Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Paul White's Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:
Ms. Diane Lafleur
Financial Sector Policy Branch
Department of Finance
20th Floor, East Tower
140 O'Connor Street,
Dear Ms Lafleur,
I was advised of the ongoing review of these pension regulations for private defined benefit pension plans and it is with that in mind that this submission is made. After perusal of the concerned federal regulations, I am of the opinion that residents of the province of Saskatchewan are being discriminated against with regard to the present wording/regulations set out concerning portability of pensions. It is with these portability issues in mind that I submit this request for your consideration and hopefully implementation. I note that the present regulations at section 19.1; state:
19.1For the purposes of paragraphs 26(1)(b) and (2)(b) and subparagraphs 26(3)(a)(ii) and (b)(ii) of the Act, a retirement savings plan into which a pension benefit credit may be transferred shall be a life income fund or a locked-in registered retirement savings plan. SOR/95-551, s. 2.
Where proper consideration is given to the updates to the pension rules for Saskatchewan that took effect on April 1, 2002, discrimination by the federal rules becomes evident.
The Saskatchewan rules for private and provincial defined benefit pension plans state:
The Pension Benefits Regulations, 1993(Regulations) were amended by The Pension Benefits Amendment Regulations, 2002 effective April 1, 2002. The amendments give retirees greater control over managing their retirement savings by allowing the transfer of locked-in assets to a Registered Retirement Income Fund (RRIF) that complies with Section 29.1 of the Regulations.
Further, the Saskatchewan rules go on to state:
The option is available to former pension plan members who have money in a Locked-In Retirement Account (LIRA) contract and are eligible to retire, and to individuals with existing Life Income Fund (LIF) and Locked-In Retirement Income Fund (LRIF) contracts. Pension plans are permitted, but not required, to offer a RRIF as an option at retirement.
Highlights of the changes are:
* Sections 30 and 31 of the Regulations are repealed and replaced by Section 29.1.
There is no maximum withdrawal limit under a RRIF.
* A consent form must be signed by the spouse before money may be transferred to a RRIF.
* A spouse may waive his or her designated beneficiary status under a RRIF.
* Financial institutions are no longer required to file specimen documents with the Pensions Division when they wish to market a LIRA or a RRIF that will accept locked-in money subject to The Pension Benefits Act, 1992.
I am of the opinion that if the words; "and pensions that fall under federally regulated plans may be converted to be governed by the Provincial regulations for employees that may be domiciled in that jurisdiction." This change could be added to Section 3 that now provides:
3.For the purposes of the definition "designated province" in subsection 2(1) of the Act, the Provinces of Ontario, Quebec, Nova Scotia, New Brunswick, Manitoba, British Columbia, Saskatchewan, Alberta and Newfoundland and Labrador are prescribed as provinces in which there is in force a law substantially similar to the Act. SOR/90-363, s. 2; SOR/93-109, s. 2; SOR/94-384, s. 2; SOR/2002-78, s. 2.
Said addition should read:
3.For the purposes of the definition "designated province" in subsection 2(1) of the Act, the Provinces of Ontario, Quebec, Nova Scotia, New Brunswick, Manitoba, British Columbia, Saskatchewan, Alberta and Newfoundland and Labrador are prescribed as provinces in which there is in force a law substantially similar to the Act, and pensions that fall under federally regulated plans may be converted to and be governed by the Provincial regulations for employees that may be domiciled in that jurisdiction.
If this small change could be implemented it would vastly improve the portability issue for Saskatchewan residents that fall under Federal law with regard to their pensions. To say the present wording is discriminatory is an understatement.
Should your review decide to allow for specific changes regarding portability of pensions then minimally the ability to; be rid of the LIF at a plan members option, and allow for the no maximum withdrawal limit under a RRIF. Rules to obtain a consent form signed by a spouse before money may be transferred to a RRIF could be adopted, and the allowance of a spouse to waive his or her designated beneficiary status under a RRIF should be adopted as well.
The regulation should also allow for financial institutions to be no longer required to file specimen documents with the Pensions Division when they wish to market a LIRA or a RRIF that will accept locked-in money. The addition of these rules would allow for a much more level playing field between provincial and federal pension plans and as such, allow persons entering retirement within the confines of a province, to have the same options available to them as their provincially regulated peers. This inclusion should do away with any and all discriminatory practices that currently exist between the various plans.
The Saskatchewan plan was amended in 2002. The Manitoba plan was amended very similarly earlier this year and the Province of Alberta is currently investigating similar changes to their pension laws. To allow federally regulated employees the option of retiring under the laws of their domiciled province or minimally, similar laws to their domiciled province would enhance a person's ability to investigate their options when making their decision as to retirement. It would also remove the requirement of a person to be faced with either the locked-in provisions in their company pension plan or the locked-in provisions as regulated by the federal government. I am of the opinion that the current federal statutes/regulations regarding pensions are behind the times and require updating to properly meet the needs of the Canadian public, especially Saskatchewan residents and especially regarding portability issues.
Please give due consideration to this requested amendment, I am confident that this amendment will form a part of the rules when your review is finalized.
Thank you for the opportunity to submit these comments for your consideration.
cc: Federal Minister of Justice Honourable Irwin Cotler
Federal Minister of Finance Honourable Ralph Goodale
M.P. for Moose Jaw/Wakamow Dave Batters