2020 Agreement Respecting Multi-Jurisdictional Pension Plans

Multi-jurisdictional pension plans are employment-based pension plans with members in more than one jurisdiction, whether federal or provincial. Often these plans are sponsored by large national employers and unions that operate in several jurisdictions.

A province's pension legislation applies to plan members employed in that particular province whose pension benefits are not otherwise governed by the federal government's pension legislation, the Pension Benefits Standards Act, 1985 (PBSA). The PBSA applies to plan members employed within federally regulated areas of employment such as banking, interprovincial transportation, telecommunications, as well as any employment in the territories. Since a multi-jurisdictional plan has members employed in multiple jurisdictions, it is simultaneously subject to more than one jurisdiction's pension legislation.

The first Memorandum of Reciprocal Agreement was signed between representatives of the provinces in 1968 and sets out rules for how multi-jurisdictional pension plans in Canada are to be regulated between provincial pension regulators. Similar federal-provincial bilateral agreements have also been signed between the federal government and provinces other than Quebec and Newfoundland and Labrador since 1968.

The bilateral agreements require that a multi-jurisdictional plan be registered with only one jurisdiction's pension regulator, which is the pension regulator for the jurisdiction that has the most active plan members. In the absence of such an agreement, multi-jurisdictional plans would need to register in each jurisdiction in which they have members. The bilateral agreements also require the pension regulator with which the plan is registered (called the "major authority") to apply the legislation of the "minor authorities" and exercise their regulatory powers.

These bilateral agreements remain in effect until July 1, 2020 when most will be replaced by the recently announced 2020 Agreement Respecting Multi-jurisdictional Pension Plans (the 2020 Agreement). The bilateral agreement with Manitoba will remain in effect as they are not a signatory to the 2020 Agreement. There is no bilateral agreement between the federal government and Newfoundland and Labrador and they are also not a signatory to the 2020 Agreement.

The 2020 Agreement provides that certain provisions of the major authority's legislation are to apply to the multi-jurisdictional pension plan, instead of the requirements of the minor authorities' legislation. Please refer to question 3 for more details.

The 2020 Agreement Respecting Multi-jurisdictional Pension Plans (the 2020 Agreement) comes into effect on July 1, 2020 and provides a clear legal framework for the administration and regulation of multi-jurisdictional pension plans in Canada. Among other things, the 2020 Agreement

• requires that a multi-jurisdictional plan only register with one pension regulator (the "major authority"), and sets out rules for determining which pension regulator will be the major authority for the plan;
• provides that certain requirements of the major authority's pension legislation (such as plan-wide funding requirements, investment requirements, etc.) will apply to the entire plan and all of its members despite the requirements of any other jurisdiction's pension legislation, while the requirements of those other jurisdictions' pension legislation will largely continue to apply to the individual benefits of members;
• requires that the "final location" approach to determining a plan member's benefits be applied in cases where the member has been employed in more than one jurisdiction while a member of the plan; and
• sets out clear rules for allocating the assets of a plan between jurisdictions in the event of a plan termination and wind up or a plan split.

For additional details, please refer to the announcement regarding the 2020 Agreement on the Canadian Association of Pension Supervisory Authorities (CAPSA) website.

For plans that are currently registered both federally and in Quebec, the regulators will, in accordance with the 2020 Agreement, determine in which jurisdiction the plurality of members fall and thereafter, the plan will maintain registration in that jurisdiction only. Plan administrators will be notified once a determination has been made.

As Newfoundland and Labrador did not sign the 2020 Agreement and the federal government does not have a bilateral agreement with that province, dual registration will be maintained.

Under the 2020 Agreement, the portability restrictions (if any) of the major authority will apply to all members of the plan, regardless of their jurisdiction. This means that the amount that can be transferred from the plan (i.e. the initial transfer and the remainder to be paid at a later date, if any) will be based on the rules and conditions of the major authority. A member's entitlement to benefits (i.e. the level of benefits to eventually be paid out from the plan) is determined in accordance with the legislation of the respective minor authorities.