Pension Cash-Outs and Non-Resident Withdrawals Simplified

Summary#

• Bill 15 updates New Brunswick’s pension laws to set clearer rules for small pensions, non-resident withdrawals, and unclaimed pension funds. It also adjusts rules for certain unionized pension plans and lets regulators set and delegate details by regulation.

• Key goals: simplify small benefit payouts, help people who move abroad access their funds, move unclaimed money to the provincial unclaimed property system, and clarify employer obligations in certain multi‑employer or union plans.

• Key changes:

  • Lets plans cash out or transfer small pensions when they are below set size limits (based on a national earnings measure).
  • Allows survivors to receive a lump-sum value of a small survivor pension.
  • Sets a 90‑day window to direct a transfer to an RRSP or RRIF (registered retirement savings plans).
  • Requires unclaimed small payouts to be sent to the province’s Unclaimed Property program.
  • Confirms that in some unionized, multi‑employer, or fixed‑contribution defined benefit plans, employers are not required to pay more than the fixed amount in the collective agreement.
  • Allows people who no longer live in Canada to withdraw their deferred pension after filing a simple non‑resident declaration.
  • Lets the government set rules for when people can withdraw from certain retirement savings arrangements and delegate decisions to the Superintendent, plan administrators, or financial institutions.
  • Removes an old rule that allowed administrators to require members to request a transfer.

What it means for you#

• Workers and former plan members

  • If your pension is small, the plan may pay you the lump‑sum cash value (commuted value) or transfer it to your RRSP/RRIF. “Small” means:
    • Your yearly pension at normal retirement is no more than 4% of the Year’s Maximum Pensionable Earnings (a standard national number used to set pension limits), or
    • The lump‑sum value is less than 20% of that same number.
  • You have 90 days after receiving your written statement to tell the plan to transfer the money to an RRSP/RRIF. If the amount is more than what federal tax rules allow to transfer, the extra will be paid to you in cash.
  • If you move outside Canada and are a non‑resident for tax purposes, you can withdraw the lump‑sum value of a deferred pension by filing a simple declaration form.

• Spouses or survivors

  • If a former member dies and the survivor pension is small (same size limits as above), the plan may pay the lump‑sum value to the survivor.

• Members of unionized, multi‑employer, or fixed‑contribution defined benefit plans

  • The bill confirms employers in these plans do not have to contribute more than the fixed amount set in the collective agreement. This clarifies who bears the risk if the plan’s funding changes.

• People who lose track of small pensions

  • If you do not claim a small cash‑out, the plan must send it to the province’s Unclaimed Property program. You would then search and claim it there.

• Plan administrators and financial institutions

  • Must send certain unclaimed small payouts to the Unclaimed Property Director.
  • Can no longer require members to request a transfer under the repealed rule.
  • Will follow new or updated regulations on when withdrawals from retirement savings arrangements are allowed. Some decisions may be delegated to you by regulation.

• Teachers’ Pension Plan members

  • A clause in the Teachers’ Pension Plan Act is repealed. Impact details: No publicly available information.

• When the changes take effect

  • The government will set the start date later by proclamation.

Expenses#

Estimated annual cost: No publicly available information.

• The bill mainly changes rules and administrative duties. It does not include new spending.
• Any costs would likely be administrative for oversight and unclaimed property processing. No publicly available information.

Proponents’ View#

• Clarifies and simplifies small pension payouts, reducing red tape and giving people clearer choices.
• Helps former workers who move abroad access their savings with a straightforward non‑resident declaration.
• Moves unclaimed small pensions into the Unclaimed Property system, making it easier for people to find and claim their money.
• Confirms employer contribution limits in certain unionized plans, aligning the law with collective agreements and how these plans are designed to work.
• Lets regulators respond faster by setting rules in regulation and delegating decisions to experts, rather than changing the law each time.

Opponents’ View#

• Capping employer contributions in some plans could shift more risk to workers if investment results are poor, possibly leading to benefit adjustments.
• Easier cash‑outs for small pensions may reduce long‑term retirement income if people take money out early.
• Giving regulators and institutions more discretion could lead to uneven decisions or less transparency for members.
• If unclaimed funds move to the Unclaimed Property program, some people may face extra steps to find and claim their money later.
• Non‑resident withdrawals could be open to error or misuse if residency status is not carefully verified.