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2020 Agreement Respecting Multi-Jurisdictional Pension Plans To Become Effective On July 1, 2020
Date: June 22, 2020
The Canadian Association of Pension Supervisory Authorities (CAPSA) has announced the adoption of the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans (2020 Agreement), which will become effective on July 1, 2020.
The 2020 Agreement will govern the administration and regulation of multi-jurisdictional pension plans (MJPPs) between the following jurisdictions (Participating Jurisdictions):
- Alberta
- British Columbia
- Canada
- New Brunswick
- Nova Scotia
- Ontario
- Quebec
- Saskatchewan
The 2020 Agreement replaces the 2016 Agreement Respecting Multi-Jurisdictional Pension Plans (2016 Agreement). The number of Participating Jurisdictions has also expanded since the 2016 Agreement was entered into, with the federal government and the governments of Alberta and New Brunswick signing on to the new 2020 Agreement. Each of the Participating Jurisdictions have taken steps to enter into the 2020 Agreement over the last few months.
The 2020 Agreement reflects the results of CAPSA’s 2017 public consultation on proposed changes to the pension plan funding and asset allocation rules under the 2016 Agreement, and addresses a number of areas where the legislation of the major authority (i.e., the applicable pension legislation of the jurisdiction where a plan is registered) will govern. The 2020 Agreement contains the following changes:
- Funding Rules on Transition: Amended funding rules to require that only the major authority’s legislated pension plan funding rules will be applied on an ongoing basis.
- Annuity Discharges: Clarification that the annuity discharge requirements of the minimum standards pension legislation governing a member’s pension benefits (i.e. the pension legislation of the “minor authority”) will apply to an annuity purchase. This would include, for example, the requirements related to member notices. However, if the province of registration has legislated funding rules for annuity discharges, those funding rules will apply to contribution requirements, minimum funding and solvency levels, and actuarial valuation reports (including the form and content of such reports, applicable deadlines, and actuarial standards).
- Asset Allocation: Amended requirements governing asset allocation between jurisdictions upon plan wind up or upon certain other major plan events. This change has been made to accommodate the defined benefit solvency funding rule changes that have taken effect in a number of the Participating Jurisdictions since the 2016 Agreement was entered into.
- Change of Province of Registration: Allowing a change to the major authority to be cancelled if, before the effective date of the change, the existing province of registration again has most of the active members.
- Withdrawal Waiting Period: Shortening the waiting period for a jurisdiction to withdraw from the 2020 Agreement from three years to eighteen months.
The adoption of the 2020 Agreement by an expanded number of Participating Jurisdictions is a welcome development. The 2020 Agreement is expected to further simplify the administration of MJPPs with members in the Participating Jurisdictions. In particular, the 2020 Agreement will simplify the administration of MJPPs that must provide annual and biennial statements to members that are governed by multiple pension jurisdictions. Under both the 2016 Agreement and the 2020 Agreement, administrators of MJPPs can discharge the requirement to provide these statements by issuing statements to members in each of the Participating Jurisdictions that comply with the pension legislation of the province of registration.
The 1968 Memorandum of Reciprocal Agreement will continue to apply to Manitoba and Newfoundland and Labrador.
Should you require further information, please contact any member of our Pension, Benefits and Executive Compensation Group.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
