11D New Pension Standards in Western Canada - … Pension Standards in Western Canada Aaron Walker-Duncan ... SEP + NCP 2. SEP + NCP + JSP 3. ... TB 4. DB + DC 5. DB + TB 6.

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New Pension Standards in Western Canada

Aaron Walker-DuncanDirector, Policy BranchPension Corporation of British ColumbiaVictoria, British Columbia

11D-1

Agenda

• History• Plan design• Benefit changes• Governance• Funding• Oversight

11D-2

History

• Current BC legislation from 1996• Joint Expert Panel on Pension Standards• Legislation in both provinces received

royal assent in 2012• ‘In force’ date subject to proclamation

11D-3

Plan design

• Joint sponsorship– Shared governance– No need for a collective agreement– Accrued benefits can be reduced

(with regulatory consent)– No employer liability for solvency

deficiency on wind up – Must meet prescribed criteria

11D-4

Plan design

• Flexible pension plan structure (Target Benefit Plans)– Shared risk between members and employers– Looks like a DB plan, but accrued benefits can

be reduced (without regulatory consent)– No requirement to be jointly sponsored– Liability limited to contractual obligation– No employer liability for solvency deficiency

on wind up

11D-5

Overlapping structuresSINGLE EMPLOYER PLAN (SEP)

NON COLLECTIVELY BARGAINED MULTI-EMPLOYER PLAN (NCBMEP)

COLLECTIVELY BARGAINED MULTI-EMPLOYER PLAN (CBMEP)

NEGOTIATED COST PLAN (NCP)

JOINTLY SPONSORED PLAN (JSP)

11D-6

Many possible plan design combinations

Governance structure combinations

1. SEP + NCP2. SEP + NCP + JSP3. CBMEP + NCP4. CBMEP + NCP + JSP5. CBMEP + JSP6. NCBMEP + JSP7. SEP + JSP8. SEP alone9. NCBMEP alone10.CBMEP alone

Benefit provision combinations

1. DB2. DC3. TB4. DB + DC5. DB + TB6. DB + TB + DC7. TB + DC

11D-7

Benefit changes

• Immediate vesting• Shortened life expectancy• Locking-in• Financial hardship• Forcing out small benefits• Suspension of membership

11D-8

Governance

• Clarification of roles and responsibilities of administrators (trustees), participating employers and fund holders

• Disclosure• Requirement to establish policies

– Governance– Statement of Investment Policies

and Procedures– Funding (DB and TB)

11D-9

Funding

• New standards for funding?• Target benefit funding• Solvency Reserve Account

11D-10

Oversight

• Increased power of the regulator• Requirement to assess plan administration• Participation agreements

11D-11

Questions?

11D-12