Government of Canada Issues Draft Regulations on Negotiated Contribution Plans and Unclaimed Pension Balances; Comments Due July 24

Published June 28, 2023

The Government of Canada posted proposed Regulations Amending the Pension Benefits Standards Regulations, 1985 (Negotiated Contribution Plans) in Part I of the Canada Gazette. Organized labour and retiree representatives, pension professionals, and other key stakeholders are invited to share their feedback. The proposed Regulations would exempt negotiated contribution (NC) plans from solvency funding requirements and set out enhanced going concern funding standards as well as the information requirements for plan governance and funding policies, and ensure that sufficient information is provided to and published by the designated entity to ensure that unclaimed pension balances from terminated federally regulated pension plans can be found and claimed by their owners.

For NC plans, the proposed Regulations would:
  • Exempt NC plans from making extra payments if there is a solvency deficiency. Instead, the proposed Regulations would require NC plans to include a funding buffer for both normal costsfootnote2 and for going concern liabilities as part of enhanced going concern requirements.
  • Prescribe the elements required in the governance and funding policies of NC plans.
  • Set a going concern funding threshold for plan amendments, which would prohibit any amendments to improve benefits that would result in a going concern ratio of less than 1.05 (i.e. fully funded with a going concern surplus of 5 per cent).
For unclaimed pension balances, the proposed Regulations would:
  • St out the information associated with unclaimed pension balances of unlocatable beneficiaries that the plan administrators must provide to the designated entity at the time of transfer.
  • Set out the information the designated entity can publish on a public database to facilitate the search for unclaimed pension assets.
  • Allow the designated entity to publish the last known name and address of the unlocatable beneficiary, the name and registration number of the pension plan, as well as the market value of the transferred assets. 
  • Specify who qualifies as an eligible claimant of unclaimed pension assets, and establish the period for how long the designated entity can administer the unclaimed assets before the funds are transferred to the Crown.
  • Set the proposed prescription period for unclaimed pension balances at 30 years for balances under $1,000 and 100 years for balances over $1,000.
The objectives of the proposed Regulations are:
  • To enhance the retirement security of negotiated contribution plan members and retirees by allowing active plans to offer more sustainable benefit levels for a given level of contributions; and
  • To safeguard unclaimed pension balances received by the designated entity from terminated federally regulated pension plans and facilitate these funds being claimed by their owners.
The Government is looking for feedback on various elements of the proposed Regulations.

Comments are due July 24, 2023.