Office of the Superintendent of Financial Institutions
No. Deadlines have returned to the regular filing schedule for plans subject to the
Pension Benefits Standards Act, 1985 (6 months after plan year-end) and for plans subject to the
Pooled Registered Pension Plans Act (4 months after plan year-end).
If a plan administrator is facing challenges complying with the prescribed timelines, they should contact their OSFI Relationship Manager.
When a member of a defined benefit pension plan ceases employment with the employer sponsoring the pension plan, they can choose to leave their entitlement in the pension plan and receive a monthly pension payment when they eventually retire, or they can, in some circumstances, exercise "portability". Exercising portability means transferring the value of the pension (also referred to as the "pension benefit credit" or "commuted value") to a locked-in vehicle such as a life income fund or locked-in registered retirement savings plan, transferring to another pension plan or using the value of the pension to purchase an annuity.
Pension Benefits Standards Act, 1985 (PBSA) is the legislation that protects members of pension plans who work for federally regulated employers. These protections include limiting the circumstances under which money can leave a plan. The PBSA provides the authority to the Superintendent to impose conditions on, or to prohibit portability transfers if he believes the transfer would impair the solvency of the pension fund.
Directives of the Superintendent include conditions on portability transfers and buy-out annuity purchases.
The Superintendent grants his automatic consent to transfers that relate to defined benefit provisions made pursuant to section 26 of the
Pension Benefits Standards Act, 1985, subject to the following terms and conditions:
In addition, the transfer deficiency must be credited with interest from the date of determination of the commuted value to the date of the transfer, at the same rate used to determine the commuted value.
For additional details regarding the conditions applicable to negotiated contribution plans, please refer to questions 15 through 17.
No. As of the effective date of the
Directives of the Superintendent (the Directives), references to the solvency ratio in the Directives will mean the solvency ratio as defined in subsection 2(1) of the
Pension Benefits Standards Regulations, 1985. Generally, this means that the applicable solvency ratio for portability transfers is the solvency ratio of the pension plan based on the most recently filed actuarial report.
Under the previous version of the Directives of the Superintendent (the Directives), the transfer ratio was defined as the lower of the solvency ratio of the plan as filed in the most recent actuarial report and the solvency ratio of the plan, projected to a date no earlier than March 31, 2020.
Going forward, portability transfers must be paid out of the pension fund at the solvency ratio of the plan as determined in the most recently filed actuarial report. This means that if a plan administrator was using a projected solvency ratio, it must now use the solvency ratio as determined in the most recently filed actuarial report, whether or not it preceded March 31, 2020.
Please refer to questions 15 through 17 for the rules applicable to negotiated contribution pension plans.
Yes. Where a plan administrator wishes to purchase an immediate or deferred life annuity other than for the purposes of portability transfers under section 26 of the
Pension Benefits Standards Act, 1985, and the purchase does not settle all the liabilities of the plan, consent is given if
The "solvency ratio following the purchase of the annuity" is the solvency ratio, adjusted to reflect the effect of the purchase of the immediate or deferred life annuity.
No. The conditions on transfers in the
Directives of the Superintendent do not apply to defined contribution plans, nor do they apply to the benefits payable from the defined contribution provisions of a plan with both defined benefit and defined contribution provisions (i.e. a combo plan).
No. The conditions on transfers in the
Directives of the Superintendent do not affect the monthly pension payments that retirees or surviving spouses are currently receiving from a federally registered private pension plan. The conditions also do not affect the payment of monthly pensions from the plan for future retirees or surviving spouses.
No. A buy-in annuity is not considered an immediate or deferred life annuity under section 26.1 of the
Pension Benefits Standards Act, 1985. As indicated in OSFI guidance on
Buy-in Annuity Products, they are considered investments of the plan and are subject to the same rules that apply to any investment made by the plan administrator.
Directives of the Superintendent do
not affect payments from the pension fund that are not portability transfers under section 26 of the
Pension Benefits Standards Act, 1985(PBSA). This includes the following:
No. If a member is eligible for portability then the member's election must be processed in accordance with the
Directives of the Superintendent (the Directives). If a plan administrator has concerns about complying with the Directives, they should contact their OSFI Relationship Manager.
The federal government signed the
2020 Agreement Respecting Multi-jurisdictional Pension Plans (the 2020 Agreement) that came into effect on July 1, 2020. The other signatories to the 2020 Agreement are Alberta, British Columbia, New Brunswick, Nova Scotia, Ontario, Quebec and Saskatchewan. Paragraph 6(f) of Schedule B of the 2020 Agreement provides that the portability conditions of the jurisdiction under which the plan is registered (the major authority) will apply to portability transfers for all members, regardless of jurisdiction. Subsection 8(2) of the
Directives of the Superintendent (the Directives) confirms this provision for federal members in these multi-jurisdictional plans.
Newfoundland and Labrador and Manitoba did not sign the 2020 Agreement. If a federally registered plan includes members whose benefits are subject to either the pension legislation of Newfoundland and Labrador or Manitoba, the following applies:
Newfoundland and Labrador There is no bi-lateral agreement in place between the federal and the Newfoundland and Labrador governments. As such, the plan must be registered with both OSFI and Newfoundland and Labrador.
In this scenario, federal rules apply to federal members and Newfoundland and Labrador rules apply to Newfoundland and Labrador members.
Manitoba There is a bi-lateral agreement between the federal and Manitoba governments and it remains in effect.
Although the bi-lateral agreement does not specifically address whether or not the portability conditions of the jurisdiction under which the plan is registered will apply to portability transfers for all members, the Office of the Superintendent – Pension Commission of Manitoba permits federal portability conditions to apply to Manitoba members of plans registered with OSFI.
Subsection 8(2) of the Directives provides that Manitoba's portability conditions apply to federal members of plans registered in Manitoba.
For more information on the 2020 Agreement, please see our related
Frequently Asked Questions.
Subparagraph 8(1)(b)(ii) of the
Directives of the Superintendent (the Directives) provides that the full amount of the commuted value can be transferred if the transfer deficiency is less than 20% of the Year's Maximum Pensionable Earnings for that year, provided that the aggregate value of all transfers made does not exceed 5% of the assets of the plan at the valuation date of the most recently filed actuarial report. The value of the aggregate limit should be measured on a plan year basis (i.e. from one valuation date to the next).
Yes. The Superintendent exercises his authority under section 26.1 of the
Pension Benefits Standards Act, 1985 by issuing
Directives of the Superintendent. The purpose of this authority is to protect the benefits of all plan members and beneficiaries, by granting the Superintendent the ability to restrict transfers out of the pension fund where they pose a risk to the overall financial health of the pension fund.
As a result of future events, such as a further deterioration in the financial and economic environment, the Superintendent may determine that any transfers would impair the solvency of pension funds and that it is prudent to reintroduce a temporary freeze or to change the conditions for providing automatic consent.
For instance, in the event of renewed market volatility, the Superintendent has the flexibility to require plan administrators to use a more recent projected solvency ratio as the basis for such transfers, if appropriate. Such a change would require plan administrators to use the lower of the solvency ratio as at the last filed actuarial report, and a solvency ratio projected to a date no earlier than the date set by the Superintendent. This would allow plan administrators to continue portability transfers in the ordinary course, using a more up-to-date solvency ratio. As a result, portability transfers should not adversely impact the financial position of the pension plan.
The definition of transfer ratio has been amended to set the transfer ratio at 1.00 where the pension benefit credit (or "commuted value") is calculated in accordance with subsection 3570 of the
Standards of Practice for Pension Plans of the Canadian Institute of Actuaries (the Standards) that came into effect on December 1, 2020. As a result, federally registered negotiated contribution plans should transfer the full amount of the commuted value when it is determined in accordance with subsection 3570 of the Standards, regardless of the solvency ratio of the plan.
Subsection 8(1.1) of the
Directives of the Superintendent (the Directives) provides that, for commuted values calculated in accordance with subsection 3570 of the
Standards of Practice for Pension Plans of the Canadian Institute of Actuaries (the Standards), and transferred out of the pension fund between December 1, 2020 and the effective date of the Directives, any amount of the commuted value that remains payable to the member, plus interest, should now be paid out.
Prior to December 1, 2020, federally registered negotiated contribution plan commuted values could not be calculated in accordance with subsection 3570 of the Standards. Any transfer deficiencies determined prior to this date continue to be subject to the conditions set out in subsection 8(1) of the Directives. For additional details on these conditions, please refer to Question 3.
The portability conditions applicable to multi-jurisdictional negotiated contribution plans are the same as those set out for multi-jurisdictional pension plans in question 12 of these FAQs.
However, the member's benefits and how the commuted value is calculated will depend on the pension legislation governing that member's benefits. A member's commuted value will be determined in accordance with the legislation of their jurisdiction (be it provincial or federal), notwithstanding that another jurisdiction's portability conditions may apply to the plan as a whole.