On September 30, 2010, the federal government introduced Bill C-47, which makes further amendments in conjunction with this year’s budget, including another round of pension reform amendments. Among these, perhaps the most interesting are the amendments which purport to provide defined contribution (DC) plan administrators with a limited form of “safe harbour” from liability related to member directed plan investments.

Earlier this year, Bill C-9, which included amendments regarding plan funding, wind-ups, vesting, and “work out schemes” for plans at risk (see our April 1, 2010 post), received royal assent. Bill C-47 follows up on the Bill C-9 amendments with further significant amendments to the federal Pension Benefits Standards Act (the PBSA).

The PBSA reforms contained in Bill C-47 include:

New Specific Rules for DC Plans

  • There are new provisions which expressly permit pension plan members, former members and their beneficiaries to make investment decisions with respect to the assets in their individual accounts within a DC plan.
  • However, the new provisions regarding DC plan investments also specify that if a plan administrator provides members with investment choices, the administrator must offer choices with “varying degrees of risk” and expected investment returns that would allow “a reasonable and prudent person to create a portfolio of investments that is well adapted to their retirement needs”. If an administrator meets these obligations and the requirements of the PBSA regulations (yet to be enacted), it is deemed to have complied with the “prudent person” requirements in the PBSA.
  • While these provisions do appear to provide a limited form of “safe harbour”, DC plan administrators should proceed with caution as the requirements outlined in the amendments are generally worded and it is not yet clear how they will be interpreted and applied in practice. For example, in order to provide investment options that may be adapted to meet members’ “retirement needs”, plan administrators may have to consider the demographics of their plan membership.
  • In addition, the reference to compliance with the “regulations” seems to indicate that further guidance will be provided. Perhaps such guidance will be provided by adopting into the regulations certain aspects of the Capital Accumulation Plan Guidelines released by the Canadian Association of Pension Supervisory Authorities (CAPSA), as was indicated in the federal government’s announcement last fall.
  • Although the new DC plan specific rules will be helpful, in particular since these new rules provide a limited form of safe harbour by deeming administrator compliance with the prudent investment requirements of the PBSA, they do not appear to be as definitive as the “safe harbour” rules in the United States Employee Retirement Income Security Act (ERISA), which provide plan sponsors with relief from specific fiduciary duty liabilities provided that the plan satisfies specified requirements.

Missing Plan Members

  • The Minister of Finance will be authorized to designate an entity for the purposes of receiving, holding and disbursing the pension benefit credit of any person who cannot be located.
  • This is a welcome change that should ease plan administration for many plan sponsors and administrators.

Negotiated Contribution Plans

  • The amendments recognize a new type of pension plan – a “negotiated contribution” (NC) plan. It is described as a multi-employer pension plan with a defined benefit provision, which limits a participating employer’s contributions to an amount determined in accordance with a participation agreement or a collective agreement, statute or regulation, and which amount does not vary as a result of prescribed solvency tests and standards. (This appears to be similar to Ontario’s jointly sponsored pension plans, which provide defined benefits and require members to make contributions in relation to any unfunded liabilities or solvency deficiencies.)
  • Administrators of NC plans will be able to amend their plans to reduce pension benefits or pension benefit credits.


  • Plan administrators will be required to obtain the consent of a member’s spouse or common-law partner before transferring the member’s pension benefit credit to a retirement savings plan where the member is eligible to retire.

Electronic Communications

  • Subject to receiving the reader’s consent and certain other conditions, plan information may be distributed electronically, including information provided to plan members or to the Superintendent.
  • Signatures in relation to electronic documents may also be acceptable if certain requirements are met.

Multi-Jurisdictional Plans

  • The Minister of Finance will have the authority to enter into bilateral and multi-lateral agreements with the provinces respecting pension plans that are subject to the pension legislation of more than one jurisdiction. (Presumably, these provisions will enable the federal government to affirm the CAPSA proposed agreement regarding the regulation of multi-jurisdictional pension plans, as well as any future agreements.)
  • In addition, the Superintendent will have the authority to direct the administrator of a pension plan that is subject to the pension legislation of more than one jurisdiction to establish a separate pension plan for members and former members who are or were working for a federally regulated employer.

The Bill C-47 amendments address a number of the items that were previously announced by the federal government, but were not included in Bill C-9. Some of the latest amendments (e.g., the method for dealing with missing plan members and the ability to communicate with plan members electronically) seem to be aimed at simplifying plan administration, while others (e.g., DC “safe harbour” rules) may help to clarify administrators’ duties. However, in order to take advantage of these improvements, plan administrators will (not surprisingly) have to continue to meet certain requirements, which may include additional regulations not yet enacted.