Clients with long-forgotten pensions could be a step closer to reuniting with their funds.
The federal government has released draft amendments to the federal pension rules intended to help plan administrators match lost beneficiaries with unclaimed pension benefits.
The draft amendments to the Pensions Benefit Standards Regulations, 1985 were published for a 30-day consultation period, ending July 24.
Under the draft amendments, pension assets relating to an “unlocatable” member can be transferred to a “designated entity” without specific authorization from the Office of the Superintendent of Financial Institutions.
The draft amendments also prescribe who qualifies as an eligible claimant, the specific information that must be provided to the designated entity, the information that entity may publish and the period that the entity must hold the unclaimed pension assets before being transferred to the Crown. For amounts under $1,000, the prescribed period is 30 years; for any other amount, the period is 100 years.
Lea Koiv, a pension expert and president of Lea Koiv & Associates Inc. in Toronto, said Canadians change jobs and addresses more frequently today than they did in the past, so pension plan administrators often have trouble locating members or beneficiaries when pension benefits are meant to start. They may also be unable to wind up a plan because members can’t be located.
“This presents significant administrative issues for pension plan sponsors,” Koiv said in an email.
People may forget they have a pension entitlement if, for example, they worked at a company for a short time early in their career, Koiv said. Should they lose or fail to retain plan booklets or member statements, they may die leaving their spouse unaware that they may have an entitlement to a survivor’s benefit under the plan.
In 2018, the federal government launched public consultations on how to address unclaimed pension balances.
In the 2021 federal budget, the government proposed revising the federal unclaimed assets regime, both through increasing the information available and use of electronic communication, and by expanding the scope of the regime to include unclaimed pension benefits for unlocatable members of terminated federally regulated pension plans.
A budget bill that received royal assent in April 2021 included amendments to the Pension Benefits Standards Act, 1985 to facilitate those changes.
Changes to the unclaimed asset regime are not set to be brought into force until the associated changes to the regulations are implemented.