Modernized standards governing workplace pension plans that take effect Sept. 30, 2015, will improve pension coverage options and security for more than 900,000 British Columbians covered by employer sponsored pension plans.
Pension benefits standards protect the financial health of workplace pension plans and the interests of plan members. The act applies to all employment pension plans registered in British Columbia, and plans registered elsewhere that have members employed in British Columbia.
The new Pension Benefits Standards Act accommodates alternative plan designs such as target benefit plans and plans that are jointly-sponsored by employers and employees. The new act improves plan governance by strengthening disclosure requirements and requiring that all plans are covered by a governance policy.
The new act also provides former plan members with greater access to locked-in retirement accounts (i.e. locked-in RRSPs) or locked-in life income funds. These funds may now be accessed for reasons of financial hardship in certain circumstances, which include: low expected income, inability to pay medical expenses (including those of a spouse or dependent), threat of eviction for rental arrears, threat of mortgage default on a principal residence, or inability to pay a deposit on a new rental residence. An annual limit to the amount of funds that may be withdrawn applies. To access locked-in retirement funds, former plan members facing financial hardship must apply to the financial institution holding these locked-in retirement funds.
The new Pension Benefits Standards Act was developed following extensive collaboration with the Government of Alberta. Pension standards among the two provinces have been largely harmonized, reducing the complexity and cost of administering pension plans that have members in both Alberta and B.C.
- The new Pension Benefits Standards Act was developed jointly by B.C. and Alberta based on the 2008 Report of the Alberta-B.C. Joint Expert Panel on Pension Standards. The panel’s two rounds of public consultation indicated broad support for the report.
- The new act introduces financial hardship unlocking for funds held in either a locked-in retirement account or a life income fund in limited circumstances. Former plan members seeking access to locked-in funds must apply to the financial institution in which funds are held.
- The new act replaces the outdated Pension Benefits Standards Act, which took effect in 1993.
- The Pension Benefits Standards Act governs 720 pension plans, with 513,000 current members and 491,000 retired and other members entitled to benefits.
The Financial Institutions Commission has information for members and plan administrators about B.C.’s new Pension Benefits Standards Act (The New Act) on its website. Go to http://www.fic.gov.bc.ca and click on pension plans.
Read commonly asked questions and answers about the changes brought about by the new Pension Benefits Standard Act: http://www.fic.gov.bc.ca/pdf/Pensions/FAQ.pdf
Watch this webinar to learn more about financial hardship unlocking: http://bit.ly/1NYbJbK
For more information please contact:
Office of the Superintendent of Pensions
2800- 555 West Hastings Street
Vancouver, British Columbia V6B 4N6
Toll Free: 866-206-3030
A backgrounder follows.