Negotiated Contribution Pension Changes

Summary#

These are proposed changes, published in the Gazette on June 24, 2023, that would change how some federally regulated multi-employer pension plans work and how small, unclaimed pension amounts from terminated federal plans are handled. If adopted, the rules would exempt certain “negotiated contribution” plans from solvency funding rules and set out stronger long‑term (going concern) funding and governance requirements. They would also create rules for moving unclaimed pension balances to a designated public entity and for what information about those balances can be published.

What it does#

• Exempts negotiated contribution (NC) plans from solvency funding requirements.
• Requires NC plans to hold extra going‑concern reserves instead, including:
  • a minimum provision for normal costs of 5%, and
  • a going‑concern buffer for liabilities set using actuarial judgment by the plan administrator.
• Prevents benefit improvements that would leave a plan with a going‑concern ratio below 1.05 after the change.
• Requires NC plans to have written funding and governance policies. Those policies must cover items such as funding objectives, contribution stability, how and when benefits could be reduced, governance roles, performance monitoring, education for administrators, and conflict‑of‑interest rules.
• Sets rules for unclaimed pension balances from terminated federally regulated plans:
  • Plan administrators must transfer unclaimed balances of unlocatable beneficiaries to a designated entity (once that entity is appointed).
  • Information to be transferred includes name, date of birth, address and Social Insurance Number, where known.
  • The designated entity may publish limited information to help people find their money — for example, last known name and address, the pension plan name and registration number, and the market value of the transferred assets.
  • Specifies who may claim an unclaimed balance (the owner, an authorized agent, survivors or designated beneficiaries).
  • Sets prescription periods for how long the designated entity can hold funds before they go to the Crown: 30 years for balances under $1,000 and 100 years for balances over $1,000.
• The document is a proposal (Canada Gazette, Part I). There is a public comment period of 30 days.

Who's affected#

• Members, retirees and beneficiaries of federally regulated negotiated contribution plans — there are 14 active NC plans covering about 45,000 people.
• Plan administrators and employers involved in those NC plans.
• People who have small, unclaimed pension balances from terminated federally regulated pension plans. The government estimates there are over 500 such unclaimed balances with a total value around $10 million.
• The eventual designated entity that will hold and publish information about unclaimed balances.
• The Department of Finance and the Office of the Superintendent of Financial Institutions (OSFI), which supervise and implement federal pension rules.

If you are unsure whether your pension is federally regulated, these rules apply only to plans under federal jurisdiction (for example, banks, interprovincial transport, communications, and work in the territories).

Why it matters#

• For people in NC plans: removing solvency funding requirements should lower the chance that plans are forced to reduce benefits because of short‑term solvency gaps. Instead, plans will rely more on longer‑term funding assumptions and written policies. That can make benefit levels more stable while the plan is operating.
• For people with lost or unclaimed pensions: transferring those balances to a designated public entity and allowing it to publish search information may make it easier to find and reclaim forgotten pension money.
• For plan administrators: the changes impose clearer documentation and disclosure duties (written governance and funding policies and data transfers for unclaimed balances). Most plans are expected to already have many of these practices, but some will need to formalize them.
• For the public: this is a proposed rule. It is not law yet. The details (and their effects) could still change through the public comment process.