The federal government has proposed new regulations that aim to bolster disclosure, and enhance the investment and withdrawal rules for federally regulated defined contribution (DC) pension plans.
The Department of Finance Friday proposed new rules to modernize the regulatory framework for federally regulated pension plans that would enhance disclosure and reform pension investment rules. The proposed amendments would offer a new variable benefit option to retirees, which would them to withdraw variable amounts each year. “This option has already been provided for in legislation but these regulations make the option available to pensioners,” the government notes. The rules would also prescribe the information that has to be provided by plan administrators for pensions that offer investment choices.
The proposed rules would also require plan administrators to provide retirees, and other former plan members, with annual statements on the plan’s investments; and for defined benefit plans, the value of the plan’s assets and liabilities, and the employer’s contributions.
Finally, the proposals would revise the rule prohibiting plan administrators from investing more than 10% of plan assets in one entity by basing the calculation on the asset’s market value, rather than its’ book value; and, they would clarify that the limit applies to the total of debt and equity. Prohibitions against investing in related parties will also be tightened, the government says.
“Based on extensive consultations, these improvements to the federally regulated private pension framework will provide enhanced benefit security for workers and retirees, while allowing pension plan sponsors to better manage their funding obligations as part of their overall business operations,” said Minister of State (Finance), Kevin Sorenson.
The proposed rules will be released for a 30-day public comment period on September 27.