The last of the bunch in Canada, Prince Edward Island is set to have its very own Pension Benefits Act. Looking to safeguard the financial security of employees, the pension legislation lays out rules and standards for employers with pension plans to protect workers’ retirement assets. Previous pension legislation was passed by the province in 1990 but not proclaimed.
“It’s important to enact legislation that really brings us in line to a harmonized Canadian pension regulatory system and to give islanders with pension assets basically the minimum rules and standards that other Canadians currently have,” said Steven Dowling, general counsel at the consumer, corporate and insurance division at P.E.I.’s Department of Justice and Public Safety.
The proposed act requires employers with pension plans to register those plans and to make financial disclosures on a regular basis. It also establishes how employees can access their retirement funds.
“It will mean different things to different employers but we expect that employers who currently provide pension plans to be burdened no more than employers in similar situations across the country,” said Dowling. “We have to find that balance between providing those minimum protections and not unnecessarily burdening employers with regulation.”
P.E.I.’s act is actually modeled on that of Nova Scotia, he said.
“At this point, we’ve just tabled the act and we’ll be developing regulations later.”
Many of the provisions are similar to other provincial acts such as that of Ontario, with notice requirements for adverse amendments, partial wind-ups and grow-in rights for members affected by a plan wind-up, said Shaun Miller, an associate in the pension and benefits group at Osler, Hoskin and Harcourt in Toronto.
“Once proclaimed in force, all existing plans in P.E.I. must be registered and administered in accordance with the legislation,” he said. “Employers will be required to review the provisions of the bill and ensure that their plan is consistent with the minimum standards outlined in the bill. Ultimately, this may result in changes to the terms of plans and the processes by which they are administered.”
However, administering the legislation takes up resources, so for a province with such a small population it’s not clear how many will benefit, said Mark Newton, a partner in the pension and benefits group at Heenan Blaikie in Toronto.
“I wouldn’t have thought there really is a big need for P.E.I. pension legislation,” he said. “Maybe they feel like they’re the only province without the legislation and they need something there.”
However, the P.E.I. Federation of Labour disagreed. A lack of legislation “leaves the pensions that so many island workers have worked so hard to accumulate over their working lives vulnerable to unscrupulous employers,” it said in a submission. “Workers deserve and have every right to expect the same basic legislative protections for their hard-earned pension plans that every other Canadian enjoys.”
It’s also questionable whether the legislation will go further with the federal government’s recent announcement it will introduce pooled registered pension plans (PRPPs), said Newton.
“With PRPPs, most small to mid-sized employers will probably go this approach, really obviating the need for provincial legislation of the type that P.E.I. has recently introduced.”
All jurisdictions are working together to try and find a model that would work across the country, said Dowling.
“We wouldn’t have set out to expressly preclude such an option and if we find, as that process unfolds, that there are certain amendments necessary and that’s what the public wants, we’d consider bringing those in too.”
Bill 30 has had its first reading and is now undergoing consultations with stakeholders.
The consultation process might result in amendments to the bill consistent with the pension reform taking place in other Canadian jurisdictions, said Dowling.
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