PBSA amendments will require changes to administrative forms and procedures as well as plan text
The British Columbia provincial government of has made changes to the BC Pension Benefits Standards Act (PBSA) which will offer some new options and flexibility for pension plan administrators such as more flexibility around eligibility for multi-employer plans and the option to offer variable life benefits (VLBs) from a defined contribution (DC) plan, according to a November 23 ‘Special Notice’ from Eckler.
Bill 33, Pension Benefits Standards Amendment Act, 2023, received royal assent on November 8, 2023, and makes several amendments to the BC PBSA, many of which will come into effect at a later date.
Highlights of changes and the implications for pension plan administrators under Bill 33 include:
More flexibility permitted in eligibility to a collectively bargained multi-employer plan
Bill 33 provides more flexibility with respect to eligibility for membership by permitting collectively bargained multi-employer plans (CBMEPs) to specify eligibility conditions based on eligibility conditions that are better suited to their design. This change is effective November 8, 2023.
Options for pre-retirement death benefits
Under Bill 33, defined benefit (DB) pension plans will no longer be permitted to require that surviving spouses transfer their pre-retirement death benefit out of the plan (unless it is a small benefit.) Surviving spouses must be entitled to a choice of a pension from the plan or transfer of the commuted value of the death benefit out of the plan.
Variable life benefits option
Bill 33 amends the PBSA to enable employers to offer variable life benefits (VLBs) from a defined contribution (DC) plan following the enactment of the federal Bill C-30 in June 2021, which permits VLBs under the Income Tax Act (wherein they are referred to as variable payment life annuities.) VLBs are a new flexible retirement benefit option intended to provide Canadians retiring from DC plans with greater retirement security.
The changes on VLBs in Bill 33 will come into effect once related amendment to the Pension Benefits Standards Regulation (PBSR) are developed. British Columbia will join Saskatchewan, Quebec and the federal government in updating pension standards to accommodate VLBs.
Auto-escalation of DC member contributions
DC plans that automatically enrol members will be allowed to automatically increase such members’ contributions if members receive a notice with details of the increase and do not opt out of the increase within the prescribed decision-making period. This change will come into effect once related amendments to the PBSR are developed.
Permitted transfer option
Bill 33 expands the transfer options that are required to be offered where a lump sum is payable to a person to include a registered retirement income fund (RRIF), to the extent permitted by the Income Tax Act. While this change will become effective on March 31, 2024, plan administrators may begin to make necessary updates to their pension plan text, member booklets and pension election forms for compliance.
Discharge for annuity purchase
Bill 33 clarifies that the requirements for discharge from liability when annuities are purchased from an on-going plan’s DB provision now applies to all persons entitled to benefits.
