FRANCAIS

December 06, 2004

The province has introduced proposed changes to the Pension Benefits Act which would strengthen and update the legislation, and give senior Manitobans more options for managing their retirement, Labour and Immigration Minister Nancy Allan announced today.

"This bill will provide a range of new options for Manitobans who are at or nearing retirement and allow them more flexibility in developing retirement plans," said Allan. "This will be the first significant pension reform in over 20 years and is also essential to ensuring our seniors have a greater degree of control over their future."

The legislation would amend the act to implement pension reform recommendations made by the Pension Commission of Manitoba in March of 2003. The proposed amendments focus on four key areas: clarification of pensions as ‘family assets’, protection of the ‘pension promise’ of an income for life, provision of increased flexibility and updated requirements for the governance and management of pension plans.

The proposed overhaul of the legislation would address a wide range of issues including:

·         permitting a one-time transfer of up to 50 per cent of the balance in an individual locked-in retirement benefit plan (LIF/LRIF) to a creditor-proof RRIF that is not locked-in, subject to informed spousal consent;

·         providing flexible benefits that pension plans could offer members on an optional basis such as enriched early retirement benefits and cost of living adjustments;

• making it easier for pension plans to offer ancillary benefits to members such as disability benefits and pre-retirement death benefits;
• allowing phased-in retirement so that older workers could choose, with their employers’ agreement, to receive a benefit while continuing to work part-time instead of having to choose only between full retirement and continuing full time work;

·         requiring committee management of certain pension plans so that active members, retirees and other non-active beneficiaries have representation in the management of their plans;

·         requiring certain joint trustee-managed plans to have representation from non-active members and beneficiaries including retirees;

·         providing active members, retirees and other non-active beneficiaries with a voice in decisions about the disposition of pension plan surpluses; and

·         harmonizing pensions with other jurisdictions.

"Manitoba is seeking a greater level of control and flexibility for seniors over their pension funds while ensuring the promise of a lifetime pension income is protected," said Allan. "Our amendments also balance the desire for more flexibility with the need to respect the rights of spouses and protect pension savings against creditors."

The Pension Commission began an extensive consultation, that included public hearings and written submissions, on the Pension Benefits Act in December, 2002. The Pension Commission report is available on line at http://www.gov.mb.ca/labour/pension/historical/historicaldocs.html.

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BACKGROUND INFORMATION

BILL DETAILS

The proposals for rebuilding Manitoba’s pension legislation focus on four key pension areas which are clarification of pensions as "family assets," protection of the "pension promise" of an income for life, provision of increased flexibility and updated requirements for the governance and management of pension plans.

The amendments identifying the status of pensions as family assets would:

·         require informed spousal/partner consent for waiver of spousal/partner entitlements or the withdrawal of pension funds;

·         permit the cohabiting spouse/partner of a member who dies before retirement to waive the survivor pension in favour of a designated beneficiary;

·         harmonize joint pension requirements with other jurisdictions so that a joint 60 per cent pension must be paid to the cohabiting spouse or common-law partner on the retired member’s death with no reduction in pension to a member on the death of a spouse/partner;

·         ensure all separated common-law partners (cohabitation of one year or more) are able to apply for a court order to divide a pension; and

·         recognize court orders from other Canadian jurisdictions for the division of a pension between separated spouses/partners.

To ensure that pension benefits would be adequately defined and protected to provide future income the amendments would:

·         clarify that pension standards in the act are minimum standards, allowing plans to provide better benefits to members and their spouse/partner;

·         prevent waiving or contracting out of legislated pension standards;

·         provide immediate and full vesting of a pension to provide workers with an unconditional entitlement to the pension;

·         provide immediate and full locking-in to preserve the pension, subject to exceptions in the act and regulations;

·         clarify minimum standards for early, normal and deferred retirement of members;

·         prevent excessive reduction of pension on early retirement;

·         provide for increased pension on deferred retirement;

·         clarify the 50 per cent cost sharing rule for members of defined benefit pension plans (pension benefit earned based on employment and earnings);

·         update provisions for portability and transfer of pension benefits before retirement including identification of options available to members upon termination of active membership; and

·         retain mandatory participation in pension plans and harmonize employment/earning requirements for non full-time worker participation.

To provide improved flexibility and access the legislation would:

·         subject to informed consent and spousal consent provisions, permit a one-time transfer of up to 50 per cent of the balance in an individual locked-in retirement benefit plan (LIF/LRIF) to a creditor-proof RRIF that is not locked-in;

·         allow pension plans to offer members options to buy flexible pension plan benefits such as enriched early retirement benefits and cost of living adjustments;

·         permit non-residents of Canada to unlock and withdraw their pensions;

·         permit unlocking and withdrawals of pension in the event of a terminal illness;

·         allow phased (early) retirement planning in which members working reduced hours may receive partial payment of benefits while continuing to earn a pension;

·         recognize additional benefits provided to members under defined benefit pension plans such as bridge benefits and enriched early retirement benefits; and

·         permit members, beneficiaries and employers to agree on a distribution of surplus plan assets.

The proposals for revising the governance of pension plans would:

·         clarify provisions relating to multi-unit pension plans (plans established by employers in co-operation with unions or associations);

·         require the board of trustees of a multi-unit pension plan to include a member who represents the interests of retirees and other non-active members;

·         require certain pension plans to be administered by a pension committee that includes at least two committee members selected by the members and beneficiaries; and

·         clarify the duties and responsibilities of pension administrators when investing pension asset