November 27, 2019
Government Introduces Legislation that Would Change The Pension Benefits Act
– – –Amendments Provide More Flexibility to Manitobans: Fielding
The Manitoba government is moving ahead with reforms to strengthen its current pension benefits legislation and provide Manitobans more flexibility, Finance Minister Scott Fielding announced today.
“The Pension Benefits Amendment Act will modernize the legislation while maintaining its integrity,” said Fielding. “We want to create a strong pension framework that guarantees secure and stable retirement income for Manitobans. These changes will give Manitobans more flexibility to manage their own money and provide employees better access to their funds to save them from severe financial hardship.”
Provincial legislation exists to safeguard employees’ rights to benefits promised under employment pension plans. The proposed changes are based on recommendations from the Pension Commission and feedback from online consultation.
The amendments would:
• permit individuals with funds in Manitoba locked-in accounts with a financial institution to unlock funds under certain financial hardships;
• allow individuals to fully unlock funds in Manitoba locked-in accounts with a financial institution if they have attained age 65 to give them greater flexibility to manage their own retirement funds;
• in the event of a relationship breakdown, allow parties to split pension assets up to 50 per cent based on their individual circumstances, rather than choose between the currently mandated 50-50 split or no division;
• remove the requirement for the commission to approve requests for one-time 50 per cent unlocking of a person’s pension funds, in order to reduce red tape;
• introduce small modernization measures to reduce administrative inefficiencies; and
• relax the solvency funding rules for a defined benefit pension plan while still providing a level of protection for members’ benefits.
Employers are currently required to fund on the basis that 100 per cent of the funds are available to cover obligations of a defined benefit pension plan, should the pension plan terminate and the employer be required to immediately pay out members’ benefits. To reduce the burden on businesses, that would change to 85 per cent. Employers will be subject to stronger funding requirements on the basis the plan continues to operate indefinitely.
The Pension Commission must complete a review of The Pension Benefits Act every five years and report its findings and recommendations to the minister of finance with the goals of increasing pension participation by employers, and strengthening plans and the regulatory system.
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