The New Regs

On July 22, 2014, the Alberta Government passed the new Employment Pension Plans Regulation (the New Regs.). The New Regs. support the new Employment Pension Plans Act, (the New Act) which was passed in the fall of 2012.

The effective date of the Act and Regulations is September 1, 2014.

The new legislation reflects the changes recommended by the Joint Expert Panel on Pension Standards in their 2008 report. It has been drafted to be highly “harmonized” with the province of British Columbia. Significant differences between the BC and Alberta Acts are only with respect to effective dates and with respect to differences required by differences in the provincial Family Law legislation.

In the sense that the legislation was passed over 3 years ago, there are no great surprises. The following are details of the main provisions of the new Act and Regulations:

Individual Pension Plans

Plans for Connected Individuals (PCIs) (more than 10% shareholders or related)
Plans for Connected Individuals are still exempt from registration with Alberta Finance. A significant change is that PCIs no longer need to meet any minimum funding requirements.

Plans for “specified Individuals” (PSIs)
Specified Individuals are defined as individuals who earn more than 2.5 times the YMPE (Year’s Maximum Pensionable Earnings as defined in the CPP). Under the New Regs., PSIs will still need to be registered with Alberta Finance and are subject to provisions such as the minimum funding rules.

Registered Pension Plans (“RPPs”) in General

New provisions for all RPPs are:

1. Immediate Vesting for all service
2. Pre-retirement death benefit equal to 100% of commuted value (previously 60%)
3. Several new plan types permitted, as follows:
   • Target benefit plans – A target benefit plan is a Defined Benefit Plan where the benefit levels are adjusted based on the funded status of the plan.
   • Joint sponsored Plans- Joint sponsored plans are DB plans where the costs of the plan are shared 50%/50% between the members and the employer.
   • Collectively bargained multi-employer plan (CBMEP) means a multi-employer plan that is established through a collective agreement, unless, under section 28 of the Act, the superintendent designates the plan as a non-collectively bargained multi-employer plan or a single employer plan.
   • Non-collectively bargained multi-employer plan (NCBMEP) means a multi-employer plan that is established other than through a collective agreement, unless, under section 28 of the Act, the superintendent designates the plan as a collectively bargained multi-employer plan or a single employer plan.
4. Provision for unlocking for small amounts, shortened life expectancy and no-residency
5. Solvency Reserve account
6. Forced portability
7. Provision for phased retirement
8. Additional Documentation
   • Corporate Governance Policy
   • Funding Policy
9. New document retention rules
10. Default investment option for defined contribution provisions
11. Extend actuarial valuation due date from 6 months to 9 months from plan year end
12. Annual filing of actuarial valuation report and cost certificate for plans with funding ratio less than 0.85
13. Audited financial statement of the fund requirements for plans with benefit formula provision whose assets are at least $10 million (previously $3 million)

 

A summary of filing deadlines for Administrators can be found here.

This content is for general information only. As it is impossible to include all situations, circumstances and exceptions in a commentary such as this, a further review or study should be undertaken to the reader’s own situations and circumstances due to the application of the Budget 2015 proposals. Every effort has been made to ensure the accuracy of the information contained in this commentary. However, because of the nature of the subject, no person or firm involved in the preparation or distribution of this commentary accepts any liability for its contents or use.