Effective September 1, 2014, the new Alberta Employment Pension Plans Act (New EPPA) and Employment Pension Plans Regulation (New Regulation) came into force. Pension plans registered in Alberta, as well as plans registered in other jurisdictions which have Alberta members, will need to review their plans and make any necessary amendments to ensure compliance with the new requirements.
In this post we highlight the key amendments that administrators of single employer pension plans will have to make to their plans, however, it is not an exhaustive list of all required compliance amendments under the New EPPA.
We recommend a comprehensive review of each pension plan’s specific provisions in order to confirm compliance with the New EPPA and the New Regulation.
Mandatory Plan Amendments
Plans must be amended by December 31, 2014 to reflect the following changes:
- immediate vesting;
- unlocking due to small benefit, shortened life expectancy and non-residency;
- effective date of the plan (which now must be specified in the plan text);
- where the plan text provides for automatic enrollment (which is not a mandatory requirement) the plan text must specify the time period within which the employee can opt out; and
- on marriage breakdown, where a member’s pension is already in pay when the division occurs, the continuing pension payable to the member must be in the form of a single life pension, unless the plan text provides that the member may elect a different form of pension.
Defined contribution plans must also specify whether the plan administrator, members or both have responsibility for directing plan investments. Where members are permitted to make investment decisions, the funding agreement must provide a default investment option which is either a balance fund or a portfolio of investments that takes into account a member’s age.
The plan text for defined benefit (and target benefit) plans must indicate the rules around the formula used to determine the amount of benefits. (For more information on target benefit plans and the requirements associated with such plans, please see our prior post.)
Where applicable, plan texts must be separate from a collective agreement, and from any other document that creates the plan.
New Plan Documents
In addition to plan amendments, plan administrators must put in place a governance policy and a funding policy (for defined benefit and target benefit plans only) by August 31, 2015. We discuss the requirements of these policies and what issues they must address in our earlier post.
As we noted above, the plan amendments required under the New EPPA and New Regulations may vary depending upon the type of plan and its specific provisions. If you sponsor a pension plan with members in the province of Alberta, a compliance review is in order to ensure that the new requirements are met.