Changes to Canada’s Pension Regulations

In March 2015, the federal government registered amendments to the regulations of the Pension Benefits Standards Act, 1985 (the “Regulations”) and the Pooled Registered Pension Plans Act. They can be found here.

The explanation with the amendments sets out three goals:

  1. improve the framework for defined contribution (“DC”) plans;
  2. modernize investment rules for pension funds; and
  3. enhance disclosure requirements.

We highlight a few of the amendments seeking to achieve each of these aims.

DC framework

  • Retired employees who have a DC pension plan will now have the option of receiving different pension amounts from year to year from the pension plan, known as variable benefits. The amount of the variable benefit will be the minimum established by the Income Tax Act and a maximum according to a formula. The formula is based, in part, on the total value of the retiree’s DC account.

Investment rules

  • The investment rules prohibit more than 10% of a pension fund’s assets being invested in a single entity (or related group of entities). The amended Regulations have changed the calculation of that 10%. It will now depend on the current market value of the fund’s holdings in the entity, rather than the purchase price (book value). The 10% rule has now been extended to the assets of a plan member who chooses his or her own investments. The provisions providing exemptions to the 10% rule, such as purchasing investment funds, have also been amended.
  • Another investment rule prohibits investments in entities related to the administrator of the plan. The amended Regulations update some of the exemptions to that rule. Perhaps most notably, administrators are now permitted to make related-party investments if they are made by purchasing an investment fund that is available to third parties. A former exemption for investments made in a related entity through a public stock exchange has been removed.


  • Going forward, pension plan administrators will have enhanced disclosure obligations. For plan members permitted to make investment choices, administrators will be required to annually provide information on each investment option to members permitted to make investment choices. The description of each option must contain details such as the objective of the investment type, the degree of risk, the ten largest asset holdings, performance history, and target asset allocation. Annual statements to all other plan members must also include a list of the ten largest asset holdings and the target asset allocation of the fund.
  • Members and former members will now be able to opt to receive information from the plan administrator electronically.

Impact in Atlantic Canada

These amendments not only affect pension plans of federally-regulated employers. In Atlantic Canada, they will automatically extend to employers in Newfoundland and Labrador as the pension regulations in that province automatically adopt any changes to the federal Regulations.  These changes have not been adopted in new Nova Scotia Regulations or in New Brunswick.

The changes to the federal rules may ultimately impact plans in provinces that do not automatically adopt them.  Those provinces often amend their own regulations to align more closely to the federal investment rules. As such, pension plans in Nova Scotia and New Brunswick that are not impacted by these changes now may eventually have to comply with similar rules if those provinces move to harmonize their investment rules.