Manitoba Labour and Immigration

Table of Contents

In 1992, The Pension Benefits Act was amended to provide for the enactment, by regulation of simplified registration and administrative procedures and pension standards for money purchase pension plans with 250 or fewer employees, or deemed to be employed, in Manitoba.

A regulatory amendment was passed in March 1996 to provide the legislative framework for the establishment, regulation and administration of a simplified money purchase pension plan, and is incorporated in Sections 30 to 54 of the regulation under the Act.

A simplified money purchase pension plan, or "SMPPP", is a pension plan which has been filed by a financial institution, and registered by the Pension Commission under Section 34 of the regulation. One or more employers have entered into a contractual arrangement under the plan whereby pension benefits become payable to plan members based on amounts which are contributed by, and on behalf of, the members to individual accounts. Pension benefits are accrued on a money purchase basis. Legislative and administrative requirements are simplified.

It should be noted that Sections 30 to 54 of the regulation set out the requirements for the SMPPP. However, unless expressly stated otherwise, the Act and regulation apply to the simplified money purchase pension plan with such necessary modification, as context requires.

B. Availability

The SMPPP is available to an employer with 250 employees or less, employed, or deemed to be employed, in Manitoba. Employers who employ more than 250 employees are not eligible to participate in the SMPPP, but may wish to examine the feasibility of establishing a traditional registered pension plan.

The regulations provide that a bank*, credit union*, life insurance company, or trust company which is authorized to carry on business in Manitoba may file and administer a SMPPP. SMPPPs, and the funds under a SMPPP, must be administered by the same financial institution that files for registration. This means all aspects of the SMPPP's administrative and investment management responsibilities will be carried out by the same financial institution that files the plan with the Commission.

C. Registration Requirements
Within 60 days of the establishment of a SMPPP for the first participating employer, the financial institution issuing the plan shall file a copy of the plan text, funding contract, employee booklet, Application for Registration of A Simplified Money Purchase Pension Plan and the filing fee of $250.000 with the Pension Commission. Enrolment of subsequent employers as participants in the SMPPP does not require the filing of any additional fee. Subsequent participating employers will be reported in the Annual Information Return filed in respect of the plan.

Should the financial institution amend any provision of the SMPPP documentation which applies to all participating employers and their employees, the amendment must be filed immediately with the Commission. Further, the financial institution must give written notice of any such proposed amendment to a SMPPP to each participating employer at least 30 days before the day the amendment is to be adopted.

Amendments to any provision of the plan which are determined by a participating employer, will be reported in, and a copy filed with, the Annual Information Return for the SMPPP in which the employer participates.

* Current requirements under the Income Tax Act and regulations do not permit these financial institutions to administer funds from a pension plan, which therefore prevent banks and credit unions from issuing SMPPPs directly.

D. Content of Plan Document
The plan text of a SMPPP must contractually provide for the following:

• The SMPPP will be administered by the financial institution that issues the plan,
• The only individuals eligible to become members are employees who are employed, or deemed to be employed, in Manitoba,
• The fiscal year from the plan is from January 1st to December 31st, unless the Commission specifically approves a different fiscal year,
• Where the plan is in effect for a class of employees, such employee of that class shall be eligible to join voluntarily, or eligible and required to join the plan, subject to a period that is no greater than two years,
• Upon termination of plan membership, the member's benefits are fully vested and locked-in,
• A participating employer contribution of not less than 1% of the payroll of the members employed by that employer, and
• "Simplified Money Purchase Pension Plan" on the title or cover page.

The plan text of a SMPPP must not provide for the partial commutation of benefits under Section 21(5) of the Act. A SMPPP shall not contain any defined benefit provisions.

E. Eligibility and Membership
The employer has the option to provide a plan in which membership is either voluntary or compulsory. The employer must determine the class or classes of eligible employment in effect for the plan, as well as the period of eligibility applicable to each eligible class.

Subject to a period of eligibility, which cannot be greater than two years of service, all employees falling within the eligible class of employment, regardless of whether they are full-time, part-time, casual, temporary or seasonal, will be eligible to join the plan. In the event plan membership is compulsory and the employee does not become a member when first eligible, the employee will be required to become a member of the plan subject to a period which shall not be greater than two years.

In the event a member falls outside the eligible class of the participation, or is no longer employed, or deemed to be employed, in Manitoba, the member's benefits will cease to accrue. If there is no other existing registered pension plan which the member would be eligible to join, benefits may be transferred to a Locked-In Retirement Account or "LIRA".

Employees who fall under "included employment" as defined in the Pension Benefits Standards Act. 1985 are not eligible to participate in the SMPPP. Employment in the following types of business/activities falls into the category of included employment:

-air, water, railway transportation

-flour, feed or seed mills

-atomic energy

-inter-provincial trucking

-chartered banks

-radio,television or telegraph

-employment in the Northwest Territory, Nunavut, Yukon

F. Contributions
Employee and employer required contributions must be set out in the plan text. The employer required contributions must be no less than 1% of the payroll of the members employed by the participating employer. All employees and employer required contributions are subject to immediate vesting and locking-in. Employee additional voluntary contributions may be withdrawn in cash.

G.  Benefits

Retirement
Joint and two-thirds survivor requirements at retirement remain unchanged under a SMPPP. As in a standard money purchase pension plan, a member has the right, subject to pension waiver, to transfer to a Life Income Fund or "LIF", or a Locked-In Retirement Income Fund or " LRIF", selected from the Superintendent's list of financial institutions at retirement.

Termination of Membership
Upon termination of membership in the SMPPP, the member is entitled to a fully vested and locked-in deferred pension benefit. Portability to a LIRA, or another registered pension plan under which the individual is a member, if the plan permits. A participating employer may elect to have the SMPPP provide that where a member has terminated and is entitled to certain options, and the member fails to elect an option within 30 days of receiving their termination statement, or after waiving their statement, a deferred annuity will be provided to the terminating member. Provisions of the deferred annuity can be either by means of an annuity purchase or maintaining the member's vested account balance under the plan.

A terminating member may waive, in writing, the entitlement under section 23(9) of the regulation to receive a statement.

H.  Disclosure
The financial institution assumes the duties and responsibilities of the employer for purposes of providing the required disclosure under Section 23 of the regulation, i.e. annual statements, benefit statements, employee booklets, etcetera.

The financial institution is not required, however, to make available the documents referred to in Section 23(2)(a) to (c). The documents referenced in these sections, as well as those submitted with the registration and any amendments, shall be available for inspection by the plan member, their spouse or common-law partner, or by an agent authorized in writing of either, at the Pension Commission office during regular business hours. Subject to a reasonable fee, copies of such documents may be made available.

I.  Investments
Investment requirements as set out in Section 26(1)(b) of the Act, and sections 16(2) and 16(3) of the regulation remain unchanged for the SMPPP. The financial institution is required to certify in the Annual Information Return that the funds of the plan have been administered accordingly.

Where contributions to an original plan cease as a result of the adoption of a simplified money purchase pension plan, the assets and liabilities of the original plan may be combined with the new SMPPP, or remain under the original plan. Further, the original plan is considered not to have terminated. Please refer to Update No. 18, Conversion of a Defined Benefit Plan to a Defined Contribution Plan.

Where the new SMPPP provides for voluntary membership, an active member of the original plan may elect not to be a member of the SMPP, in which case their benefits must be either transferred to a LIRA, or used to purchase a deferred annuity. This option is not available to members who elect to join the SMPPP.

A. Combining Assets and Liabilities
In the event that an employer elects to combine assets and liabilities of the original plan with those of the new SMPPP, depending on the benefit structure of the original plan, certain modifications may need to be undertaken prior to consolidation.

Benefits under the original plan in respect of pensioners, dependants, beneficiaries, estates and former members must be moved to an outside vehicle, as only active members can be transferred to the new SMPPP. Guaranteed annuities must be purchased for pensioners, dependants, etc., while portability may be offered in lieu of an annuity to those with deferred benefits.

SMPPP to SMPPP
Where an original SMPPP is substituted with a new SMPPP, no modification to the benefits should be required. Approval from the Pension Commission prior to the transfer of assets and liabilities from the existing SMPPP to the new SMPPP is not required, provided the new SMPPP has already been filed by the financial institution for registration with the Commission.

The transfer from one SMPPP to another will be reported in the Annual Information Returns filed with the Commission in connection with those plans.

Defined Contribution to SMPPP
Where the original plan is a defined contribution, in order that assets and liabilities can be combined with those of the new SMPPP, some modification of accrued benefits may be required.

Prior to the consolidation or transfer, if the original defined contribution plan does not provide for full vesting and immediate locking-in of all accrued benefits, the plan must be amended retroactively to provide for the full vesting and locking-in of all accrued benefits. The amendment must be filed with the Pension Commission as per Section 9(2) of the regulation.

Provided the new SMPPP has already been filed by the financial institution for registration with the Commission, and the prior written consent of the Commission has been received, the transfer of assets and liabilities to the new SMPPP can take place.

Remaining surplus, if any, must be addressed at the time of conversion. Unallocated forfeitures, if any, under the original defined contribution plan must be either allocated to the members of the plan, or taken as a refund, subject to Section 26(2) of the Act. Please refer to Update No. 12, Payment of Surplus Assets from pension Plans.

As members' rights and benefits are modified by virtue of the change, appropriate disclosure to affected members must be provided within the time limits set out in the regulation.

Defined Benefit to SMPPP
If the original pension plan provides for defined benefits, the defined benefits must first be converted to money purchase benefits on a fully vested and locked-in basis. Conversion requirements remain the same as those on the conversion of a plan containing defined benefits to a conventional money purchase plan.

Remaining surplus, if any, must be addressed at the time of conversion. Surplus must be used to improve benefits of the members of the defined benefit plan, or taken as a refund, subject to Section 26(2) of the Act.

Provided the new SMPPP has already been filed by the financial institution for registration with the Commission, following receipt of the Commission's consent to the conversion, the transfer of assets and liabilities to the new SMPPP can proceed.

As members' rights and benefits are modified by virtue of the change, appropriate disclosure to affected members must be provided within the time limits set out in the regulation.

B. Maintaining Assets and Liabilities under the Original Plan
Assets and liabilities under the original plan, whether defined benefit or defined contribution, need not be combined with those of the new SMPPP. In this instance, the original plan is maintained with assets and liabilities intact, while future contributions are made to the new SMPPP.

Conversion requirements, in this instance, remain the same as those on the conversion of a plan containing defined benefits to a conventional money purchase plan. Filings with respect to the original plan, such as Annual Information Returns, and triennial actuarial valuations, where applicable, must continue to be filed with the Pension Commission. Reporting with respect to the SMPPP will be made as per the requirements for that plan.

A. Termination of Participation in a SMPPP
When an employer ceases participation in a SMPPP, that part of the SMPPP relating to that employer and its participating employees shall be wound up, the financial institution administering the plan shall apply the assets of the plan to provide benefits to the affected members, beneficiaries, etc., in accordance with the terms of the plan.

Prior notification of the termination to the Pension Commission is not required. Further, a termination of this kind does not require the filing of a termination report with the Pension Commission.

B. Termination of a SMPPP
In the event that a financial institution elects to terminate its SMPPP, it must give each participating employer written notice of its intent to terminate the plan at least 30 days before providing the Pension Commission notice under Section 26(4).

The financial institution shall file, with the Pension Commission, a report as set out in section 13(4) of the regulation.

Within 90 days of receiving the written notice of the SMPPP's termination, a participating employer shall elect to either:

C. Employee Participation Exceeding 250 Limit
Where the Annual Information Return filed in relation to a SMPPP discloses that a participating employer has employed more than 250 employees in three consecutive fiscal years of the plan, the employer's participation in the SMPPP shall be terminated not later then the end of the fourth fiscal year,

Prior to the end of the fourth fiscal year of the plan, the participating employer shall either terminate participation in the SMPPP (Part A above), or adopt a new pension plan that is not a SMPPP (Section III above).

A. Annual Information Return
The financial institution is responsible for filing the Annual Information Return with the Pension Commission in respect of the SMPPP. The financial institution shall include a filing fee of $250.00.

The Annual Information Return shall be certified by the financial institution and filed not later than six months after the fiscal year end of the plan.

B. Employer Certification
Each participating employer shall provide to the financial institution administering the SMPPP not later than three months after the fiscal year end of the plan, a statement certifying that all contributions required for the fiscal year have been paid to the plan.