Act

Public consultation on proposed amendments to the Succession Law Reform Act (SLRA) to offer greater clarity to substitute decision makers and financial institutions regarding beneficiary designations for a plan.

Regulation Number(s):
N/A
Instrument Type:
Act
Bill or Act:
Succession Law Reform Act (SLRA)
Summary of Proposal:
Proposed Changes:
• In order to ensure an individual's beneficiary designation is maintained if they become incapable of managing property, an amendment to Part III of the SLRA is proposed.

• The proposed amendment to Part III of the SLRA would explicitly allow substitute decision-makers to make a beneficiary designation in an instrument that is renewing, replacing, converting an instrument or transferring to a similar instrument, provided that the beneficiary remains the same as in the designation made in the original instrument by the incapable person while capable.

• The following is the draft language being considered:
o If a participant has designated a person by an instrument to receive a benefit payable under a plan on the participant's death and if the plan is being converted, renewed, replaced or transferred, the participant's attorney under a continuing power of attorney for property or the participant's guardian of property may make a designation, by instrument signed by the attorney or guardian, in order to permit the person to receive the same benefit payable under the plan that results from the conversion, renewal, replacement or transfer.

It is intended that this proposed amendment would capture all instruments within the financial, insurance, and pension sectors where a beneficiary may be designated and all scenarios where a change in the instrument may occur.
Analysis of Regulatory Impact:
The proposed amendments are intended to provide greater clarity and guidance to substitute decision-makers and financial institutions as it concerns beneficiary designations.

• Substitute decision makers would more simply and easily be able to convert pensions, registered savings plans, and other similar instruments bearing beneficiary designations, including maintaining the incapable person's wishes with respect to the beneficiary designation in those instruments. To protect the interests and reflect the wishes of an incapable person, a substitute decision-maker should be able to name a beneficiary in certain circumstances. For example, upon reaching the Income Tax Act-mandated age to begin decumulating Registered Retirement Savings Plan (RRSP) funds, an RRSP owner would need to convert RRSP funds to a Registered Retirement Income Fund in order to begin withdrawals. Should they no longer be capable, a substitute decision-maker would need to fulfill this obligation including the naming of a beneficiary.

• Banks, financial institutions and pension plan administrators would have streamlined operations resulting from clear and simple statutory authority to guide them when dealing with substitute decision-makers converting these instruments and maintaining beneficiary designations on behalf of incapable individuals.

Within the pension and financial sectors, the intention is that the proposed amendments apply to all of the possible scenarios, (i.e., including, but not limited to, plan mergers and asset transfers).

Corresponding amendments may be needed to the Insurance Act to clarify that substitute decision makers may do the same in insurance contracts.
Further Information:
Proposal Number:
24-MAG005
Posting Date:
May 22, 2024
Comments Due Date:
July 8, 2024
Contact Address:
McMurtry-Scott Building
720 Bay Street, 3rd Floor
Toronto ON M7A 2S9
Comment on this proposal via email