Human Resources Legislative Update - Legislative Developments in Human Resources Law

On May 2, 2013, the Ontario government tabled its Budget 2013, “A Prosperous and Fair Ontario” as well as Bill 65, Prosperous and Fair Ontario Act (Budget Measures), 2013, legislation which, if passed, would implement certain initiatives contained in the Budget.  

Among other things, the measures contained in the Budget of interest to employers include:  

• reaffirmation that the compensation restraint measures imposed by Part II.1 of the Broader Public Sector Accountability Act, 2010 are to remain in effect until the elimination of the deficit;
• a review of compensation practices for executives in the Broader Public Sector;
• commitments to consider possible “modest enhancements” to the CPP and to commence consultations regarding the viability of implementing Pooled Registered Pension Plans in Ontario;
• a review of the Court of Appeal for Ontario decision in Carrigan v. Carrigan Estate regarding spousal entitlements under the Pension Benefits Act;
  
• an intention to amend the pension benefit legislation to permit the transfer of assets from and/or conversion of a single employer pension plan (“SEPP”) to a jointly sponsored pension plan (“JSPP”);
• a proposed increase of the Employer Health Tax exemptions for small businesses, from $400,000 to $450,000;
• the establishment of a Minimum Wage Advisory Panel to review the minimum wage rates in Ontario; and
• additional funding to hire more officers and staff to enhance enforcement of the Employment Standards Act, 2000.

An FTR Now providing a more detailed analysis of the Budget proposals will be availabe shortly on our website.

For an analysis of the Carrigan v. Carrigan Estate decision, see our FTR Now of March 28, 2013 “Supreme Court Denies Leave in Carrigan.”

On April 11, 2013, O. Reg. 131/13, amending Regulation 909 (General) made under the Ontario Pension Benefits Act, was filed and came into force on that date.

O. Reg. 131/13 amends subsection 47.7.2 (1) of Regulation 909 to add the following paragraph:

4. Ontario Teachers’ Pension Plan, registered under the Act as number 0345785.

As previously reported, subsection 47.7.2 was recently added to Regulation 909 to allow prescribed pension plans to make an election, under the specified conditions, to cause the applicable pension plan to be reviewed and an actuarial report prepared under section 14 with a new valuation date “that is not later than January 1, 2018 and is also not later than the fourth anniversary of the valuation date of the most recently filed report with a valuation date on or before December 30, 2014, despite subsection 14(1).”

On March 21, 2013, the federal government tabled its Budget 2013, Jobs Growth and Long Term Prosperity – Economic Action Plan 2013.

Some of the highlights of interest to employers and pension plan administrators include:

• simplified GST/HST pension plan rules for employers;
• amendments to the Income Tax Act to permit the correction of reasonable pension plan contribution errors;
• an update on the status of Pooled Registered Pension Plans;
• an announcement that a consultation and changes are forthcoming to provide options for troubled pension plans;
• GST/HST changes affecting certain health-related services;
• an extension of the temporary hiring credit for small businesses;
• creation of the Canada Job Grant program;
• proposed measures to encourage the use of apprentices; and
• the reform of the Temporary Foreign Worker Program.

For more detailed analysis of the Budget 2013 initiatives see our FTR Now "Federal Budget 2013".

On February 28, 2013, the government of British Columbia introduced Bill 16, Pooled Registered Pension Plans Act.

If passed, Bill 16 would authorize pooled registered pension plans (“PRPPs”) to be made available to provincially-regulated employees and self-employed persons in British Columbia, subject to the requirements set out in the federal Pooled Registered Pension Plans Act (“Federal Act”).  Bill 16 would implement the Federal Act’s PRPP framework in British Columbia, maintaining many of the same features as federal PRPPs:

• employer participation in a PRPP is optional;

• once a PRPP is provided by an employer, employees are automatically enrolled and have the right to opt out; and

• an employer that offers a PRPP is not required to make contributions on behalf of its employees.

As previously reported, the Federal Act came into force on December 14, 2012.

For information regarding the PRPPs, see our prior blog posts.

On January 15, 2013, the Ontario government filed O. Reg. 10/13, Nortel Pension Plans, made under the Pension Benefits Act (“Act”)

In May 2011, the Act was amended to allow all pensioners of two specified Nortel Networks pension plans to transfer the commuted value of their benefits out of the plans. O. Reg. 10/13 prescribes conditions and restrictions relating to such transfers, including consent, notice requirements and the methodology to be used for calculation of the commuted value transfer amount.

The Regulation came into force on January 15, 2013.

On December 14, 2012, Regulations Amending the Canada Pension Plan Investment Board Regulations were registered. As previously reported and of particular note, this amendment repeals section 12 of the Canada Pension Plan Investment Board Regulations (“CPPIBR”) which established quantitative investment limits in respect of Canadian resource and real properties. The repeal of this section aligns the CPPIBR with the Pension Benefits Standards Regulations, 1985 (“PBSR”) and allows the Canada Pension Plan Investment Board (“CPPIB”) to rely on the prudent person standard. This gives the CPPIB the same investment flexibility as that available to federally regulated pension plans operating under the PBSR (as amended in 2010).

On December 14, 2012, Regulations Amending the Public Sector Pension Investment Board Regulations were also registered. Among other things, these amendments repeal section 12 of the Public Sector Pension Investment Board Regulations, which established the quantitative investment limits in respect of Canadian resource and real properties. Similar to the CPPIBR amendments, repeal of this section allows the Public Sector Pension Investment Board (“PSPIB”) to rely on the prudent person standard.

On December 14, 2012, the federal government announced that the second and final tranche of the regulations under the Pooled Registered Pension Plans Act (“Act”) came into force on that day, following the conclusion of a period for public comment.

As previously reported, these supporting regulations address provisions of the Act, including:

• general requirements regarding the provision of information to plan members by employers and plan administrators;
• the requirements for unlocking funds in a pooled registered pension plan account for non-residency and shortened-life expectancy;
• the circumstances in which a member may receive variable payments from the funds in his or her account;
• the transfer options available to members from his or her account and the conditions upon which a member’s funds may be transferred;
• the use of electronic means to satisfy communication requirements under the Act; and
• other technical rules related to the implementation of the framework.

The Act and the first tranche of Regulations also came into force on December 14, 2012, with the result that the complete federal Pooled Registered Pension Plan framework, including the income tax rules which are applicable to both federally- and provincially-regulated PRPPs, is now in force.

On December 5, 2012, the Ontario government posted a regulatory proposal regarding amendments to O. Reg. 178/11 (Solvency Funding Relief for Certain Public Sector Pension Plans), made under the Pension Benefits Act. Comments on the proposal are due by January 20, 2013.

Under the proposal, the third and final window for solvency funding relief for eligible Broader Public Sector (“BPS”) plans is now open and applications for Stage 1 relief must be filed by December 31, 2012. Regardless of the valuation date, the first valuation report filed with the Financial Services Commission of Ontario after December 31, 2012 will form the basis of Stage 1 relief. Eligible single employer plans which did not apply earlier for BPS solvency relief may apply now.

A regulatory extension of the filing deadline for pension plans with a valuation date on or after June 1, 2011 and before May 30, 2012 was previously enacted by O. Reg. 164/12. The new deadline is February 28, 2013.

As previously discussed in our FTR Now of February 11, 2011, “Solvency Funding Relief Details for Broader Public Sector Released by Ontario Government”, BPS solvency funding relief provides BPS pension plans two stages of relief (in the form of a moratorium, followed by an extended funding period) during which the relevant stakeholders are given time to make changes to their pension plans to make the plans more sustainable (i.e. contribution increases, benefit reductions).

On November 20, 2012, Bill 10, Employment Pension Plans Act, passed Third Reading in the Alberta Legislature. As previously reported, Bill 10 is an overhaul of the existing pension legislation in Alberta and will repeal and replace the Employment Pension Plans Act. The government of Alberta has issued an update outlining the key differences between Bill 10 and its predecessor legislation.

Bill 10 will not be proclaimed into force until its supporting regulation is in place.

Section 18 of the Securing Pension Benefits Now and for the Future Act, 2010 has been proclaimed into force effective January 1, 2013. This section amends the Pension Benefits Act (“PBA”) to add section 55.2, Letters of Credit.

As previously reported, the supporting regulation to section 55.2, O. Reg. 364/12, was filed on November 15, 2012. It will also come into force on January 1, 2013.

For more information on these and other recent changes to the pension regime in Ontario, see our FTR Now of July 27, 2012, “Pension Reform Measures in Ontario Have Arrived.”

On November 15, 2012, the Ontario government filed O. Reg. 364/12, which amends Regulation 909 made under the Pension Benefits Act (“PBA”) and implements the framework for letters of credit under the yet to be proclaimed section 55.2 of the PBA.

Section 55.2 of the PBA will allow the use of letters of credit in lieu of cash contributions to fund deficits in defined benefit plans up to 15% of a plan's solvency liabilities. As previously reported, a draft regulatory proposal designed to implement that change was released for comment on July 30, 2012. O. Reg. 364/12 is the result of that process.

Among other matters, O. Reg. 364/12 prescribes:

• the pension plans to which section 55.2 of the PBA applies;
• rules with respect to the determination of the amount of the solvency liability of a pension plan for the purposes of section 55.2(4) of the PBA;
• the circumstances under which a trustee who holds a letter of credit in trust for a pension plan can demand payment of the amount of that letter of credit into the pension fund by the issuer;
• mandatory requirements of the form of the letters of credit and their terms;
• requirements for holding a letter of credit in trust; and
• specified provisions which must be contained in trust agreements to which a letter of credit is subject.  

O. Reg. 364/12 comes into force on the day it is filed or the date section 18 of the Securing Pension Benefits Now and for the Future Act, 2010 (which enacts section 55.2 of the PBA) comes into force, whichever is later.

For more information on the recent changes to the pension regime in Ontario, see our FTR Now of July 27, 2012, “Pension Reform Measures in Ontario Have Arrived.”

On November 1, 2012, the Canada Revenue Agency (“CRA”) released the “2013 Rates for Money Purchase limits, RRSP limits, YMPE, DPSP limits and Defined Benefits limits,” which are as follows:

• The 2013 annual pension for the year in which a pension commences to be paid under a Defined Benefit pension plan will be limited to $2,696.67 per year of service.
• The 2013 Money Purchase (Defined Contribution) limit will be $24,270.
• The Registered Retirement Savings Plan (“RRSP”) limit will increase to $23,820 in 2013, and to $24,270 in 2014.
• The Deferred Profit Sharing Plans contribution limit in 2013 is $12,135.

As previously reported, the CRA also announced that for 2013, the Year’s Maximum Pensionable Earnings for the Canada Pension Plan shall be $51,100. This figure is used as the maximum earnings on which contributions to the Canada Pension Plan are payable and is also used in many pension plans to calculate employee contribution rates.

All current and historical rates are posted on the CRA website.

On October 26, 2012, the federal government announced that it was pre-publishing proposed Regulations Amending the Pooled Registered Pension Plans Regulations (“Proposed Regulations”) for public commentary and that once the Proposed Regulations are finalized, the Pooled Registered Pension Plans Act (“Act”) and its supporting regulations will come into force.

As stated in the announcement, the Proposed Regulations will address provisions of the Act respecting:

• general requirements regarding the provision of information to plan members by employers and plan administrators;
• the requirements for unlocking funds in a PRPP account for non-residency and shortened-life expectancy;
• the circumstances in which a member may receive variable payments from the funds in their account;
• the prescribed retirement savings plans available as transfer options to members and the conditions upon which a member’s funds may be transferred;
• the use of electronic means to satisfy communication requirements under the Act; and
• other technical rules related to the implementation of the framework.

For information regarding the Pooled Registered Pension Plans, see our prior blog posts.

On October 5, 2012, Pooled Registered Pension Plans Regulations were registered by the federal government. The Regulations provide supporting details for the Pooled Registered Pension Plans Act (“Act”). Among other things, the Regulations establish:

• the licensing conditions for a Pooled Registered Pension Plan (“PRPP”) administrator;
• the management and investment of funds in PRPP members’ accounts;
• details with respect to the permitted investments and investment options for members;
• criteria for determining whether a PRPP is provided at a “low-cost” to members;
• conditions under which a PRPP member is allowed to set his or her contribution rate to 0%; and
• information that PRPP administrators must disclose to PRPP members, employers and the Superintendent of Financial Institutions.

As previously reported, a draft of the Regulations was released by the federal government in August 2012, for comment. That process resulted in minor technical changes. No changes were made to the PRPP administrator licensing conditions or the criteria for determining whether a PRPP is “low-cost”.

The Regulations will come into force when the Act comes into force.

Additional regulations are required for, among other things, provisions respecting the locking-in of a member’s account, and the use of prescribed forms and electronic communications between PRPP administrators, members and/or employers. The second package of regulations is expected shortly.

Also as previously reported, a Notice of Ways and Means Motion was recently tabled to give effect to certain income tax changes necessary to support the introduction of the PRPP.

On October 15, 2012, the federal government tabled a Notice of Ways and Means Motion to implement certain tax measures contained in the government’s March 2012 budget, the Economic Action Plan, 2012 – A Plan for Jobs, Growth and Long-Term Prosperity. Among other things, the Notice of Ways and Means Motion includes implementation of the following:

• tax changes in respect of the inclusion of employer contributions made to certain types of group sickness or accident insurance plans in the income of employees;
• amendments to retirement compensation arrangements to prevent certain schemes designed to inappropriately reduce tax liabilities;
• amendments to Employees Profit Sharing Plans rules;
• improvements to the Registered Disability Savings Plans; and
• tax measures related to the introduction of Pooled Registered Pension Plans.

For more information about the March 2012 budget, see our FTR Now, “Federal Budget 2012 – Highlights for Employers.” As previously reported, the federal government passed omnibus legislation, Jobs, Growth and Long-term Prosperity Act, intended to give effect to certain key initiatives outlined in its Budget 2012. For more information about the proposed tax rules relating to Pooled Registered Pension Plans, see our prior post describing the proposals first released in December 2011. As previously reported, the Pooled Registered Pension Plans Act received Royal Assent on June 28, 2012.

On September 8, 2012, amendments to section 44 of the Pension Benefits Act were proclaimed in force effective October 1, 2012. Specifically, the amendments clarify (1) that survivor benefits can be reduced on the death of either spouse, and (2) that consent will be required in order to commute small survivor benefits where the member retired prior to July 1, 2012.

The amendments were outlined in sections 2(1), (2) and (4) to Schedule 44 of Bill 55, Strong Action for Ontario Act (Budget Measures), 2012.

For background information on these and other reform changes, please see our FTR Now of July 27, 2012, “Pension Reform Measures In Ontario Have Arrived.”

On August 14, 2012, the Ministry of Finance published new legislative proposals relating to the Income Tax Act and Regulations for public commentary. The proposals, which are designed to implement a range of Budget-related initiatives announced by the federal government earlier this year, include measures that would, if adopted,

• include an employer’s contributions to a group sickness or accident insurance plan in an employee’s income to the extent that the contributions are not in respect of wage-loss replacement benefits payable on a periodic basis;
• improve Registered Disability Savings Plans (“RDSPs”) following the review of the RDSP program in 2011;
• amend the rules applicable to retirement compensation arrangements to prevent certain schemes designed to inappropriately reduce tax liabilities;
• amend the rules applicable to Employee Profit Sharing Plans to discourage excessive contributions for employees with a close tie to their employer through the imposition of a special tax on excessive allocations to specified employees; and
• phase out the Overseas Employment Tax Credit.

Members of the public are invited to comment on the draft legislative proposals by September 13, 2012.

For more information on the federal Budget 2012, see our FTR Now of March 30, 2012, “Federal Budget 2012 – Highlights for Employers.”

On July 30, 2012, the Ontario Ministry of Finance posted details of a proposed, supporting regulation to implement the new framework for letters of credit under the yet to be proclaimed section 55.2 of the Pension Benefits Act (“PBA”).

As noted in our “Pension Reform Measures in Ontario Have Arrived” FTR Now of July 27, 2012, in Bill 120, the PBA was amended to allow the use of letters of credit in lieu of cash contributions to fund deficits in defined benefit plans up to 15% of a plan's solvency liabilities. The government reaffirmed its commitment to providing employers with additional flexibility in the funding of their pension plans in the 2012 Budget. The regulatory details proposed are designed to implement these measures, and would:

• identify the maximum value of letters of credit;
• set out the calculation method for determining the maximum value;
• identify who can use and issue letters of credit;
• set out the contractual requirements for letters of credit;
• set out the provisions for holding letters of credit in trust;
• determine circumstances in which a default is deemed to have occurred;
• establish procedures to be followed in the event of a default;
• establish requirements for permissible trust agreements; and
• set out distribution and inspection requirements.

Stakeholders and interested parties may submit comments on the proposed regulation electronically by August 31, 2012.

On June 23, 2012, the federal government published a proposed amendment to the Canada Pension Plan Investment Board Regulations which would repeal section 12 of the Regulations. That section establishes quantitative investment limits in respect of Canadian resource and real properties. Repeal of this section would align the Regulations with the Pension Benefits Standards Regulation, 1985 (“PBSR”), allowing the Canada Pension Plan Investment Board (“CPPIB”) to rely on the prudent person standard and giving it the same investment flexibility as that available to federally regulated pension plans operating under the PBSR, as amended in 2010, and provincially regulated plans influenced by the PBSR. The amendment would also repeal section 3 of the Regulations, which states that “a corporation is a subsidiary of another corporation if it is controlled by the other corporation.”

Interested parties may comment on this proposed amendment to the Canada Pension Plan Investment Board Regulations no later than July 23, 2012.

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The federal government has announced that Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts, will receive Royal Assent today, June 28, 2012.  As previously reported, Bill C-25 is new legislation implementing the framework for federally regulated pooled registered pension plans (“PRPPs”).

It is expected that the government will now move forward with finalizing previously released draft supporting Income Tax Act amendments, which will apply to both federally and provincially regulated PRPPs. Provincial enabling legislation is expected to be introduced shortly in some provinces (not including Ontario). For example, in the 2012 budget, Quebec recently introduced its framework for “voluntary retirement savings plans”, its provincial equivalent to the PRPP.

More information about the PRPP legislation is available in our FTR Now of November 23, 2011, “Pooled Registered Pension Framework Introduced.”

On June 22, 2012, the Ontario government filed O. Reg 164/12 made under the Pension Benefits Act, amending Regulation 909 (General).

Generally speaking, plan administrators are required to file actuarial valuations within nine months from the date of the valuation. O. Reg 164/12 provides an extension to the window for filing actuarial valuations in accordance with Regulation 909. It amends Regulation 909 to provide an extended period for filing actuarial valuations for defined benefit (“DB”) plans and states that administrators may file the first report for which the valuation date is on or after September 30, 2011 and before March 31, 2012 by December 31, 2012.  The Ontario government has indicated that this is the first step towards implementing additional temporary solvency funding relief for Ontario pension plans.

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Further to initiatives first announced in its 2012 Budget, the Ontario government has appointed a special Pension Investment Advisor, Bill Morneau, to develop recommendations for the government’s consideration through a public consultation process in anticipation of a new legislative framework that will facilitate the pooling of pension fund assets in the broader public sector (“BPS”).

Pension plan administrators and other stakeholders are invited to comment on the following questions: 

• What is the appropriate mechanism(s) for pooling the investments of BPS pension plans?
• Should participation in the model be voluntary or mandatory? 
• What is the appropriate governance model to ensure effective leadership and representative decision-making?
• How can the model meet plan-specific investment needs in a manner that is consistent with the fiduciary responsibilities of plan administrators?
• How can the model be implemented?  What is the appropriate transition period for implementation?  How should transition costs be allocated?
• What role should pension plan design, asset allocation models and the size of the plan play in determining participation?
• Are there any obstacles to the inclusion of defined contribution pension plans in the model?
• Should the model include other BPS Investment Funds?

Comments may be submitted by June 30, 2012, and will be posted on the Ministry of Finance website at a future date, unless otherwise directed.

On May 14, 2012, the Ontario government published additional draft amendments to General regulation 909 under the Pension Benefits Act (“Act”), and further proposed a proclamation date of July 1, 2012 in respect of certain amendments to the Act.

The regulatory amendments would specifically outline the information plan administrators are required to disclose, including:

• “prescribed records” for the purposes of subsection 29(5) of the Act (relating to requests for the most recent plan documents to be mailed or sent by electronic means);
• prescribed documents that “specified persons” are entitled to inspect at the office of the Superintendent of Financial Services for the purposes of paragraph 2 of subsection 30(1) of the Act; and
• investment information summary filing obligations of plan administrators, where the plan provides defined benefits.

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On Monday, April 30, 2012, the Ontario Ministry of Finance published long-awaited, proposed regulatory amendments under the Pension Benefits Act (“Act”), including additional, proposed prescribed “activating events” for the purposes of grow-in benefits that come into force on July 1, 2012, for public commentary.

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The Ontario government has proposed an amendment to Regulation 909 made under the Pension Benefits Act, Filing Extension for Certain Pension Plans in the Public Sector and Broader Public Sector. This regulation would extend the timeframe for these pension plans to file their actuarial valuation reports and extend the time for the commencement of special payment schedules established in the report, subject to other relief measures that the plan would elect to take.

The filing extension would apply to a public sector pension plan that:

• falls within the definition of “public sector plan”;
• is not a jointly sponsored pension plan;
• is not a multi-employer pension plan;
• provides defined benefits;
• has at least 25% of total membership that are active members as of the valuation date that continue to accrue defined benefits under the plan; and
• is required to file its valuation report on or after June 1, 2012 and before February 27, 2013.

The filing date for these plans would be extended to February 28, 2013.

Any comments on this proposed regulation are due by June 11, 2012.

On March 20, 2012, the Quebec government introduced its 2012-13 Budget. As expected, the government is moving forward with the joint federal-provincial initiative to provide small business owners and their employees with access to large-scale, low-cost, professionally administered pension plans. Accordingly, the Budget introduces Voluntary Retirement Savings Plans (“VRSPs”), mandatory group pension plans that all employers in Quebec employing at least five employees will be required to implement, if they do not already provide a retirement savings plan for employees.

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On February 1, 2012, Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts passed at Second Reading in the House of Commons, and was referred to the Standing Committee on Finance.

As previously reported, Bill C-25 is new legislation implementing the framework for federally regulated PRPPs, and was first introduced on November 17, 2011. The government subsequently released draft, supporting Income Tax Act amendments related to the PRPP for public commentary on December 14, 2011, which will apply to both federally and provincially regulated PRPPs. Provincial enabling legislation has not yet been introduced; the Ontario Legislative Assembly is set to resume sitting on February 21, 2012.

As announced in Budget 2011, the release of the PRPP legislation follows a joint federal-provincial initiative to move forward with a new type of broad-based privately administered pension arrangement to bridge existing gaps in the Canadian retirement system. Notably, the PRPP is intended to provide small business owners and their employees with access to large-scale, low-cost, professionally administered pension plans.

The proposed tax rules for PRPPs would apply to both federally and provincially regulated PRPPs, and would operate alongside Bill C-25.

Stakeholders and interested parties may submit comments on the package of proposed PRPP amendments before February 14, 2012.

More information about the proposed PRPP legislation is available in our FTR Now of November 23, 2011, "Pooled Registered Pension Framework Introduced."

The federal government filed a regulatory amendment to the Canada Pension Plan Regulations which prescribes the manner of employee elections (or revocations) regarding the new Post-Retirement Benefit (“PRB”), which will be available under the Canada Pension Plan (“CPP”), effective January 1, 2012.

The amendment was first proposed in October of 2011, as previously reported.

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On December 14, 2011, the federal government released draft legislative proposals outlining proposed amendments to the Income Tax Act (“ITA”) and the Income Tax Regulations to facilitate the implementation of Pooled Registered Pension Plans (“PRPPs”) for public commentary.

The proposed amendments would incorporate PRPPs into the existing ITA regime for registered retirement savings vehicles and would provide the basic framework of income tax rules that will apply in relation to PRPPs, including the treatment of employee and employer contributions and limits on contributions made to PRPPs. The federal PRPP legislative framework is outlined in Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts, which, as previously reported, was introduced on November 17, 2011.

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On November 8, 2011, the federal government announced a reduction in the maximum potential increase in Employment Insurance (“EI”) premium rates for 2012 from 10 cents, to 5 cents. Under these new parameters, the 2012 premium rate will not exceed $1.83 per $100 of insurable earnings.

In addition, the government announced a temporary extension of an enhancement to the Work-Sharing Program first outlined in Budget 2011. Prior to Budget 2011, the maximum duration of approved work-sharing agreements between employers and employees was between a minimum of 6 consecutive weeks and a maximum of 26 consecutive weeks, with an extension of up to 12 weeks (for a total duration of 38 weeks). The Budget 2011 temporary extension of up to 16 weeks for active or recently terminated agreements has been extended until October 2012. Accordingly, currently active work-sharing agreements could have a duration of up to 54 weeks.

The Canada Revenue Agency (“CRA”) has released the 2012 limits for pension plan and retirement savings plans:

• The 2012 annual pension for the year in which a pension commences to be paid under a Defined Benefit pension plan will be limited to $2,646.67 per year of service.
• The 2012 Money Purchase (Defined Contribution) limit will be $23,820.
• The Registered Retirement Savings Plan (“RRSP”) contribution limit in 2012 was previously announced as $22,970.  In 2013, the RRSP limit will increase to $23,820.
• The Deferred Profit Sharing Plans contribution limit in 2012 is $11,910.

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In anticipation of January 1, 2012, when new legislation related to the division of pension assets on the breakdown of a spousal relationship comes into force, the Financial Services Commission of Ontario (“FSCO”) has published a Question and Answer guide (“Q & A”) for members of the public.

As previously reported, the pension division and valuation reforms were outlined in Bill 133, the Family Statute Law Amendment Act, 2009.

On August 30, 2011, the federal government released a paper outlining proposed tax rules governing Employee Profit Sharing Plans (“EPSPs”) for public consultation, in furtherance of initiatives first announced in its 2011 Budget.

Specifically, the government is seeking stakeholder input on the following issues:

• eligibility of non-arm’s length employees / “related persons” to participate in an EPSP;
• the role of minor children and the exclusion of EPSP allocations from the tax on split income provisions;
• limitations on employer contributions (e.g. a certain percentage of an employee’s salary or wages paid directly by the employer for the year); and
• withholding requirements for, and general tax treatment of, EPSPs.

Interested persons and stakeholders may submit comments electronically by October 25, 2011.

On August 16, 2011, the Department of Finance released draft legislative and regulatory proposals to implement a number of key tax measures first introduced by the federal government in Budget 2011, the Next Phase of Canada’s Economic Action Plan—A Low-Tax Plan for Jobs and Growth.

In part, “Legislative Proposals Relating to the Income Tax Act and Related Regulations” proposes:

• anti-avoidance rules for Registered Retirement Savings Plans;
• new rules to limit tax deferral opportunities for individual pension plans by imposing minimum annual withdrawal requirements similar to those for Registered Retirement Income Funds and by reducing the tax advantages related to making contributions to an individual pension plan in respect of past service;
• a Volunteer Firefighters Tax Credit, allowing eligible volunteer firefighters to claim a 15% non-refundable tax credit based on an amount of $3,000; and
• extends the dividend stop-loss rules to dividends deemed to be received on the redemption of shares held by certain corporations.

Interested persons and stakeholders may comment upon the proposals by September 16, 2011.

For more information on Budget 2011, please see our FTR Now of June 7, 2011, “Federal Budget Reintroduced June 6, 2011”.

On June 24, 2011, the Ontario government filed long-anticipated regulations in support of amendments to the Pension Benefits Act effected by Bill 133, the Family Statute Law Amendment Act, 2009.

O. Reg. 287/11 (Family Law Matters) follows the previously reported March 2011 release of draft regulations and a related Consultation Paper, and reflects that consultation process by making significant changes to the earlier draft regulations.

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On June 3, 2011, the Ontario government filed two regulations under the Pension Benefits Act.

O. Reg. 195/11 amends General Regulation 909 by creating a new section, “Designated Jurisdictions and Agreements with Designated Jurisdictions”, and a Table listing multi-jurisdictional agreements entered into under section 100 of the Act, and the date on which the agreement comes into effect in Ontario. This regulation comes into force on July 1, 2011. As previously reported, Ontario has entered into one such agreement, effective July 1, 2011, with Quebec.

O. Reg. 196/11, “AbiBow Canada Inc. Pension Plans”, implements certain agreements involving Ontario, Quebec and AbiBow Canada Inc., relating to the Ontario pension plans listed in Schedule 1 and the Quebec pension plans listed in Schedule 2 to the regulation, providing for the aggregate funding of those plans. This regulation, which stems from Abitibi and Bowater’s filing under the Companies’ Creditors Arrangements Act, is now in force.

On May 20, 2011, the Ontario government filed two new regulations under the Pension Benefits Act.

O. Reg. 177/11 contains several amendments to the Pension Benefits Act General Regulation 909 ("Regulations”) relating to measures first introduced by the government when it tabled Bill 120, Securing Pension Benefits Now and for the Future Act, 2010, which was previously reported here.

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Effective April 1, 2011 and July 1, 2011, certain sections of the federal Jobs and Economic Growth Act (Bill C-9) and the Pension Benefits Standards Act, 1985 (“PBSA”) come into force.

As previously reported, amendments to the PBSA which were brought into force effective April 1, 2011 include provisions:

• permitting plan sponsors to secure letters of credit in lieu of making solvency payments to the pension plan;
• affecting the requirements on plan termination, which include requiring plan sponsors to fully fund pension benefits on plan termination; and
• implementing the distressed pension plan workout scheme (which provides a framework for parties of a distressed pension plan to negotiate an alternative funding schedule for the plan in order to provide an opportunity for the restructuring of the employer, the plan or both).

The PBSA amendments are supported by the April 1, 2011 implementation of the Regulations Amending Certain Regulations Made Under the Pension Benefits Standards Act, 1985 which provide the necessary details for these provisions. In addition, amendments to the PBSA effective April 1, 2011 include a number of the enhanced disclosure requirements.

Amendments to the PBSA which will now come into force effective July 1, 2011 include the entitlement to immediate vesting of pension benefits and minimum standards changes to the PBSA provisions regarding locking-in, minimum pension benefit credit (the 50% rule) and pre-retirement death.

As previously reported, Bill C-9 was introduced on March 29, 2010 and is omnibus legislation that amends various Acts to implement certain key measures outlined in the federal government’s 2010 Budget.

For more information about these amendments, please see our FTR Now of April 4, 2011, “A Roadmap to Federal Pension Reform”.

On April 1, 2011, regulatory amendments to the Pension Benefits Standards Regulations, 1985 will come into force. These amendments support the changes to the Pension Benefits Standards Act, 1985 (PBSA) made by Bill C-9, which is discussed here.  

As previously reported, these amendments will:

• permit plan sponsors to secure properly structured letters of credit in lieu of making solvency payments to the pension fund, up to a limit of 15% of plan assets;
• require the plan sponsor to fully fund pension benefits on plan termination;
• void any amendments to a pension plan that would reduce the solvency ratio of the pension plan if the plan’s solvency ratio would be below a ratio of 0.85; and
• permit sponsors, plan members and retirees of a distressed pension plan to negotiate their own funding arrangements to facilitate a plan restructuring.

Further amendments to the Pension Benefits Standards Regulations, 1985 are required to support additional amendments to the PBSA made in Bill C-47, which is discussed here.

On March 3, 2011, the Ontario government posted draft regulations under Bill 133, the Family Statute Law Amendment Act, 2009, and a related Consultation Paper for public review and comment.

Among other family law-related matters, Bill 133 amends the Pension Benefits Act and creates new rules governing both:

(1) the valuation of pension assets by plan administrators for family law purposes; and

(2) the immediate settlement of the former spouse’s entitlement, either through a lump sum transfer if the marriage breakdown occurs prior to retirement or division of the pension in pay, where there is a court order, family arbitration award or domestic contract awarding a payout from the pension.

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On January 1, 2011, Regulations Amending the Canada Pension Plan Regulations came into force (SOR/2010-300). The regulations implement the legislative amendments in the Economic Recovery Act (stimulus) (which received Royal Assent on December 15, 2009) and are intended to restore and enhance the actuarial adjustments made to Canada Pension Plan retirement pensions taken before and after age 65 to their actuarially fair values. They set out a plan to implement those adjustments over a number of years.

On December 15, 2010, Bill C-47, the Sustaining Canada’s Economic Recovery Act, received Royal Assent. The Bill is omnibus legislation and addresses numerous measures of interest to employers, including:

• income tax reforms relating to stock option plans and employee life and health trusts as outlined in the March 2010 Budget previously reported on August 30, 2010;

• changes to harmonize the Superintendent of Financial Institutions’ ability to collect pension fees from employers; and

• reforms to the Pension Benefits Standards Act, 1985  to designate an entity to receive pension benefit credit due to un-located pension plan beneficiaries, to create a "safe harbour" for administrators who offer investment options meeting certain criteria in respect of member-directed defined contribution pension plans, to address electronic communications with pension plan beneficiaries and to require consent of a member’s spouse or common-law partner before the transfer of a member’s pension benefits to a retirement savings plan.

The Bill should be consulted for specific coming into force information. 

On December 8, 2010, Bill 120, the Securing Pension Benefits Now and for the Future Act, 2010, received Royal Assent.

As previously reported, the Bill passed at Third Reading on December 7, 2010 after being amended by the Standing Committee on Finance and Economic Affairs under an accelerated schedule for consideration and debate.

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In accordance with the terms of a special time allocation motion that was passed on November 3, 2010, Bill 120, the Securing Pension Benefits Now and for the Future Act, 2010, was reported to the House as amended by the Standing Committee on Finance and Economic Affairs and ordered for Third Reading on December 1, 2010.

The Bill is expected to be debated at Third Reading on December 2, 2010, and to pass shortly thereafter.

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On October 29, 2010, the Ontario government released a paper, "Securing our Retirement Future: Consulting with Ontarians on Canada's Retirement Income System", for public discussion, and reiterated its intention to amend the Pension Benefits Act in respect of employment-based defined benefit plans, among other matters.

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On September 30, 2010, the federal government introduced Bill C-47, the Sustaining Canada’s Economic Recovery Act.

As outlined in the government announcement, Bill C-47 is omnibus legislation and addresses numerous measures of interest to employers including:

• income tax reforms relating to stock option plans and employee life and health trusts as outlined in the March 2010 Budget previously reported on August 30, 2010; and
• reforms to the Pension Benefits Standards Act to satisfy benefit payments due to un-located pension plan beneficiaries, to create a "safe harbour" for member-directed defined contribution pension plan investments meeting certain criteria, and to address electronic communications with pension plan beneficiaries.

Hicks Morley is reviewing Bill C-47 and will be publishing a more detailed analysis of these reforms on our website.

The Financial Services Commission of Ontario (“FSCO”) updated its long-running online “FAQ” for pension plan administrators to set out FSCO’s position on surplus distribution on full or partial plan wind ups in light of recent amendments to the Pension Benefits Act.

A detailed discussion of the FAQ and FSCO's position on this point is available on our website.

On October 1, 2010, amendments to the Pension Benefits Act and Financial Services Commission of Ontario Act, 1997, set out in Bill 16, the Foundation for Jobs and Growth Act, 2010, will come into force.

These Bill 16 amendments permit the Ontario government and the pension regulator to enter into agreements with other designated provincial pension regulators regarding the governance and regulation of multi-jurisdictional pension plans (“MJPPs”).

The amendments greatly expand the scope of the powers and duties of the pension regulator and the use of such agreements in the operation of MJPPs.

The amendments are supported by the previously reported new general pension regulation amendments filed on September 8, 2010, O. Reg. 342/10, which will also come into force on October 1, 2010.

The Department of Finance released draft legislative proposals in July and August of 2010 to implement a variety of tax measures, including those first outlined in its 2010 Budget along with several previously announced tax initiatives, for public consultation.

The proposals outline significant changes to the tax rules applicable to employee stock options that will:

• alter the deductions available when stock option rights are paid out in cash instead of exercised for shares;
• alter the treatment of underwater options in certain circumstances; and
• eliminate the taxable benefit deferral on the exercise of options to acquire public company shares after March 4, 2010.

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On August 5, 2010, the Ontario government announced that it will provide universities with temporary solvency funding relief.

The temporary funding relief will be provided through two stages: a temporary period during which each university must develop a sustainability plan for its pension plans and, if the sustainability plan is acceptable to the government, an extended amortization period for funding their solvency deficiencies. 

Amendments to the Pension Benefits Act regulations will be required in order to give effect to the promised relief.

More information regarding the announcement is available on our website.

On Monday, July 12, 2010, Bill C-9, the Jobs And Economic Growth Act, received Royal Assent.

As previously reported, Bill C-9 was introduced on March 29, 2010 and is omnibus legislation that amends various Acts to implement certain key measures outlined in the federal government’s 2010 Budget.

Amendments to the Pension Benefits Standards Act (“PBSA”) setting out new solvency funding rules for federally-registered defined benefit plans are now in force (associated regulations were released on June 25, 2010).

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On May 19, 2010, the Department of Finance released proposed changes to the Harmonized Sales Tax (“HST”) rules covering the supply of financial services relating to the calculation of the provincial component of the HST under the Excise Tax Act.

As outlined in the government Backgrounder, the proposed changes would affect, among others, mutual funds, pension plans, DPSPs, RCAs, health and welfare trusts, supplementary unemployment benefit plan trusts, and other employee benefit plans.

The proposal also includes consequential changes flowing from the new Input Tax Credit calculation method for registered pension plans introduced in Bill C-9, which we discussed in our FTR Now of April 5, 2010.

Comments on the proposals may be submitted by interested parties by June 9, 2010 to ConsultationsFI-IF@fin.gc.ca.

On May 13, 2010, Bill 54, the Retirement Savings Plans for Employees and Self-Employed Persons Act, 2010 was referred to the Standing Committee on Finance and Economic Affairs. Bill 54 is a Private Member's Public Bill, first introduced on May 5, 2010. As outlined in our FAQ section, historically, very few Private Member Bills progress beyond the Committee stage to Third Reading or receive Royal Assent. It is therefore unlikely to become law.

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On May 5, 2010, Bill 236, the Pension Benefits Amendment Act, 2010 carried at Third Reading, and is expected to receive Royal Assent. Bill 236 was reported as amended by the Standing Committee on Finance and Economic Affairs on April 19, 2010.

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