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OSFI lifts freeze on commuted value transfers and buy-out annuity purchases

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Corporate / Canada

OSFI lifts freeze on commuted value transfers and buy-out annuity purchases

An in-depth look at this and other subjects are covered in the current issue of the Morneau Shepell News & Views

TORONTO, Sept. 23, 2020 /CNW/ - Morneau Shepell released the September 2020 issue of its monthly newsletter, News & Views, in which the company looks at the following topics:

  • OSFI lifts freeze on commuted value transfers and buy-out annuity purchases – The Office of the Superintendent of Financial Institutions (OSFI) has lifted the freeze on commuted value transfers and buy-out annuity purchases effective as of August 31, 2020, suggesting a renewed confidence in the economic recovery. In its place, OSFI has introduced restrictions on portability transfers and buy-out annuities that are broadly similar to those that were in place prior to the freeze, with some adjustments.
  • Ontario court applies principle of resulting trust to beneficiary designations – An Ontario court has ruled that the beneficiary of a Registered Retirement Income Fund (RRIF) was holding the benefit in trust for the estate of the deceased RRIF owner. The court applied a legal principle known as the presumption of resulting trust, which requires that, in order to retain the funds, the beneficiary must demonstrate that the RRIF owner intended for the beneficiary to have true ownership of the funds following the owner's death. The case highlights the potential challenges that can be made to beneficiary designations by other heirs and the potential delays in distributing death benefits that may result.
  • CRA updates newsletter on annuity purchases from pension plans – The Registered Plans Directorate of the Canada Revenue Agency has finalized a newsletter publication on the question of what constitutes a "material difference" between an annuity purchased in satisfaction of a pension obligation and the original pension benefit. The newsletter aims to assist administrators of plans with indexation provisions that wish to satisfy pension obligations through the purchase of buy-out annuities, as well as former members of defined benefit pension plans who wish to purchase annuities in lieu of receiving a pension directly from the plan.
  • Newfoundland consultation on unlocking of pension benefits for financial hardship Newfoundland and Labrador has announced it is considering amendments to its Pension Benefits Act to permit the unlocking of pension benefits for reasons of financial hardship. The province is seeking comments on issues including financial hardship criteria and eligibility, dollar amounts that could be accessed, frequency of unlocking and type of locked-in accounts from which funds could be accessed.
  • Tracking the funded status of pension plans as at August 31, 2020 – Morneau Shepell describes the funded status of pension plans since December 31, 2019 based on three typical investment portfolios. A graph shows the changes in the financial position of a typical defined benefit plan since the end of 2019. A table shows the impact of past returns on plan assets and the effect of interest rate changes on solvency liabilities of a medium duration pension plan.
  • The impact of pension expense under international accounting as at August 31, 2020 – Morneau Shepell has shown the evolution of the pension expense for a typical defined benefit pension plan. Since the beginning of the year, the pension expense has increased by 14 per cent (for a contributory plan) mainly due to the decrease in the discount rates.

About Morneau Shepell
Morneau Shepell is a leading provider of technology-enabled HR services that deliver an integrated approach to employee wellbeing through our cloud-based platform. Our focus is providing world-class solutions to our clients to support the mental, physical, social and financial wellbeing of their people. By improving lives, we improve business. Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement consulting, actuarial and investment services. Morneau Shepell employs approximately 6,000 employees who work with some 24,000 client organizations that use our services in 162 countries. Morneau Shepell is a publicly traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit

SOURCE Morneau Shepell Inc.

For further information: Heather MacDonald, Morneau Shepell,, 855-622-3327