The federal government has proposed rule changes to accommodate planned reforms to Saskatchewan’s pension plan.

Federal finance minister Jim Flaherty proposed amendments to income tax rules Tuesday to accommodate changes to the Saskatchewan Pension Plan, outlined in the province’s 2010 budget.

The amendments would facilitate an increase in the annual contribution limit to the Saskatchewan Pension Plan (which is a voluntary defined contribution plan that serves as an alternative for small businesses that do not offer their own pension plans) to $2,500 from $600, and align its tax treatment with that of other tax-assisted retirement savings vehicles.

The federal Department of Finance notes that these changes will ensure that Saskatchewan Pension Plan members benefit from additional features of the RRSP and RPP rules that were not previously available to them. The proposed changes will apply to 2010 and subsequent taxation years.

Saskatchewan’s government is simultaneously proceeding with amendments to provincial legislation and regulations required to enact these changes. Flaherty indicated that the federal government intends to table the proposed changes to the Income Tax Act in the House of Commons at an early opportunity.

Ontario passes bill to further pension reform

Meanwhile, the Ontario government said that reforms passed in the province’s legislature on Tuesday will further modernize and strengthen its pension legislation.

The government says that the reforms will:
> strengthen funding rules;
> permit more flexible funding rules for certain multi-employer pension plans and jointly sponsored pension plans;
> clarify pension surplus rules and provide a dispute resolution process to allow members, retirees, and sponsors to reach surplus-sharing agreements on plan wind-up;
> provide a more sustainable Pension Benefits Guarantee Fund; and
> further strengthen regulatory oversight and improve plan administration.

So far, the Ontario government’s reforms have dealt with about two-thirds of the 142 recommendations handed down in an expert commission’s report to the Ontario government on pension reform. The government says that the remaining recommendations will be considered for inclusion in future reforms.

IE