What’s New in Pension and Benefits – Spring 2026

LEGISLATION

FEDERAL BUDGET BILL PASSED

Bill C-15, Budget 2025 Implementation Act, No. 1, received Royal Assent on March 26, 2026. It includes amendments to the Income Tax Act, Income Tax Regulations and Excise Tax Act to implement some (but not all) measures announced in the Federal Budget, as well as some previously announced measures (for further details, including effective dates, see our Winter 2026 Update).

DRAFT ITA AND ITR QUALIFIED INVESTMENT RULES

Draft amendments (along with Explanatory Notes) to the Income Tax Act (ITA) and Income Tax Regulations (ITR) have been released and would amend the qualified investment regime for six types of registered plans (RRSPs, RRIFs, TFSAs, FHSAs, RDSPs, and RESPs). These measures were first announced in the 2025 Federal Budget (see our Winter 2026 Update). Most of the amendments will take effect on January 1, 2027, with some amendments relating to FHSAs retroactive to April 1, 2023.

The amendments would consolidate the qualified investment rules for the six registered plans noted above. This includes repealing the rules set out in Part X.2 of the ITA (Tax in Respect of Registered Investments) that currently apply only to certain registered plans, and amending the definition of "qualified investment" in section 207.01(1) to apply to all six types of registered plans. As well, Part XLIX of the ITR (Registered Plans - Investments) would be repealed and replaced by new Part L (Qualified and Prohibited Investments for Registered Plans). Amended section 4900(1) lists the types of property that are qualified investments from November 4, 2025 to the date that Part L takes effect.

Certain prescribed investment rules for DPSPs would also be amended, in generally similar ways, though DPSPs could also hold certain commutable annuities as qualified investments (as is currently the case for other registered plans). Registered plans could also still invest in small businesses, though some rules relating to these investments will change.

FEDERAL LEAVE CHANGES IN EFFECT

Effective December 12, 2025, federally regulated workers are entitled to a new pregnancy loss leave of eight weeks for a stillbirth (generally, if pregnancy had been 20 weeks or more or if the foetus was 500g or more) or of three days for any other reason. Workers on this leave are entitled to pension and benefit continuation.

Also effective December 12, 2025, federally regulated workers on bereavement leave have the same rights as for other leaves, including pension and benefit continuation.

2026 ONTARIO BUDGET

The 2026 Ontario Budget and Budget Bill (Bill 97), tabled on March 26, 2026, include various announcements and amendments with respect to pensions and benefits, including:

Increasing the monthly guarantee limit under the Pension Benefits Guarantee Fund (PBGF) from $1,500 to $3,000, or such greater amount as may be prescribed, for all eligible beneficiaries for any windup date on or after March 26, 2026, with no increased costs to employers since the PBGF is well funded as of March 31, 2025
Consulting on regulations to end PBGF premiums when a DB single employer pension plan’s beneficiaries have consented to a merger with a jointly sponsored pension plan and the merger is awaiting regulatory approval (currently, PBGF assessments and coverage only end after the merger is completed)
Permitting pension plans with DC benefits, or additional voluntary contributions (AVCs), to include a Variable Life Benefit (VLB) as a decumulation option, entitling members who transfer funds to a VLB pool to receive monthly benefits for life subject to adjustments based on the VLB’s investment performance and retirees’ mortality experience; draft regulations must still be released, with an expected in-force date of January 1, 2027
Permitting holders of locked-in retirement accounts who have reached early retirement age under the terms of their plan, or who are under age 55 and whose total locked-in balances are below a prescribed amount ($29,840 in 2026 and subject to annual indexation) to fully unlock their funds
Providing for a discharge relieving pension plan administrators of obligations related to missing members over the age of 100; administrators must apply to the Financial Services Authority of Ontario and satisfy conditions (e.g., searches) set out in regulations, with consultations expected later this year
Permitting all funded benefit plans to elect to be treated as unfunded benefit plans for purposes of Insurance Premium Tax under the Corporations Tax Act
Establishing the Protect Ontario Account Investment Fund to crowd in investments from pension funds and other private capital for opportunities in high-growth industries; and exploring other innovative equity partnership opportunities and ownership models to develop future nuclear projects that involve pension funds

DRAFT ONTARIO REGULATIONS ON JSPP CONVERSIONS AND ASSET TRANSFERS, SPECIAL INDIVIDUAL TRANSFERS

Ontario has released two draft regulations to implement Pension Benefits Act (PBA) amendments in Bill 68 (see our Winter 2026 Update) setting out the framework (scheduled to take effect on July 1, 2026) for conversions and asset transfers with respect to single employer pension plans (SEPPs) with only DC benefits (section 80.5) and DC asset transfers where an employer with a SEPP becomes a participating employer in a jointly sponsored pension plan (JSPP) (section 101.4). The comment deadline is April 20, 2026. The draft regulations set out:

Limits on the earliest effective date for an asset transfer
Content requirements for notices sent by the SEPP administrator to plan members or filed with the Financial Services Regulatory Authority of Ontario (FSRA)
Deadlines for steps that parties involved in the process must meet
Rules on payment to a prescribed retirement savings arrangement and a lump sum payment
Deadline and required information for the report filed by the JSPP administrator (under section 80.5 only)

Consequential amendments would integrate the new DC conversion and transfer framework into existing regulations and allow FSRA to impose new general administrative monetary penalties. Ontario states that plans participating in a conversion would incur one-time compliance costs averaging approximately $340,000, followed by average annual cost savings for SEPP employers that could exceed $1 million.

COMPOSITION OF OMERS SPONSORS CORPORATION

On or before April 14, 2026, CUPE Local 416 (Toronto Civic Employees Union) of the Canadian Union of Public Employees shall appoint one member of the OMERS Sponsors Corporation for a term that begins on April 15, 2026 and ends on April 14, 2029 or the day the OMERS Sponsors Corporation is replaced with the Sponsors Council, as set out in Bill 68 (see our Winter 2026 Update).

REGULATORY UPDATE

FINAL FSRA GUIDANCE ON TARGET BENEFIT MEPP IMPLEMENTATION, UPDATED FORMS

The Financial Services Regulatory Authority of Ontario (FSRA) has released the final version of its Supervisory Approach Guidance to Implementation of the Target Benefit MEPP Framework (No. PE0687APP), which is identical to the proposed guidance released last year (see our Fall 2025 Update). A summary is available outlining feedback received during the consultation process.

FSRA has also updated the following forms to address the new target benefit framework:

The current versions of each family law form may be used until April 30, 2026. Effective May 1, 2026, the updated forms must be used.

FSRA PENSION UPDATE

The Financial Services Regulatory Authority of Ontario (FSRA) has released its latest Pension Update, which includes the following:

As of December 31, 2025, the median solvency ratio of defined benefit pension plans was 124% (unchanged from the previous quarter)
Plan amendments that seek to end contributions, including amendments to wind up a plan or cease contributions during an asset transfer, are adverse and must be filed before their effective date
Plans with “excess surplus” under the federal Income Tax Act that are considering a contribution holiday must still comply with all requirements under Ontario Regulation 909, General, including to file a cost certificate within the prescribed timeline
Incremental costs should be reported in the Actuarial Information Summary as an annual average over the reporting period, not as a cumulative amount or an annual incremental cost following the valuation date (e.g., if the total incremental cost over a three-year reporting period is $300,000, the reported amount should be $100,000)
As part of its data clean-up initiative, FSRA is asking plan administrators, before the next Annual Information Return filing cycle, to review and update (if necessary) name and contact information on the Pension Services Portal and, going forward, to review this information from time to time in conjunction with plan filings
Administrators should carefully summarize investment data from plan financial statements in the Investment Information Summary, as FSRA has noted significant data discrepancies between the two
FSRA has updated the Plan wind ups and surplus applications website to make it easier to navigate and streamline the application process

NATIONAL INSTITUTE ON AGEING RECOMMENDS CPP/QPP PENSION DELAY GUARANTEE

In January 2026, the National Institute on Ageing (NIA) released a policy information brief entitled Pension Delay Guarantee which advocates the introduction of a guarantee payment (PDG) under the Canada Pension Plan (CPP) and Québec Pension Plan (QPP) that would ensure that individuals, or their beneficiaries, will receive at least the same benefit they would have obtained had they elected to commence their benefit at age 60. For example, if an individual who would have earned $640 per month in CPP benefits if they had claimed at age 60 dies at age 63 without having started their CPP pension, their estate or beneficiary would receive $23,040, representing all the CPP payments the individual would have received if their CPP pension had been paid from age 60. The purpose of the PDG is to reduce pensioners’ fear of “losing out” when delaying CPP and QPP benefits, which instead allows pensioners to take advantage of significant increases to CPP and QPP amounts achieved through delay up to age 71. This would bolster retirement income security, particularly for middle-range income earners. The brief claims that the proposal could be funded by changes to the age-related adjustments to CPP/QPP pensions for commencement before or after age 65. It proposes that, if adopted, implementation could take place as early as January 1, 2028.

In other NIA news, the Institute has released its Cost of Ageing Calculator, which provides estimates of the cost of living for older persons based on adjustable factors including age, spousal status, health and geographic location within Canada.

CASELAW

HBC BANKRUPTCY: HARDSHIP PROGRAMS APPROVED FOR CERTAIN LTD RECIPIENTS

In Re 1242939 B.C. Unlimited Liability Company et al (formerly Hudson's Bay Company ULC et al), the Ontario Superior Court of Justice approved three Hardship Programs relating to long-term disability (LTD) benefits previously provided under administrative-services only (ASO) plans to former employees and retirees of the Hudson’s Bay Company (HBC), which has sought protection under the Companies’ Creditors Arrangement Act, or its predecessors:

Trust Program, to extend and settle future claims for former employees whose LTD benefits would otherwise have terminated
Woodwards Replacement Policy, to continue and settle through a paid-up contract of insurance LTD benefits for one former employee of Woodwards Stores Limited/Simpsons Limited (HBC predecessors) that would otherwise have terminated
Employee Hardship Program (EHP), to provide some relief for former employees (terminated on or after the CCAA filing date) and certain retirees facing extraordinary hardship

EHP payments are limited to eight weeks of regular wages (as determined by applicable employment standards legislation, but capped at $9,600), with the possibility of additional discretionary payments in cases of medical or other emergencies. Amounts received will not constitute “earnings” for Employment Insurance purposes, and will not be subject to withholding or repayment obligations. Denied claims could be appealed to an independent committee. Recipients must sign releases in favour of various parties, including current and former ASO plan trustees.

HBC will be reimbursed $1.05 million for post-filing LTD payments. HBC’s secured lenders will forego a portion of their indebtedness, to avoid costly litigation and assist these “highly vulnerable” stakeholders.

SETTLEMENT APPROVED IN OTPPB CRYPTOCURRENCY CLASS ACTION

In Bandola v. Ontario Teachers’ Pension Plan Board, the Ontario Superior Court of Justice approved the settlement of a class action proceeding arising from the Board’s loss of USD$95 million following the bankruptcy of FTX, a cryptocurrency exchange, one year after its decision to invest. In exchange for discontinuance of the action with no release of individual class members’ claims, the Board agreed to pay class counsel’s fees and disbursements (totalling $653,000) and to publish a statement in the Plan’s 2025 Annual Report setting out the outcome of the litigation, the Board’s response to the lost investment, and enhancements to its investment due diligence processes. The Court approved the settlement in part because the Board had not secured insurance against the type of loss claimed and thus would have to fully bear any damages arising from a successful claim.

METHODS OF PENSION DIVISION

In Browne v. Browne, the Ontario Superior Court of Justice confirmed that there is no presumption of a statutory onus that an equalization payment will be made by transfer of a lump sum payment from a pension plan. Each case depends on its own facts. In this case, although the husband had not yet retired and could make a lump sum transfer under section 67.3 of the Pension Benefits Act, there would have been little left over from the sale of the matrimonial home if he were required to include his pension in the equalization payment. Therefore, division at source made more sense financially, with taxes deferred until the parties retired and no deduction for notional disposition costs.

TAXATION

REPORTING EXEMPTION FOR RCAs: UPDATED T3-RCA TAX RETURN

Following the introduction of Bill C-15 (see our Winter 2026 Update), the Canada Revenue Agency (CRA) revised T3-RCA Retirement Compensation Arrangement (RCA) Part XI.3 Tax Return to reflect that retirement compensation arrangements that supplement a registered arrangement are exempt from beneficial ownership reporting requirements. See box 11 of the Return, which indicates that several entities are not required to complete Schedule 15-Beneficial Ownership Information of a Trust. One of these is “a supplemental pension plan described under subparagraph 150(1.2)(n)(xii)”. This provision was added to the Income Tax Act by Bill C-15.

CRA has also updated its Enhanced reporting rules for trusts and bare trusts: Frequently asked questions, which note that CRA would proceed with administering proposed amendments in Bill C -15 and did not expect bare trusts to file a T3 return, including Schedule 15, for the 2023, 2024 or 2025 taxation years. Certain bare trusts will be required to file for taxation years ending on or after December 31, 2026.

REGISTERED PLAN COVERAGE DATA – 2023

The Office of the Superintendent of Financial Institutions has released a summary of registered plan coverage in 2023 (comparisons are with 1993 unless otherwise indicated):

RPP active membership and coverage were 7.2 million and 38% (up from 5.2 million and down from 45%), respectively
51% of RPP members were women, whose coverage has been higher than men’s since 2004
Private sector coverage was 17% (down from 23%) and public sector coverage was 20% (down from 22%), while the percentage of uncovered workers (regardless of sector) was 63% (up from 55%)
Proportion of active RPP members in DB plans was 68% (down from 89%), with the decline more significant in the private sector
Number of active members in DC, hybrid, TB or shared-risk plans was 963,000 (up from 179,000 in 2004), with 85% of these members in the private sector
Proportion of active RPP members participating in a contributory pension plan was 90% (up from 75% in 2003)
2.5 million individuals who were not active RPP members participated in an employer-sponsored Group RRSP and/or DPSP
Average annual RRSP contribution was $8,777 (up from $6,281 in 2013)
RRSP participation generally declined across all income levels and age groups, with an overall average of 21% of tax filers contributing (down from 23% in 2013)
Total TFSA contributions were $107 billion (up from $40 billion in 2013), with the average annual contribution increasing to $10,520 from $5,938
TFSA participation generally increased across income levels and age groups, with 62% of tax filers holding a TFSA and 34% contributing (up from 42% and 27% respectively in 2013)
Approximately 485,000 tax fillers contributed $2.9 billion to an FHSA, with a median contribution of the $8,000 annual maximum (FHSAs became available on April 1, 2023)

GST/HST REBATE CLAIM PERIODS FOR PUBLIC SERVICE BODIES OR PENSION ENTITY REBATE FILERS

CRA has released Excise and GST/HST News - No. 121. It sets out guidance on the proper rebate claim period for public service bodies or pension entity rebate filers. For registered filers, the claim period is the same as their GST/HST return's reporting period; and for non-registered filers, it is the first six months and the last six months of their fiscal year. Authorized division or branch accounts, regardless of their filing status, must use the same fiscal year end and claim period as their head office. Each rebate application covers one claim period and generally only includes GST/HST that became payable, or was paid, during the claim period. Examples are provided.

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