Revised FSCO Policy on Joint and Survivor Pension or Annuity
FSCO has released Pension Policy S500-307 – Joint and Survivor Pension or Annuity-Entitlement, Waiver and Cancellation, which replaces former Pension Policy S500-306 (same title) effective January 1, 2017. The revised policy contains two key changes:
1. It incorporates the new definition of “spouse” in section 1(1) of the Pension Benefits Act (PBA) that came into force on January 1, 2017, i.e. (changes noted):
“either of two persons who,
- are married to each other, or
- are not married to each other and are living together in a conjugal relationship,
- continuously for a period of not less than three years, or
- in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act."
2. It has been amended to correctly state that, to be effective, a Form 3 waiver form or domestic contract “must be delivered to the plan administrator or insurance company (as applicable) within the twelve months preceding the commencement of pension or annuity payments”. The former policy indicated that the waiver or domestic contract had to be delivered “within twelve months of the start of pension or annuity payments”.
Revised Actuarial Information Summary
FSCO, together with the CRA, OSFI and Retraite Québec, has released a revised T1200 Actuarial Information Summary (AIS), which is mandatory for Ontario-registered pension plans that provide defined benefits.
There are extensive changes to the AIS, including in Part III - Information Required by the Financial Services Commission of Ontario. This additional FSCO information includes valuation data relating to annuity purchases (for both going-concern and solvency valuations) and letters of credit.
FSCO has also advised that data from a filing started (but not submitted) before March 30, 2017 has been transferred to the revised AIS template on the Pension Services Portal. Otherwise, the filing process has not changed.
Court Holds RCA Subject to Garnishment
The husband owed substantial arrears of support to the wife, who made a Request for Garnishment to the administrator of his retirement compensation arrangement (RCA). The RCA was in pay, and the husband was its only beneficiary. He disputed the wife’s Notice of Garnishment. In Virc v. Blair, the Ontario Superior Court of Justice ruled that the husband’s RCA was not exempt from garnishment as a protected pension plan under the PBA and upheld the wife’s Notice.
Also of Note: CPP Amendments Proclaimed into Force
Part I of Bill C-26 was proclaimed into force on March 23, 2017. Part 1 amends the Canada Pension Plan and the Canada Pension Plan Investment Board Act to:
- Increase the amount of the retirement pension from one quarter to one third of eligible earnings;
- Increase survivor and disability pensions and post-retirement benefits;
- Increase the maximum level of eligible earnings by 14% by 2025;
- Phase in contribution increases over seven years, beginning in 2019;
- Provide for the accounting and financial review of the enhanced portion of the CPP; and
- Provide that the additional CPP assets are to be managed by the Canada Pension Plan Investment Board.
Part 2 of Bill C-26, which amends the Income Tax Act to increase the working income tax benefit (a refundable tax credit available since 2007 to low-income individuals or families) and provide a deduction for the additional employee contributions, will come into force on January 1, 2019.
About the authors
Evan Shapiro and Rebecca Doiron