LEGISLATION
FEDERAL UNCLAIMED PENSION BALANCES FRAMEWORK, EFFECTIVE JANUARY 1, 2027
Amendments to the Pension Benefits Standards Act, 1985 passed in 2021, and supporting amendments under the Pension Benefits Standards Regulations, 1985, will take effect on January 1, 2027.
The Act amendments will permit the administrator of a terminated federally regulated pension plan to transfer to the Bank of Canada assets (including a portion of any plan surplus) relating to the pension benefit credit of unlocated members. The Bank of Canada will then administer the pension assets of those members as the designated entity under the Act.
The Regulation amendments set out:
- Information plan administrators must provide to the Bank of Canada regarding unclaimed pension balances of unlocatable beneficiaries
- Information the Bank of Canada can publish on a public database to facilitate the search for unclaimed pension assets
- Who qualifies as an eligible claimant of unclaimed pension assets – i.e., the owner of the balance, their agent or mandatory, and survivors or designated beneficiaries
- Prescription periods – i.e., that the Bank of Canada will administer unclaimed pension assets for 30 years (balances under $1,000) or 100 years (balances over $1,000) before they are transferred to the Crown
BILLS C-30 (SPRING ECONOMIC UPDATE 2026) AND C-31 (SECOND 2025 BUDGET BILL) INTRODUCED
Bill C-30, Spring Economic Update 2026 Implementation Act, has been introduced and would amend the:
- Canada Pension Plan to reduce the contribution rate of the base CPP, from 9.9% to 9.5%, for 2027 and subsequent years
- Income Tax Act (ITA) and Income Tax Regulations (ITR) to extend from two to five years the grace period for repaying a withdrawal from a RRSP under the Home Buyers’ Plan, if the purchaser makes their first withdrawal between January 1, 2026 and December 31, 2028
Bill C-31, Budget 2025 Implementation Act, No. 2, has also been introduced and would amend the ITA, ITR and Excise Tax Act to:
- Consolidate the qualified investment rules for RRSPs, RRIFs, TFSAs, FHSAs, RDSPs and RESPs, and make similar amendments to rules for DPSPs. These amendments would generally take effect on January 1, 2027 and are very similar to the draft proposals released earlier this year (for details, see our Spring 2026 Newsletter)
- Permit transfers of amounts from a RRIF to a defined benefit RPP as a consequence of a past service event, effective January 1, 2025, (previously, only transfers to defined contribution RPPs were permitted)
- Set out when an individual who is the spouse or common-law partner or former spouse or common-law partner of the annuitant is entitled to a payment under an ALDA contract, effective January 1, 2023
- Extend the application of special GST/HST rules for certain investment plans to first home savings accounts, effective for reporting periods that end after August 12, 2024
- Ensure that special GST/HST rules for financial institutions apply correctly to master pension entities and insurers that issue only annuities, effective August 9, 2022
- Clarify that employer contributions to a group sickness or accident insurance plan under an Employee Life and Health Trust (ELHT) are included in income; recognize as a beneficiary an individual whose only interest in the ELHT is a right to a future benefit; and permit additional distributions to the Crown on ELHT wind up or reorganization. These amendments would take effect on Royal Assent.
- Make other technical amendments
DRAFT PBSR AMENDMENTS: ANNUITY DISCHARGE, VARIABLE BENEFITS
The Department of Finance has released draft amendments to the Pension Benefits Standards Regulations, 1985 (PBSR) setting out requirements (not yet effective) with respect to the discharge from liability for annuity purchase provisions under 2019 amendments to the Pension Benefits Standards Act, 1985 (PBSA). Under the draft amendments:
- Benefits could not be assigned, charged or given as a security, or be surrendered or commuted during the lifetime of the annuitant or their spouse or common-law partner
- For immediate buy-out life annuities, options must be offered that achieve the same effects as the options for assignment, distribution and adjustment following a relationship breakdown as currently set out in the PBSA
- Deferred buy-out life annuities must offer the same benefits and options the former member would have been entitled to had they remained in the plan until pensionable age
- Former members, spouses and survivors would receive an explanation of plan amendments that allow the purchase of life annuities (within 60 days of the amendment) and a detailed description of the annuity (within 60 days of the purchase).
The definition of “beneficiary” in the Assessment of Pension Plans Regulations would be amended to no longer include former members for whom a buy-out life annuity has been purchased, so that they are no longer included when calculating a plan’s annual assessment.
The draft amendments would also provide retired members a one-time opportunity to unlock up to 50% of the funds in a variable benefit account. The unlocked portion would not be subject to the maximum withdrawal limits and would continue to be managed by the plan administrator. The member’s spouse or common-law partner would have to provide consent using new proposed Form 5.3 under Schedule IV (Attestation Regarding the Transfer of Funds Within a Variable Benefit Account).
Finally, technical amendments would be made to the PBSR and the Pooled Registered Pension Plans Regulations to clarify existing provisions and update references, including amending forms to clarify when spousal consent to unlock pension funds is not required.
ONTARIO BUDGET BILL RECEIVES ROYAL ASSENT
Bill 97, the Ontario Budget Bill received Royal Assent on April 24, 2026 and will implement the following measures:
- The increased guaranteed payment amount under the Pension Benefits Guarantee Fund (PBGF) for plans with a wind up date on or after March 26, 2026, from $1,500 per month to $3,000 (the government has released a draft regulation to change a plan administrator’s PBGF reporting requirements to reflect this increase, effective July 1, 2026)
- Other Pension Benefits Act amendments dealing with Variable Life Benefits, unlocking, unlocatable members and JSPP transfers are not yet effective
- Amendments to Insurance Premium Tax under the Corporations Tax Act took retroactive effect on April 1, 2026
For details of these measures and other budget announcements, see our Spring 2026 Newsletter.
REGULATORY UPDATE
CAPSA STRATEGIC PRIORITIES
The Canadian Association of Pension Supervisory Authorities has released its Strategic Plan for 2026 to 2029. It includes 13 priorities in the following areas:
- Harmonizing regulator expectations for pension plans
- Strengthening pension plan supervision
- Enhancing regulator partnerships and stakeholder engagement
- Promoting public awareness of pension plans
OSFI GUIDANCE ON TIMELY CLOSURE OF ACTION ITEMS
The Office of the Superintendent of Financial Institutions (OSFI) has released guidance setting out its expectations for submissions of evidence by federally regulated pension plans to support timely closure of action items. The guidance explains that:
- OSFI does not provide prescriptive instructions on how a plan administrator should remediate an issue or resolve an action item.
- Significant changes to the remedial action plan should be agreed to by the lead supervisor before evidence for closure is submitted.
- Submissions should contain a detailed description of what the plan administrator did in response to OSFI’s recommended action item or each part of the action item, such as evidence of effective implementation and how the plan administrator will sustain remediation. Only materials that demonstrate effective remediation should be included.
- Evidence should only be submitted once remediation is complete. Partial or interim submissions should not be provided unless agreed to by the lead supervisor. If necessary, revised timelines should also be discussed.
- Where OSFI provided feedback on a prior submission to close an action item, any subsequent submission should clearly address that feedback.
OSFI ANNUAL RISK OUTLOOK FOR 2026-2027
OSFI has released its Annual Risk Outlook for 2026–2027. Pension priorities include:
- Monitoring and enforcing minimum funding, as well as legislative and supervisory requirements
- Further quantifying risks and enhancing supervision, specifically for large plans
- Supporting confidence in the pension industry by responding to stakeholder enquiries
- Completing the transition to OSFI’s new internal pension system and reporting tools, while exploring how AI and advanced analytics can strengthen its supervisory work
- Leveraging insights from OSFI’s risk indicators, including which valuation reports to review in depth
ACPM PRE-BUDGET SUBMISSION TO THE FEDERAL GOVERNMENT
The Association of Canadian Pension Management has provided a Pre-Budget Submission to the federal government, which recommends:
- Enabling pooling and portability of retirement savings
- Aligning tax and regulatory frameworks with modern work and retirement patterns
- Creating a more inclusive, portable and scalable workplace retirement system
FSRA PENSIONS SECTOR OVERVIEW AND ACTIVITIES
The Financial Services Regulatory Authority of Ontario (FSRA) has released its latest Ontario Pensions Sector Overview and Activities Report, which sets out detailed information for the following, as of December 31, 2025:
- Actuarial information return data for 4,047 plans
- DC single employer pension plan fees and default investment types
- Service standards and statutory filings
- Administrative monetary penalties
- Missing members
FSRA UPDATE ON RETROACTIVE ADVERSE AMENDMENTS
FSRA has provided its latest update on Registration of retroactive adverse amendments. Of the 33 amendment applications reviewed between April 1, 2025 and December 31, 2025, 27 were accepted for registration, and six were rejected. A summary of the issue involved and the rationale for FSRA’s decision is provided for each application.
FSRA PENSION UPDATE
FSRA has released its latest Pension Update, which includes the following:
- As of March 31, 2026, the median solvency ratio of DB pension plans was 122% (down from 124% during the previous quarter)
- Plan administrators should correct any misclassification of federal members in recently filed Annual Information Returns, and amend affected returns
- FSRA outlines how to address PBGF coverage for DB or combination DB/DC plan wind ups and in Actuarial Valuation Reports in light of the contribution limit increase discussed above
- Starting in June 2026, FSRA will add CAPTCHA functionality (i.e., mechanisms that prevent the automated abuse of websites) when accessing the Pension Services Portal
CASELAW
SCOPE OF POST-RETIREMENT BENEFITS
In Power Workers’ Union v. Atura Power, an Ontario grievance arbitration case, the parties’ collective agreement provided that Grandfathered Employees would qualify for post-retirement benefits if they had “retired” after completing 10 years of continuous service with the same Employer. The Grievor met the 10-year employment requirement, but was only 44 years old when he stopped working. To date, all Grandfathered Employees who had received post-retirement benefits were at least 55 years of age. The Union argued that “retirement” simply meant termination with ten years’ service, and that the Grievor had therefore retired, while the employer insisted he had resigned. The arbitrator held that the concept of retirement, while not defined in the collective agreement, must “recognize the significance of age”, in accordance with the ordinary meaning of that term. To accept the Union’s position would “effectively broaden post-retirement benefits to encompass post-employment benefits”. As such, the arbitrator interpreted “retirement” as meaning termination at age 55 or older. Accordingly, the Grievor had not retired, and was not entitled to post-retirement benefits.
PENSION DIVISION ORDERED AS PART OF THE EQUALIZATION PROCESS
In Cialini v. Cialini, aside from the matrimonial home, the husband’s IBM pension valued at over $300,000 was the parties’ most valuable asset. The wife also had a small HOOPP pension (approximately $33,000). To address her liquidity constraints, the wife wanted both pensions included in the valuation process, which would result in her receiving an equalization payment of approximately $155,000. The husband wanted both pensions divided at source, which would result in the wife owing him a small equalization payment.
The Ontario Superior Court of Justice ordered both pensions divided as part of the equalization process, rather than at source. Although the resources available to each spouse to meet their needs in retirement is one of five factors to consider in section 10.1(4) of the Family Law Act, in this case the wife should be free to deal with her property as she considered appropriate and to make her own decisions about when to access funds. For example, she could plan for retirement by investing some of the equalization payment into her RRSP.
CLASS ACTION CERTIFIED, INCLUDING COMMON PENSION CLAIM
In Deacon v. Bank of Nova Scotia, a class action was brought on behalf of a group of Home Financing Advisors who alleged that the Bank’s method of paying vacation pay and holiday pay breached the Canada Labour Code and their contracts of employment. The Ontario Superior Court of Justice certified the class action, including the pension common claim. The pension claim was appropriate for class determination, as it was linked to whether the plaintiffs could show that the Bank was liable for payment of Code entitlements; if their claims were established, the trial judge would then have to determine whether sufficient compensation plan earnings were included for pension benefit purposes as established under contract with the Advisors
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