Summary#
Bill 15 would change New Brunswick’s pension rules for small pension benefits, unclaimed pension money, non-residents, and some pension plans linked to collective agreements. It would also give the government more power to set rules for withdrawals from retirement savings arrangements. The bill appears intended to update pension administration and give some plans and pension holders more flexibility.
- Some pension plans could pay out small pension benefits as a lump sum instead of keeping them as future pension payments.
- A person eligible for such a payment could direct it into a registered retirement savings plan or registered retirement income fund within 90 days.
- Unclaimed small pension amounts would have to be transferred to the Director under the Unclaimed Property Act.
- A former plan member who is not a Canadian resident could withdraw the commuted value of a deferred pension after providing a non-residency declaration.
- Certain multi-employer plans and defined benefit plans with fixed employer contributions would be excluded from some existing requirements.
- The bill would allow regulations to give powers or discretion to the Superintendent, pension administrators, or financial institutions.
The source provides the bill as tabled at first reading. It does not establish that the bill has been passed. Its provisions would start on dates set by proclamation.
What it means for you#
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People with small pension benefits: A pension plan could pay you the value of a small pension benefit as a lump sum. This could apply where the annual pension is no more than 4% of the Year’s Maximum Pensionable Earnings for the relevant year, or where the commuted value is less than 20% of that amount. The plan would need to allow this option.
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People receiving a small pension payment: You could direct the payment into a registered retirement savings plan or registered retirement income fund within 90 days of receiving the required written statement. Any amount above the limit allowed for a tax-sheltered transfer would be paid to you as a lump sum.
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People whose pension money is unclaimed: If a plan administrator holds an eligible small pension amount that is unclaimed, it would have to deliver the money to the Director under the Unclaimed Property Act. The bill does not explain how this process would affect the timing of a person’s claim.
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Former workers living outside Canada: If you are entitled to a deferred pension and are not resident in Canada for federal income-tax purposes, you could withdraw its commuted value after submitting a form provided by the Superintendent.
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Members of certain workplace pension plans: Multi-employer plans created under a collective agreement or trust agreement, and some defined benefit plans with fixed employer contributions, would be excluded from requirements that currently apply to other plans. The bill does not specify the practical effect of every excluded requirement in plain language.
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Teachers: The bill would repeal one provision of the Teachers’ Pension Plan Act. The source does not explain the practical effect of that repeal.
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Pension administrators and financial institutions: Future rules could give these organizations discretion over some withdrawals or other pension matters.
Expenses#
No publicly available information.
- The source does not include a fiscal note or estimate of government spending or savings.
- Pension administrators and financial institutions may face administrative work to process lump-sum payments, transfers, non-residency declarations, and unclaimed property.
- People receiving amounts above the permitted tax-sheltered transfer limit could face tax consequences, but the bill itself does not set out those consequences.
- The bill could affect the timing or administration of pension payments, but no cost estimate is provided.
Proponents' View#
No direct statements from proponents are included in the supplied material.
Possible arguments in favour of the bill, based on its text, include:
- It could simplify the handling of small pension benefits by allowing some of them to be paid as lump sums.
- It could give eligible former members more choice by allowing transfers to registered retirement savings arrangements.
- Sending unclaimed pension amounts to the Director could place them within the province’s existing unclaimed-property system.
- Allowing non-residents to withdraw deferred pension values could make it easier for former workers who have left Canada to access their pension money.
- Giving regulations the ability to assign discretion to administrators and financial institutions could allow pension rules to be adjusted in more detail later.
Opponents' View#
No direct statements from opponents are included in the supplied material.
Possible concerns based on the bill’s design include:
- Paying out a small pension as a lump sum may reduce a person’s guaranteed income in retirement.
- The bill gives plans permission to make certain payments, but it does not clearly say that all plans must offer the same options. This could lead to differences between pension plans.
- Transferring unclaimed pension money to the Director may add another step for people trying to recover their funds.
- The bill does not explain how much administrative work or delay could result from the new unclaimed-property process.
- The bill would allow future regulations to give discretion to pension administrators and financial institutions. The limits and safeguards for that discretion are not described in the supplied material.
- The practical effect of repealing the provision in the Teachers’ Pension Plan Act is unclear from the bill alone.