Bill 63 - An Act to Amend the Pension Benefits Act

BILL 63

An Act to Amend the Pension Benefits Act

Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:

1 The Pension Benefits Act, chapter P-5.1 of the Acts of New Brunswick, 1987, is amended by adding after section 1 the following:

PART 1

DEFINED BENEFIT PENSION PLANS AND
DEFINED CONTRIBUTION PENSION PLANS

2 The Act is amended by adding after section 35 the following:

PHASED RETIREMENT

Phased retirement

35.1(1) Subject to the regulations, a defined benefit pension plan may provide for benefits to be paid to a member if

(a) the member’s hours of work and remuneration are reduced by agreement between the member and the employer,

(b) the member has reached the normal retirement date under the plan or is within ten years of reaching it, and

(c) the plan also provides for the member’s pension to be adjusted in accordance with the Income Tax Act (Canada) when he or she retires.

35.1(2) The administrator shall ensure that the plan referred to in subsection (1) complies with the Income Tax Act (Canada) and the regulations under that Act and shall provide the Superintendent with proof of the compliance.

3 Subsection 100(1) of the Act is amended

(a) by adding after paragraph (j) the following:

(j.01) respecting benefits under section 35.1;

(b) by adding after paragraph (w) the following:

(w.1) defining any word or expression used in this Act but not defined in this Act for the purposes of this Act, the regulations or both;

4 The Act is amended by adding after section 100.1 the following:

PART 2

SHARED RISK PENSION PLANS

Definitions

100.2 The following definitions apply in this Part.

“ancillary benefit” means a benefit referred to in section 100.51. (prestation accessoire)

“base benefit” means the total amount of all benefits paid or payable, including all vested ancillary benefits as at the relevant date. (prestation de base)

“shared risk plan” means the form of a defined benefit plan provided for under this Part and the regulations. (régime à risques partagés)

“termination value” means the value of a base benefit calculated in the manner prescribed by regulation and as of a fixed date. (valeur de terminaison)

“vested ancillary benefit” means an ancillary benefit for which a member is receiving a pension or for which a member would have received a pension if he or she had retired at the relevant date. (prestation accessoire dévolue)

Application of Part 1

100.3(1) Part 1 and the regulations under that Part apply with the necessary modifications to a shared risk plan but if a provision of this Part or the regulations for the purposes of this Part is inconsistent with or in conflict with a provision of Part 1 or the regulations under that Part, the provision of this Part or the regulations prevails.

100.3(2) The references to “commuted value” in Part 1 and the regulations under that Part shall be read as references to “termination value” for the purposes of this Part.

This Part binds the Crown

100.31 This Part binds the Crown if the Crown is the employer under a shared risk plan that is registered under this Part.

Characteristics of shared risk plans

100.4(1) A shared risk plan shall meet the following criteria:

(a) the employer and the members make contributions to the pension plan in the amount set in accordance with the plan and the funding policy;

(b) subject to the prior consent of the Superintendent, a funding policy for the pension plan is established at inception and reviewed at least annually by the administrator in accordance with the regulations;

(c) subject to the prior consent of the Superintendent, an investment policy for the pension plan is established at inception and reviewed at least annually by the administrator in accordance with the regulations;

(d) subject to the prior consent of the Superintendent, risk management goals and procedures for the pension plan are established at inception and reviewed at least annually by the administrator in accordance with the regulations;

(e) escalated adjustments may only be granted in respect of past periods and if the funding policy so permits;

(f) contributions shall not be reduced or suspended except in accordance with the Income Tax Act (Canada) and the funding policy;

(g) disclosure of the purpose and characteristics of the pension plan is made to its members in accordance with the regulations;

(h) a dispute resolution process is established at inception in the plan text to resolve a deadlock among the trustees on a board of trustees with respect to any resolution or motion before them; and

(i) the base benefits and ancillary benefits satisfy any other criteria prescribed by regulation.

100.4(2) The sole obligation of persons making contributions under a shared risk plan is limited to making or remitting, within the time prescribed by regulation, the contributions required under the plan text and the funding policy.

Administrator

100.5(1) The administrator of a shared risk plan shall be a trustee, a board of trustees or a non-profit corporation.

100.5(2) If the administrator is a non-profit corporation, each director on the board of directors of the corporation is a trustee of the shared risk plan.

100.5(3) A shared risk plan shall provide for the appointment of the administrator and if the administrator is a board of trustees, the composition of the board.

100.5(4) A trustee shall act independently of the person who appointed him or her.

100.5(5) The sole obligation and fiduciary duty of a trustee is to carry out the purposes of the shared risk plan.

100.5(6) A trustee shall manage the risks in accordance with the funding policy, the investment policy and the risk management procedures.

100.5(7) Subject to subsection (8), the term of office of a trustee is three years or such longer period of time as the shared risk plan permits and may be renewed.

100.5(8) The Superintendent may remove a trustee from office if the Superintendent believes, on reasonable and probable grounds, that the trustee has acted improperly, has acted to the detriment of the purposes of the shared risk plan, has not acted in accordance with this Act and the regulations or has failed to act when required to act by this Act and the regulations.

100.5(9) If a trustee is removed from office under subsection (8), another trustee shall be appointed in accordance with the shared risk plan but if not so appointed within 60 days after the removal, the Superintendent shall appoint the other trustee.

100.5(10) If there is a deadlock among the trustees on a board of trustees with respect to any resolution or motion before them, it shall be resolved in accordance with the dispute resolution process contained in the plan text.

100.5(11) If the board of trustees fails to act in accordance with the dispute resolution process within the time prescribed by regulation, the Superintendent may determine the process to follow and may appoint such persons as he or she considers necessary to resolve the dispute.

Ancillary benefits

100.51 A shared risk plan may provide the following ancillary benefits:

(a) early retirement benefits in addition to the early retirement pension referred to in section 40;

(b) postponed retirement benefits in addition to the pension referred to in section 40;

(d) pre-retirement death benefits in addition to the benefits referred to in section 43.1;

(e) escalated adjustments;

(f) the benefits payable as a result of changes to the normal form of pension payable under the pension plan; and

(g) any other ancillary benefit prescribed by regulation.

Conversion of pension plan to shared risk plan

100.52(1) A conversion of a defined benefit plan to a shared risk plan may affect escalated adjustments not yet granted as of the conversion date and future increases in the pension benefits accrued as of the conversion date resulting from increases in the member’s pensionable earnings after the conversion date.

100.52(2) Despite section 12, a conversion of a pension plan to a shared risk plan is not void if the amount of the pension benefits is frozen as of the conversion date and changed to a form of contingent indexing as of that date.

100.52(3) Despite section 12, a conversion of a pension plan to a shared risk plan is not void if the vested right to escalated adjustments is changed to a form of contingent indexing as of the conversion date.

100.52(4) On the conversion date, the administrator of the pension plan shall transfer all of the assets in the plan as of that date to the shared risk plan.

100.52(5) Sections 69 and 70 do not apply to a conversion of a pension plan to a shared risk plan.

Change of benefits and contributions

100.53 Despite section 12, an administrator may, in accordance with the funding policy for the shared risk plan,

(a) increase, reduce or suspend the contributions to the plan,

(b) increase or reduce the base benefits, and

Registration of shared risk plans

100.6(1) Section 10, except the fee referred to in subsection 10(2), applies with the necessary modifications to an application for registration of a shared risk plan.

100.6(2) An applicant shall pay the fee prescribed by regulation for the purposes of this section and file the following with the Superintendent:

(a) if a pension plan is converted to a shared risk plan,

(i) a copy of the conversion plan that

(A) demonstrates how existing benefits are converted to benefits provided by the shared risk plan,

(B) specifies the base benefits and ancillary benefits,

(C) specifies the initial contributions of the employer and the members and the automatic changes allowed by the funding policy referred to in paragraph 100.4(1)(b), and

(D) demonstrates to the satisfaction of the Superintendent that the contributions are sufficient to pay for the projected base benefits and ancillary benefits and to meet all of the risk management goals under this Part and the regulations, and

(ii) an actuarial valuation report of the status of the shared risk plan as of the conversion date;

(b) if the shared risk plan is new,

(i) the base benefits and ancillary benefits,

(ii) the initial contributions of the employer and the members and the automatic changes allowed by the funding policy referred to in paragraph 100.4(1)(b), and

(iii) evidence satisfactory to the Superintendent that the contributions are sufficient to pay for the projected base benefits and ancillary benefits and to meet all of the risk management goals under this Part and the regulations;

(c) the results of an analysis of the shared risk plan using an asset liability model that complies with the regulations and any guidelines issued by the Superintendent;

(d) the funding policy required under paragraph 100.4(1)(b);

(e) the investment policy required under paragraph 100.4(1)(c); and

(f) any other information prescribed by regulation.

Actuarial valuation report

100.61(1) An actuarial valuation report pertaining to a shared risk plan shall be submitted to the Superintendent annually within the time prescribed by regulation.

100.61(2) If an employer intends to significantly increase or reduce the number of members of a shared risk plan, the employer shall notify the administrator who shall assess the financial impact on the plan and make recommendations on any required corrective measures.

Wind-up of shared risk plan and termination of employment or membership

100.62(1) On the wind-up of a shared risk plan in whole or in part, section 36, other than paragraph 36(1)(b) and subsection 36(3), applies with the necessary modifications to the members, former members and persons receiving a pension.

100.62(2) Subject to subsection (4), on termination of employment or on termination of membership, the termination value of the base benefits of a member or former member shall remain in the shared risk plan until the retirement, death or breakdown of the marriage or common-law partnership of the member or former member.

100.62(3) A member or former member referred to in subsection (2) is entitled to all future improvements to base benefits or ancillary benefits in accordance with the funding policy if the improvements are made while he or she is a member or former member.

100.62(4) Subsection (2) does not apply if the member or former member elects within the time prescribed by regulation to require the administrator to transfer the termination value of his or her base benefits to another pension plan with the consent of the administrator of that plan or to a retirement savings arrangement prescribed by regulation.

100.62(5) Section 36 applies with the necessary modifications to the transfer referred to in subsection (4).

100.62(6) On the termination of employment, termination of membership, retirement, death or breakdown of the marriage or common-law partnership of the member or former member, as the case may be, the termination value of his or her base benefits shall be calculated in accordance with the regulations.

100.62(7) The termination value referred to in subsection (6) shall not exceed the amount calculated in accordance with the regulations.

Prohibition against wind-up or conversion

100.63 No shared risk plan shall be wound up in whole or in part or converted to another pension plan except in accordance with this Act and the regulations.

Valuation and review

100.64 An administrator shall, in each year within the time prescribed by regulation,

(a) ensure that an actuarial valuation report is submitted to the Superintendent in accordance with the regulations,

(b) review the funding policy referred to in paragraph 100.4(1)(b) in consideration of the risk management procedures referred to in paragraph 100.4(1)(d),

(c) review the investment policy referred to in paragraph 100.4(1)(c) in consideration of the risk management goals referred to in paragraph 100.4(1)(d), and

(d) ensure that the risk management procedures referred to in paragraph 100.4(1)(d) are applied to the shared risk plan.

Documents to be filed with the Superintendent

100.7(1) In each year within the time prescribed by regulation, an administrator shall file the following documents with the Superintendent:

(a) confirmation that the funding policy referred to in paragraph 100.4(1)(b) has been reviewed and an updated funding policy if any changes have been made;

(b) confirmation that the investment policy referred to in paragraph 100.4(1)(c) has been reviewed and an updated investment policy if any changes have been made;

(d) a notice of any increase, reduction or suspension of contributions;

(e) an updated report on the application of the risk management procedures to the shared risk plan; and

(f) any other document prescribed by regulation.

100.7(2) As soon as practicable, an administrator shall file with the Superintendent documents pertaining to a change to the asset liability model used to apply the risk management procedures and the reasons for the change.

100.7(3) If there is a known significant increase or reduction of the number of current or future members of a shared risk plan and as soon as practicable, the administrator shall file with the Superintendent the results of the application of the risk management procedures to the plan and the required adjustments to the base benefits, the ancillary benefits and the contributions, as the case may be.

Superintendent’s guidelines

100.8(1) The Superintendent may issue guidelines with respect to any matter dealt with in this Part or in the regulations.

100.8(2) The Regulations Act does not apply to guidelines issued by the Superintendent.

Immunity

100.81 The Crown in right of the Province, the Minister, a person designated to act on behalf of the Minister, the Superintendent or an administrator is not liable under this Part or the regulations if the Minister, person designated to act on behalf of the Minister, Superintendent or administrator exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on a report of a person whose profession lends credibility to a statement made by that person.

Regulations

100.9(1) Subsection 100(1) applies with the necessary modifications for the purposes of this Part.

100.9(2) The Lieutenant-Governor in Council may make regulations

(a) respecting the conversion of a pension plan to a shared risk plan;

(b) respecting base benefits and ancillary benefits, including increasing or reducing them;

(d) respecting the funding policy referred to in paragraph 100.4(1)(b) and the funding goals for a shared risk plan;

(e) respecting the funding deficit recovery plan for a shared risk plan;

(f) respecting the investment policy referred to in paragraph 100.4(1)(c);

(g) respecting the risk management goals and procedures referred to in paragraph 100.4(1)(d);

(h) respecting the disclosure of the purpose and characteristics of a shared risk plan for the purposes of paragraph 100.4(1)(g);

(i) respecting the calculation of the liabilities of a shared risk plan;

(j) respecting the asset liability model for a shared risk plan;

(k) respecting the actuarial valuation report referred to in subsection 100.61(1);

(l) respecting the distribution of assets on the wind-up of a shared risk plan, on termination of employment and on termination of membership;

(m) respecting the calculation of the termination value referred to in subsection 100.62(6);

(n) respecting the calculation of the maximum termination value for the purposes of subsection 100.62(7);

(o) for the purposes of section 100.63, respecting the wind-up of a shared risk plan in whole or in part or the conversion of a shared risk plan to another pension plan;

(p) respecting the funding excess utilization plan for a shared risk plan, including the management and use of a funding excess in the plan;

(q) respecting a solvency test for a shared risk plan;

(r) respecting the expenses relating to the administration of a shared risk plan;

(s) prescribing anything required to be prescribed by this Part;

(t) respecting any other matter or thing necessary or advisable to carry out the intent of this Part.

100.9(3) Regulations made under subsections (1) and (2) may be made retroactive to July 1, 2012, or to any date after July 1, 2012.

100.9(4) A regulation with retroactive effect may affect any right, privilege, obligation or liability acquired, accrued, accruing or incurred by any person under or in respect of a shared risk plan or a pension plan converted to a shared risk plan.

5 This Act comes into force on July 1, 2012.