Permitting the Payment of Variable Benefits from Defined Contribution (DC) Pension Plans
Regulation - LGIC
Bill or Act:
Pension Benefits Act
Summary of Proposal:
Currently, plan members who belong to a pension plan that provides Defined Contribution (DC) benefits must transfer the balance in their DC account to a financial institution in order to receive a retirement income. The variable benefits provisions in the Pension Benefits Act (PBA) would permit a pension plan that provides DC benefits to offer Life Income Fund (LIF)-like payments directly from the plan through the establishment of a variable benefit account.
Regulations are required to proclaim the variable benefits provisions in the PBA into force.
The posted document provides a description of these proposed regulations which would address:
•requirements and restrictions that the DC provision of a pension plan must include to authorize a variable benefits pension;
•requirements and restrictions regarding transfers in and transfers out of a variable benefit account;
•timelines related to the death benefit;
•the administrator's disclosure obligations; and
•other miscellaneous items.
The following provisions of the PBA would be proclaimed into force should the proposed regulations be approved: sections 39.1, 39.1.1 and 39.1.2. Once proclaimed into force, these provisions would permit a plan that provides DC benefits to offer a variable benefit pension directly to retired members, subject to the legislative framework.
Regulations under the PBA to address family law issues would be added at a later time. Further details of the proposal are attached below.
Analysis of Regulatory Impact:
Plan administrators would have the option of providing variable benefits pensions from the DC provision of their pension plans. Retired members would have the option to choose these payments if their plan offers them.
Since these benefits would be optional, administrative costs to business would not increase as a result of this regulatory proposal unless a business chooses to offer variable benefits and the retiree elects to receive a variable benefit pension.
March 20, 2018
Comments Due Date:
May 4, 2018
Variable Benefits Regulations
Pension Policy Branch
Ministry of Finance
5th Floor, Frost Bldg S.
7 Queen's Park Crescent
Toronto, ON M7A 1Y7