Summary#
Bill 15, An Act Respecting Pension Benefits, is a first-reading proposal to amend New Brunswick’s Pension Benefits Act, its regulations, the Pooled Registered Pension Plans Act and the Teachers’ Pension Plan Act. Its stated goal is not given in the supplied text. The proposal is not yet law, and it would start only on a day set by proclamation.
- Pension plans may pay out certain small pension benefits as a lump sum. Eligible recipients may direct the commuted value (the value paid instead of future pension payments) into a registered retirement savings plan or fund.
- Administrators must deliver certain unclaimed commuted values to the Director under the Unclaimed Property Act.
- A member who leaves employment and is not resident in Canada may withdraw the commuted value of a deferred pension by submitting a non-residence declaration.
- Some multi-employer plans and certain defined-benefit plans with fixed employer contributions would be exempt from a requirement in section 12(1). The supplied material does not show what that requirement is.
- The bill changes regulation-making powers over withdrawals from retirement savings arrangements, including allowing regulations to delegate matters or give discretion to the Superintendent, an administrator or a financial institution.
What it means for you#
- Pension plan members and former members: A plan may offer a lump-sum payment if the annual pension is no more than 4% of the Year’s Maximum Pensionable Earnings (YMPE) for the year employment or plan membership ended, or if the commuted value is less than 20% of that YMPE. This is permission for the plan, not a requirement to pay out.
- People entitled to an eligible payment: You may direct the administrator to transfer it to a registered retirement savings plan or fund within 90 days after receiving the required written statement. Any amount above the limit allowed for that transfer under federal tax law must be paid to you as a lump sum.
- People entitled to a joint-and-survivor pension after a former member’s death: A plan may pay the commuted value if the annual benefit is no more than 4% of YMPE or the commuted value is less than 20% of YMPE.
- Members who leave a job and are not resident in Canada: The bill says you may withdraw the commuted value of a deferred pension if you give the administrator a non-residence declaration on the Superintendent’s form.
- Pension plan administrators: They must deliver unclaimed commuted values covered by the bill to the Director under the Unclaimed Property Act.
- People covered by the Teachers’ Pension Plan Act: The bill repeals one provision, but the supplied text does not include its wording, so its practical effect cannot be established.
The bill also changes a French-language term and removes a reference to a transfer requirement in a regulation. Without the existing Acts and regulation, I could not verify those changes against current law or explain the full effect of repealing section 36(8).
Money#
No publicly available information on estimated costs.
- The bill gives no spending, staffing or cost estimate. Administrators would have a new duty to deliver certain unclaimed funds, but the cost of doing so is not stated.
- The bill does not set fees or fines.
- It allows future regulations to set withdrawal amounts and conditions; the bill itself does not set those detailed rules.
What is unclear#
- The supplied material does not include the current Acts or regulation. The effect of the exemption from section 12(1), and of repealing sections 36(8) and 3(2)(e) of the Teachers’ Pension Plan Act, cannot be verified.
- The bill does not set a process for finding or contacting people owed a small benefit, or explain how the unclaimed-property process applies in practice.
- The bill does not say what withdrawal rules would be made later, or how much discretion would be given to the Superintendent, administrators or financial institutions.
- No start date is set; the changes would take effect on a day or days set by proclamation.
- The supplied material contains only the first-reading text, with no adopted amendments identified.
Case for#
- A possible argument for the bill is that it gives plans a way to pay out very small benefits rather than keep administering them as future pensions.
- Allowing eligible recipients to direct a payment into a registered retirement savings plan or fund gives them a choice about where the money goes, subject to federal tax limits.
- Requiring administrators to send certain unclaimed pension amounts to the Director creates a route for handling money that remains unclaimed.
- The bill would allow regulations to set withdrawal conditions and amounts, rather than placing every detail in the Act.
Case against#
- A plan may offer a lump-sum payment but does not have to. The bill does not require plans to provide this option to eligible people.
- The bill does not explain the process for locating people owed money or how they can claim it after delivery to the Director.
- Future regulations could set important withdrawal terms, but those rules are not included in the bill. The bill also allows discretion to be given to administrators and financial institutions.
- Without the current Acts, it is hard to assess the effects of exempting some plans, changing transfer rules or repealing the Teachers’ Pension Plan Act provision.