Alberta’s New Pension Legislation: Noteworthy Changes
Alberta’s new Employment Pension Plans Act (EPPA) and Employment Pension Plans Regulation (EPPR) came into force on September 1, 2014. This new Alberta legislation, which responds to the 2008 Joint Expert Panel on Pension Standards Report, constitutes a substantial revision of pension standards legislation in that province. Below is a discussion of a number of changes, some of which are innovative.Vesting and Locking-in
All benefits, including those accrued prior to September 1, 2014, are now immediately vested. A benefit is not locked-in if it is less than 20% of the Year’s Maximum Pensionable Earnings. Unlocking is also permitted in these circumstances:
- the member has an illness or a disability that is certified by a medical practitioner to be terminal or to likely shorten the member’s life considerably, and has elected to convert all or part of the benefit to a series of payments for a fixed term or to withdraw the commuted value of the benefit or less; or
- the member, who is of pensionable age, withdraws the commuted value of the benefit on providing to the administrator written evidence that the Canada Revenue Agency (CRA) has confirmed the person’s status as a non‑resident for the purposes of the Income Tax Act (Canada).
A plan may now provide that, as part of the employee’s terms and conditions of employment, he or she must become a member of the plan. However, instead of mandatory enrollment, an opt-out right may be provided, in which case the employee must signify his or her refusal to join the plan within 60 days of receiving the auto-enrollment notice from the plan administrator.
Missing BeneficiariesA plan administrator may now transfer, upon application to the Minister in accordance with the Unclaimed Personal Property and Vested Property Act (Alberta), (i) any unlocked benefit to which a terminated member or surviving pension partner is entitled, or to which a former pension partner is entitled under a matrimonial property order or agreement; (ii) an actuarial excess allocated to anyone; (iii) any death benefit; (iv) the commuted value of a pension payable to a deferred vested member, when the recipient is missing. When the plan is wound up, the administrator must make such transfer. A missing recipient is someone who the administrator can confirm, in writing with supporting evidence, remains unfound despite searches by a licensed skip tracing firm and the National Search Unit of Service Canada (Department of Human Resources and Skills Development Canada), and under the Vital Statistics Act (Alberta). Governance and Funding Policies
Each pension plan must now have a written governance policy. If the pension plan is a defined benefit (DB) or a target benefit plan (TBP), there must also be a written funding policy. These policies must be in place by August 31, 2015. The governance policy must set out the following:
- structures and processes for overseeing, managing and administering the plan as well as the outcomes they are intended to achieve;
- the decision makers and their roles, responsibilities and accountabilities;
- performance measures and the process for monitoring each decision maker’s performance;
- procedures to ensure that decision makers have access to relevant, timely and accurate information;
- a code of conduct for the administrator and a procedure to disclose and address conflicts of interest;
- educational requirements and necessary skills;
- material risks and internal controls to manage those risks; and
- a dispute resolution process to deal with benefits claims.
The funding policy must set out the following:
- the plan’s funding objectives as they relate to benefit security and levels, and contribution stability and levels;
- the material risks that affect funding requirements, tolerances for those risks and internal controls to manage the risks;
- expectations for the going concern funded ratio and the amortization of unfunded liabilities and, if applicable, for the solvency ratio and the amortization of solvency deficiencies;
- when required by circumstances and the plan is a jointly sponsored plan (JSP), a negotiated cost plan (NCP) or a TBP, expectations for the reduction of benefits;
- expectations for the utilization of actuarial excess and surplus;
- a standard for the frequency of actuarial valuation reports, whether filed or not.
 Section 32 of the EPPA.
 Section 76 of the EPPA.
 Section 29(2) of the EPPA.
 See section 26 of the EPPR. Mandatory enrollment is not an issue under the Employment Standards Code (Alberta) since section 12 thereof allows an employer to deduct from an employee’s wages amounts, such as employee contributions, that are “permitted or required to be deducted by an enactment.”
 Section 102 of the EPPA.
 Section 103 of the EPPA.
 Section 93 of the EPPR.
 Section 43 of the EPPA.
 TBPs contain a pension formula and provide that benefits may be reduced. Section 1(nnn) of the EPPA.
 Section 44 of the EPPA.
 Section 53 of the EPPR.
 JSPs are those (i) whose funding costs are shared by employees and employers and (ii) that are administered by a board at least half of which must be appointed by plan members. Section 1(dd) of the EPPA and section 5 of the EPPR.
 NCPs are bargained defined benefit or target benefit plans whose contributions are limited by collective agreement. Section 1(kk) of the EPPA.
 Section 55 of the EPPR.
 Section 54 of the EPPA and sections 65 and 66 of the EPPR.
 Section 3 and 49(8) of the EPPR.
 Sections 30 and 31 of the EPPR. For example, the summary must set out (i) for defined contribution plans, the investment options, the default option and the way investment directions are to be provided; (ii) for plans other than JSPs, that contain a benefit formula, when and how benefits may be reduced; and (iii) for JSPs, when and how benefits or contributions may be increased or reduced and how the plan is governed.
 Sections 32 and 35 of the EPPR.
 Section 44 of the EPPR.