Manitoba passes amendments to Pension Benefits Act
On May 20, 2021, Manitoba passed Bill 8: The Pension Benefits Amendment Act, which amends The Pension Benefits Act to make certain changes that had been recommended by the Manitoba Pension Commission. Bill 8 will come into force upon proclamation and accompanying regulations will be required.
Under the amended legislation, a person who transfers a pension benefit credit to a locked-in retirement account (LIRA) or life income fund (LIF) will be able to unlock the full account value at any time after reaching age 65. The individual may make a lump sum withdrawal of the balance or transfer the balance to a registered retirement income fund (RRIF) or to a registered retirement savings plan (RRSP).
Individuals may also unlock funds based on financial hardship. The consent of the spouse or common-law partner would be required.
Continued employment after normal retirement date
Bill 8 will allow pension plans to permit a member who continues to be employed after having reached normal retirement age to cease active membership in the plan and to stop making contributions.
If the member had been participating in a defined benefit plan component, the value of the member’s pension cannot be less than the actuarial equivalent of the pension that would have been payable if the member had retired at the normal retirement age at the day he or she ceased active participation in the plan.
Specified multi-employer pension plans
The amendments allow for the establishment of specified multi-employer pension plans (SMEPPs), which are defined benefit pension plans in which several non-related employers participate pursuant to a collective bargaining agreement. Upon a plan administrator’s written request, the Manitoba Superintendent of Pensions will be able to designate a qualifying plan as a specified multi-employer plan.
The amendments also provide for the following changes:
- An employer may make use of a solvency reserve account, which is a separate account established within a pension fund and used to fund a solvency deficiency, from which prescribed amount of surplus may be withdrawn, subject to certain restrictions.
- The amendments clarify that the provision providing for the division of a pension under family law rules does not apply to benefits to which the small pension commutation rule applies.
- Provisions are added to deal with plans that are required to be administered by a pension committee, where no non-active member is prepared to serve on the committee.
Several of the changes introduced by Bill 8 will bring Manitoba pension legislation in line with that of other Canadian jurisdictions. Additional unlocking options will provide pension plan members with additional flexibility once they have transferred their pension benefit to a specified locked-in retirement account. Furthermore, a number of additional changes can be expected in the regulations, which are yet to be published. The government previously announced that these additional changes would include the reduction of solvency funding requirements from 100% to 85% and the enhancement of going concern funding requirements, similar to funding reforms in other provinces.