This year's edition of the Watson Wyatt annual government benefits update includes information regarding an increase in British Columbia Medical Services Plan premiums, significant changes to Alberta’s prescription drug program for seniors starting effective July 1, 2010 as well as changes to marginal tax rates and income thresholds in most jurisdictions. You can refer to this informative and easy-to-use summary of information year-round.
On October 27, 2009, Federal Minister of Finance Jim Flaherty released a plan for the reform of the legislative and regulatory framework governing federal private pension plans. While the majority of the proposals only affect federally regulated pension plans, the Framework’s content will undoubtedly attract attention from provincial governments as well.
Quebec’s Minister of Economic Development released two draft regulations in April and May 2009 proposing changes to the province’s pension regulatory framework and a series of temporary relief measures to deal with the financial crisis. In addition, draft rules have been published and an amendment has been proposed. Finally, It is expected that a third regulation will be released, which will address the details of the Régie des rentes du Québec administration of assets in the event that an employer becomes bankrupt or insolvent.
On June 23, 2009, the Ontario government published Regulation 239/09, which amends the Pension Benefits Regulation to provide sponsors of Ontario-registered defined benefit pension plans with temporary relief to ease solvency funding pressures exacerbated by the current economic climate. The Regulation also includes restrictions on contribution holidays for 2010 to 2012 and permanent amendments affecting plans with declining transfer ratios. In addition, it allows Ontario residents to unlock up to 50 percent of the funds in a Life Income Fund effective January 1, 2010.
The current economic downturn and the tremendous recent volatility experienced by global markets has caused the solvency funded position of DB pension plans to deteriorate dramatically. This could restrict the ability of plan sponsors to make the investments necessary to maintain and grow their business, and thereby strengthen the Canadian economy. Recent announcements by the federal government as well as a growing number of provinces explore various options for solvency relief to help mitigate the impact of the economic crisis on DB plans. All jurisdictions are willing to provide some extension to solvency deficit periods and aim to enhance security for existing benefits. However, many of these proposals are short on specifics, and the final passage of regulatory changes is likely still months away.
Watson Wyatt presents its annual government benefits update, an informative and easy-to-use summary of information you can refer to year-round. This year's edition includes information regarding the elimination of Alberta's Health Care Insurance Plan premiums, increased premiums for Quebec's prescription drug insurance plan and changes to marginal tax rates and income thresholds among the important information provided.
The rules governing how and what Canadian companies disclose on their proxy circulars about executive compensation are changing. It is anticipated that the Canadian Securities Administrators will approve final changes by the end of this year, so that the revised Form 51-102F6 rules can apply to the 2009 proxy season. The goal of the revisions is to provide more complete and transparent disclosure of executive compensation. While there are significant benefits to the transparency provided by the new guidelines, they will require substantial changes to the methods of both calculating and recording executive compensation for many employers, both large and small.
In recent years, the Canadian pension landscape has seen a shift away from DB plans in favour of DC plans. DC plans are not without their risks, which include the challenge of providing adequate member education, overcoming member apathy about their pension investments and, perhaps most importantly, concerns about the lack of adequate retirement income these plans are likely to provide. Sponsors in the United States, the United Kingdom and Canada are looking to different types of automatic features in DC plans in an attempt to resolve some of these concerns.
On December 14, 2007, the Federal Government gave Royal Assent to legislation implementing the phased retirement rule changes announced in the 2007 Federal Budget and Economic Statement. The legislation is a significant step towards the introduction of phased retirement across all Canadian jurisdictions, although provincial action is still required to allow non-federally-regulated employers to take advantage of the changes.
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