Ontario registered pension plans : Bill provides for the exemption of an IPP
On October 6th, Bill 213 - Better for People, Smarter for Business Act - was presented to the Legislative Assembly of Ontario and is currently in second reading. In this Bill, certain amendments to the Pension Benefits Act were tabled. The Bill permits the Chief Executive Officer of the Financial Services Regulatory Authority of Ontario to waive certain requirements regarding a notice of transfer of assets between pension plans or conversion of a pension plan from a single employer pension plan to a jointly sponsored pension plan. The Bill also introduces a very significant change for individual pension plans and designated plans.
It is being put forth with this Bill that, individual pension plans (IPPs) and designated plans, as defined under the Income Tax Act (ITA), may be permitted to be exempt for the application of the Act, regulations and governing rules. Hence, exempted IPPs would no longer be subject to minimum funding or locking in requirements. This change would take effect on the date the Bill reaches Royal assent and would apply to all IPPs and designated plans whether it be a new plan or an existing one.
In order to qualify for this exemption, all existing plans would need to meet the following criteria:
- Every member of the pension plan must be a connected member within the meaning of section 8500(3) of the ITA
- Every former member or retired member must have been considered a connected member prior to becoming a former member or a retired member
If these criteria are met, the following will be required:
- Consent for exemption from each member, former member or retired member as well as any person that is considered a spouse or is entitled to a pension benefit under the plan must be obtained by the Plan administrator
- Acknowledgment from all parties described above that it is understood that benefits, whether future or already accrued, will no longer be regulated by the Act
- Confirmation of marital status at the date the consent is being given must also be obtained
Once received, the Plan administrator will forward all consent forms and the request for exemption to the appropriate authorities for filing at which time the provincial registration of the plan will be withdrawn.
Once the provincial registration has been withdrawn, it is to be noted that any new members of the plan must also be a connected member.
For IPPs and designated plans implemented after the date Bill 213 reaches Royal assent, administrators should not request registration of this plan with the provincial authorities thus exempting the plan from the application of the Pension Benefits Act.
Further details regarding the effective date will follow once Royal Assent has been reached.