Changes meant to increase flexibility for plan sponsors, enhance safeguards, boost compliance
Saskatchewan has introduced legislation to make it easier for employers to provide access to pensions to workers in the province.
Bill 108 or The Pension Benefits Amendment Act, 2022 will give Saskatchewan employers and locals more options to fund and access retirement savings, according to the government.
"These changes to pension legislation add flexibility for plan sponsors, enhance pension safeguards, and provide more tools to enforce compliance," says Bronwyn Eyre, minister of justice and attorney general. “These amendments will assist Saskatchewan employers in their efforts to help the hard-working residents of Saskatchewan prepare for retirement.”
Several of the changes introduced in The Pension Benefits Amendment Act, 2022 align provincial legislation with recent amendments to the federal Income Tax Act. These changes will support Saskatchewan residents who are members of defined contribution plans by giving employers the ability to offer new solutions that lessen the risk of retirees outliving their retirement income, according to the Saskatchewan government.
The amended legislation also provides increased flexibility for employers, such as the ability to establish solvency reserve accounts and to use letters of credit in lieu of solvency deficiency contributions (up to a capped maximum). The new provisions also remove liability of plan administrators that enter into an annuity buyout contract with an insurance company, as long as certain conditions are met.
Details of changes
Changes made to the 1992 version of the legislation include:
- A pension must commence no later than the last date on which a person is allowed pursuant to the Income Tax Act to start receiving a pension from a registered pension plan.
- A person who, as a member or former member of a plan, has transferred the commuted value of the member’s pension to an external plan may transfer the amount standing to the person’s credit in the external plan back into the plan for the purpose of receiving a prescribed pension.
- The administrator of a plan who is required by the plan to provide a pension may purchase an annuity in the form of a pension from an insurance company in the prescribed manner and to the prescribed extent.
- If a prescribed employer is required to make payments into the pension fund with respect to a solvency deficiency, the employer may provide a letter of credit to a prescribed person or entity for the benefit of the plan instead of making some or all of the required payments into the pension fund with respect to the solvency deficiency if the requirements are satisfied.
More than half (54 per cent) of Canadians 55 and older now say they are delaying retirement because of the increased costs, while 62 per cent have already delayed retirement because they do not have enough savings or investment, according to a previous report.
