There have been several noteworthy developments in the area of pension reform recently. As part of its position as a thought leader in Canada, Morneau Shepell provides a monthly publication, News & Views, to provide insights to its clients. In the August issue of its newsletter, Morneau Shepell examines new pension rules in Alberta that will affect plan structures. The current issue also analyses several reforms in Ontario and the New Brunswick Government legislation to help the pensioners at Fraser Papers.
-- NEW PENSION RULES IN ALBERTA -- On July 22, 2014, the Alberta Government passed the new Employment Pension Plans Regulation. Key provisions of the New Regulation concern new plan structures, funding rules, plan membership, and disclosure requirements. News & Views goes into further analysis on the issue. -- ONTARIO TO REQUIRE INSURANCE FOR SELF-INSURED DISABILITY PLANS -- On July 24, 2014, amendments to the Insurance Act received were passed through the Ontario Government. The changes to the Act are intended to protect future recipients of long-term disability payments by requiring that any plan for long-term disability benefits in Ontario be provided under a contract of insurance undertaken through a licensed insurer. -- A CHANGE IN PENSION PLAN DEATH BENEFITS IN ONTARIO --The change in the law will allow a common law spouse living with a member on the date of the member's death to receive the member's pre-retirement pension death benefits, even if the member also had a separated married spouse. -- FRASER PAPERS PENSION PLANS MOVING TO "SHARED RISK" MODEL -- The New Brunswick government adopted legislation in a special one-day session permitting the two Fraser Papers pension plans to move to the "shared risk" model. This change, along with the contributions from the funding policy, will reportedly allow hourly pensioner payouts to increase. New Brunswick's introduction of the shared risk pension plan model in 2012, and recent events triggering a further reduction in the payout ratio, prompted a reconsideration of the Plans' extended wind-up structure. -- MARKET INDICES -- Monthly summary of returns from various market indices such as the FTSE TMX Bond Indices and Canadian, U.S. and Foreign Equity Indices. Also includes returns from benchmark portfolios used by pension funds. -- TRACKING THE FUNDED STATUS OF DEFINED BENEFIT PENSION PLANS -- Impact of past returns on plan assets and the effect of interest rate changes on solvency liabilities. -- IMPACT ON PENSION EXPENSE UNDER INTERNATIONAL ACCOUNTING -- Expense impact for a typical defined benefit pension plan.
Source: The Wall Street Journal