11d new pension standards in western canada - … pension standards in western canada aaron...
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New Pension Standards in Western Canada
Aaron Walker-DuncanDirector, Policy BranchPension Corporation of British ColumbiaVictoria, British Columbia
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Agenda
• History• Plan design• Benefit changes• Governance• Funding• Oversight
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History
• Current BC legislation from 1996• Joint Expert Panel on Pension Standards• Legislation in both provinces received
royal assent in 2012• ‘In force’ date subject to proclamation
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Plan design
• Joint sponsorship– Shared governance– No need for a collective agreement– Accrued benefits can be reduced
(with regulatory consent)– No employer liability for solvency
deficiency on wind up – Must meet prescribed criteria
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Plan design
• Flexible pension plan structure (Target Benefit Plans)– Shared risk between members and employers– Looks like a DB plan, but accrued benefits can
be reduced (without regulatory consent)– No requirement to be jointly sponsored– Liability limited to contractual obligation– No employer liability for solvency deficiency
on wind up
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Overlapping structuresSINGLE EMPLOYER PLAN (SEP)
NON COLLECTIVELY BARGAINED MULTI-EMPLOYER PLAN (NCBMEP)
COLLECTIVELY BARGAINED MULTI-EMPLOYER PLAN (CBMEP)
NEGOTIATED COST PLAN (NCP)
JOINTLY SPONSORED PLAN (JSP)
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Many possible plan design combinations
Governance structure combinations
1. SEP + NCP2. SEP + NCP + JSP3. CBMEP + NCP4. CBMEP + NCP + JSP5. CBMEP + JSP6. NCBMEP + JSP7. SEP + JSP8. SEP alone9. NCBMEP alone10.CBMEP alone
Benefit provision combinations
1. DB2. DC3. TB4. DB + DC5. DB + TB6. DB + TB + DC7. TB + DC
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Benefit changes
• Immediate vesting• Shortened life expectancy• Locking-in• Financial hardship• Forcing out small benefits• Suspension of membership
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Governance
• Clarification of roles and responsibilities of administrators (trustees), participating employers and fund holders
• Disclosure• Requirement to establish policies
– Governance– Statement of Investment Policies
and Procedures– Funding (DB and TB)
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Funding
• New standards for funding?• Target benefit funding• Solvency Reserve Account
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Oversight
• Increased power of the regulator• Requirement to assess plan administration• Participation agreements
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Questions?
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