related companies to 10% of the total book value of the plan assets. The purpose of the 10% rule is to promote diversification. There are a number of exceptions to the 10% rule, including investments in securities issued or fully guaranteed by the federal or provincial governments.

The regulation posted for consultation proposed to exempt investments in “securities issued and fully guaranteed by the U.S. government” from the 10% rule.

On March 7, 2014, Ontario Regulation 51/14 came into force in a modified form. The regulation amends section 79 of the Pension Benefits Regulations by exempting “securities issued by the Government of the United States of America” from the 10% rule.

The 10% rule is contained in Schedule III to the federal Pension Benefits Standards Regulations, 1985 which was adopted by Ontario in 2000. Since the amendment excepting U.S. government securities was made to the regulations under the Ontario Pension Benefits Act (PBA), the new exception to the 10% rule applies only to plans governed by the Ontario PBA.