British Columbia has modernized their Pension Benefits Standards Act (PBSA) and it will come into force on September 30, 2015, giving plan sponsors time to make the necessary changes to comply with the updated rules. The PBSA was enacted in 2012 with the regulation enacted on May 11, 2015.
Some of the key changes to the rules include:
- Companies will now be permitted to establish multi-employer target benefit plans.
- Plan members who can demonstrate financial hardship will have more access to locked-in life income funds and RRSPs. The application for unlocking funds due to hardship will consider the member’s inability to pay medical expenses, mortgage and rent as well as for low income.
- Members will now be immediately vested in both employer and employee contributions, rather than the previous 2 year period.
- Enhanced member disclosure requirements mean that pensioners will receive annual statements.
- Enhanced governance policies will be required for all plans.
- Defined benefit plans will be permitted to purchase buy-out annuities from regulated insurance companies to better manage plan risk
- Employers will be able to establish solvency reserve accounts within the pension plans. This is intended to remove any disincentive to fully fund the pension plan by clarifying the ownership of any surplus funds.
- Jointly sponsored pension plans will now be permitted. Employers and Employees would be jointly responsible for plan funding and governance.
It is expected that pension plans with BC members will be required to amend their pension plan documents to incorporate the changes in the rules. The deadline for submission of the amendments has not been released yet, but it is expected that pension plans with BC members will be administered in accordance with the new PBSA on and after September 30, 2015.
The announcement from British Columbia regarding the new pension standards is below. http://www.newsroom.gov.bc.ca/2015/05/new-pension-standards-legislation-in-force-this-fall.html
Questions about the new PBSA?