Manitoba has released proposed amendments to the Pension Benefits Regulation (Proposed Regulations) that result from changes made to The Pension Benefits Act in 2005 through Bill 10.

This Communiqué highlights the key differences contained in the new Proposed Regulations from the proposal reported in our Communiqué of January 26, 2005. This Communiqué will be of interest to pension plan sponsors with Manitoba employees.

Pension Committees

Under the Proposed Regulations, employer sponsored pension plans with 50 or more members must be administered by a pension committee. The earlier proposal was to apply to plans with 25 or more members.

The pension plan must set out the rights and obligations of the pension committee and must also provide that:

• at least one voting active member is appointed or elected by the active members; and
• at least one voting non-active member is appointed or elected by the non-active members.

The original proposed requirement that one additional non-voting member be appointed or elected by the active and non-active members has been removed.

Pension committee members must be members of the plan. If the pension plan members are represented by a union, the plan must permit the union to appoint a person in accordance with the union’s constitution instead of providing for a person to be elected by the active members.

Employers will have the right to appoint as many additional committee members as they wish. As a result, the pension committee could have a majority of employer representatives or member representatives. However, this is effectively at the discretion of the plan sponsor.

The only other jurisdiction in Canada that requires the administrator of this type of pension plan to be a pension committee is Québec.

Use of Surplus for Contribution Holiday

The Proposed Regulations will permit surplus to be used to reduce employer contributions, unless expressly prohibited by the terms of the pension plan, trust agreement or collective bargaining agreement. This rule will apply only if at the most recent actuarial review date the following conditions are satisfied:

1. the going-concern ratio of the plan was at least 1.05; and
2. the solvency ratio of the plan was at least 1.05.

Electronic Filing and Record Retention

The Proposed Regulations will permit, but not require, the use of electronic communication methods to record, retain or communicate information or documents.

LRIF No Longer an Option

The Proposed Regulations will no longer permit the Locked-in Retirement Income Fund (LRIF) as a prescribed retirement benefits vehicle. In addition, all amounts within a LRIF will be required to be transferred to a Life Income Fund.

50% Unlocking Directly From a Pension Plan

The Proposed Regulations would also permit a pension plan to have a provision to unlock up to 50 per cent of a member’s benefits directly from the pension plan.

Public Consultation

Comments on the Proposed Regulations may be submitted by August 15, 2009 by email to pensions@gov.mb.ca, by facsimile to (204) 948-2375, or by mail to the following address:

Office of the Superintendent - Pension Commission
1004 - 401 York Avenue
Winnipeg, MB R3C 0P8

Comments

The Proposed Regulations contain many of the enhanced optional plan provisions contemplated in Bill 10, such as flexible pension plans and phased retirement. The proposed provision to permit the use of electronic communication methods should be a welcome enhancement for plan sponsors. However, the requirement for an employer sponsored pension plan to be administered by a pension committee still remains a contentious issue with some plan sponsors in Manitoba. In addition, plan sponsors may take issue with the proposed amendment to prevent a contribution holiday from being taken unless the going-concern and solvency ratios of a pension plan are at least 1.05, rather than 1.