Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Canadian provinces not expected to fully adopt model pension law

Local jurisdictions want to keep control of own regulations

Reprints

CHARLOTTETOWN, Prince Edward Island--Canada is moving toward adoption of a model pension law, although some of its most controversial principles are not likely to be implemented, Nova Scotia's pension regulator says.

The Canadian Assn. of Pension Supervisory Authorities' model law provides the basis for all jurisdictions to revise their pension legislation and simplify regulation of plans in multiple jurisdictions, said Nancy MacNeill Smith, superintendent of pensions for Nova Scotia and a member of Toronto-based CAPSA, the coalition of federal and provincial pension regulators.

"It's not a promise of complete harmonization, but given the nature of the Constitution of Canada and the powers of the governments, it is what we've found to be the most workable solution," she said during a session at the Assn. of Canadian Pension Management's annual conference held Sept. 10-13 in Charlottetown, Prince Edward Island.

CAPSA likely will finalize the model pension law next year and then present the principles to provincial legislatures in the hope of incorporating the principles into each pension statute, Ms. Smith said.

Manitoba has already adopted some of the CAPSA model law principles. Ontario is reviewing its pension law; Alberta, British Columbia and possibly Nova Scotia will begin similar reviews with the goal of adopting, to the greatest extent possible, common pension standards she said.

A consensus, though, on some of the most contentious issues in the pension industry--namely surplus ownership--has failed to emerge, Ms. Smith said.

Indeed, provincial governments have divergent views on a number of issues, including unlocking pension benefits, or allowing the employee to withdraw funds from the pension. Saskatchewan passed legislation a few years ago to allow residents to unlock part of their pension benefits. Nova Scotia, though, would resist allowing residents to unlock their pension benefits, out of concern that its relatively older population would not be able to replenish their retirement savings, she said.

"I don't believe it will ever be possible to have a single uniform law in Canada because...it's very important to the jurisdictions to be able to maintain control of the laws they set for the people in their province," Ms. Smith said.

Ideally, Canada also would have a national pension regulator to oversee pension plans that have members in more than one province, she said. There are currently 2,700 multijurisdictional pension plans providing benefits to 1.5 million Canadian residents.

The regulators developed a memorandum of reciprocal agreement in 1968 to reduce administrative and regulatory costs associated with plans in multiple jurisdictions. Under the memorandum, the plans were subject to the rules of each jurisdiction in which they have plan members, but the regulator of the jurisdiction where the plan was registered would apply all applicable regulations, including those of other provinces. For example, if a pension plan were registered in Nova Scotia but also had members in Ontario, Nova Scotia's regulator would apply the pension rules of both provinces in overseeing the plan.

The problem, though, is that legislation across Canada is no longer similar, making it impossible for a regulator to enforce both its and other jurisdictions' rules, she said.

In response, CAPSA is nearing completion of a revised memorandum with clear and explicit rules regarding applicable laws. For example, if a member works in Ontario, then Ontario's rules would govern the member's benefits even if the plan was registered in Alberta. The Alberta pension statute, though, would govern the operation of the plan itself because that is where the plan is registered.

This practice has been accepted by regulators as it results in a minimal loss of authority. In contrast, the creation of a national pension regulator would result in a substantial loss of control for the provinces.

"It's really not acceptable," to the governments, Ms. Smith said.