On July 1, 2020, the new 2020 Canadian Association of Pension Supervisors (CAPSA) Agreement on Compliance with Multi-Legal Legal Plans (2020 Agreement) was adopted. The 2020 agreement replaces the 2016 agreement on compliance with pension plans in several legal systems (2016 agreement) and aims to simplify and clarify the oversight of pension plans in Canada with members of more than one jurisdiction. Signatories to the 2020 agreement include British Columbia, Nova Scotia, Ontario, Quebec, Saskatchewan, as well as new signatories from Alberta, New Brunswick and the federal government. Manitoba and Newfoundland and Labrador remain Canadian jurisdictions with annuity laws that have not signed the 2020 agreement. The agreement for 2020 reflects the results of CAPSA`s 2017 public consultation on the proposed changes to the rules on pension scheme funding and asset allocation under the 2016 agreement and addresses a number of areas where the legislation of the main authority (i.e. the applicable rules on the pension of jurisdiction) in which a plan is registered). The agreement for 2020 contains the following changes: the Canadian Department of Finance announced the signing of the agreement on compliance with the pension plans of several jurisdictions (2020 agreement) for 2020. The federal government signed the 2020 agreement with the governments of British Columbia, Alberta, Saskatchewan, Ontario, Quebec, New Brunswick and Nova Scotia to simplify and clarify the oversight of retirement plans in Canada with members of more than one jurisdiction. The Association of Canadian Pension Administrators (CAPSA) has announced the adoption of the Multi-Jurisdictional Pension Compliance Agreement (2020) for 2020, which will come into effect on July 1, 2020.
The 2020 agreement amends the rules on the legal relief of pension purchases. These changes are a response to the growing number of plan sponsors that are implementing risk control strategies such as redemption pensions and differences in relief rules between legal departments. The 2020 agreement provides that the rules of the subordinate authority generally apply to the possibility of legal relief when purchasing pensions, but notes that the rules of the large authority apply with regard to: from the point of view of the administration of the plan, the agreement provides for more clarified changes in 2020 with regard to pendulum value transfers for which a plan is underfunded. The text clarifies that the amount of the initial payment and the deadline for the transfer/payment of balances are governed by the rules of the lead authority. This language can be of particular help to plan managers, given the current economic climate. The general structure of the 2020 agreement remains unchanged from the 2016 agreement, as it defines the areas in which the rules of the „lead authority“ (the pension regulatory authority with which the plan is registered) apply instead of the rules of a „small authority“ (any other pension supervisory authority whose pension legislation applies due to affiliation to the plan). The agreement for 2020 sets out the issues subject to the provisions of the lead authority`s pension legislation, including the registration of plans, funding and the provision of certain (but not limited) information. On 1 July 2020, the 2020 multi-jurisdictional pension compliance agreement entered into force (the 2020 agreement). The 2020 agreement replaces some agreements that previously existed between the signatories of the 2020 agreement.
For more information on the 2020 agreement, see CAPSA`s press release and OSFI`s new FAQ series….