New BC Pension Legislation & Regulatory Framework

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To help people save for retirement the BC government approved the new Pension Benefit Standards Regulation Act (PBSR) this past May. Pensions are required to be administered in accordance with the Act by Sept 30, 2015 and to be filed before Jan 1, 2016.

The purpose of these changes was to harmonize pension standards legislation between BC and Alberta. The PBSR is designed to protect the interests of plan members by setting minimum standards as it applies to all employer sponsored pension plans registered in BC.

One of the changes of note is the allowance for auto-enrolment. Previously, members were required to enroll in the plan when they were eligible. With this change, plans maybe set up so that employees are automatically on the plan unless they opt-out. This type of provision has dramatically increased participation in other jurisdictions where it has been implemented.

Key changes include:
 >Auto enrolment
 >Immediate vesting of plan benefits for all years of service/plan membership.
 >Omitting the “small benefit” test. Locking-in is now based on a dollar threshold amount equal to 20% of the Yearly Maximum Pensionable Earnings (YMPE) regardless of the length of time it takes to accrue that amount of benefit
 >A new default investment option must either be a balanced fund or portfolio of investments that takes into account a member’s age, with implementation set for June 28, 2016
 >Age restrictions are removed for pre-retirement survivor benefits which entitles the spouse-of-a-deceased to commence an immediate pension from the plan or to choose a portability option instead
 >Plan sponsors must now establish a written plan governance policy
 >Written assessments of plans are required every 3 years by plan administrators

Some other interesting changes to note include the transfer of adjudicating financial hardship for unlocking withdrawal requests for Locked-in Retirement Accounts (LIRAs) and Life Income Funds (LIFs) to the financial institutions that administer the accounts.

There are also new disclosure rules. For pension plans with a fiscal year ending Sept. 30 or later, inclusion of new information and additional statements are required as set out by the new regulation.

A New Regulatory Framework for Pension Plans
The BC Financial Institutions Commission (FICOM) released a Risk-Based Regulatory Framework to regulate the new written assessment requirements outlined in the PBSR. The regulations are to ensure pension plans are not at risk of becoming insolvent by identifying inappropriate risks, unsafe business practices, and it provides a way for helping plan administrators resolve risks.

The Framework can be found here: http://www.fic.gov.bc.ca/pdf/pensionplans/RegulatoryFramework.pdf

Detailed summaries of both the new PBSR legislation and regulations can be found at the link below.
http://www.fic.gov.bc.ca/?p=consumer_news/latest_news

Sources:
Standard Life Legislative News June 2015
https://advisors.standardlife.ca/wps/wcm/connect/4207c900-3ad6-4c48-a9c7-8a66ba3ecaf9/GE14011.pdf?MOD=AJPERES&CACHEID=4207c900-3ad6-4c48-a9c7-8a66ba3ecaf9
BC Financial Institutions Commission Information Bulletin, New Pension Legislation Proclaimed, May 2015
http://www.fic.gov.bc.ca/pdf/Pensions/bulletins/PENS-15-001.pdf
E&OE

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