Posted under: DB, News, Business Owners, IPP, RCA
GBL Technical Bulletin
By Pat Johnston, FCIA, FSA, GBL | Published November 12, 2026
Canada’s Federal Budget 2026, tabled on November 5, 2026, contains several notable pension measures affecting registered pension plans (RPPs), Individual Pension Plans (IPPs), federally regulated pension plans, and federal public-sector pension arrangements. The budget also proposes a significant modernization of the RRSP/RRIF framework through a new “RRSP for life” model, which would eliminate the age-71 mandatory RRSP conversion while retaining minimum withdrawal requirements.
The most significant private-sector proposals are the new compliance regime for revoked RPPs and expanded restrictions on IPPs. All of the measures are proposals and are not yet law. Further to GBL’s previous LinkedIn post on the 2026 Federal Budget’s impact on IPPs, this bulletin, prepared for Canadian pension plan sponsors, administrators and advisors, explains each measure, when it would apply and what to do now.
Key Takeaways:
Table 1 summarizes each pension measure in Budget 2026, who it affects and when it would apply. It is drawn from the budget’s Tax Measures: Supplementary Information and Annex 3: Legislative Measures. Details may change when draft legislation is released.
Table 1. Budget 2026 pension measures at a glance
| Measure | What Budget 2026 proposes | Who is affected | Timing |
| Revoked RPPs | A special tax of 10% of the plan’s assets, which the CRA may waive, then treatment as an RCA with a 50% refundable tax | Any RPP whose registration is revoked | Revocations after 2026 |
| IPP definition | Extends to defined benefit plans in which every member is related to a participating employer, or not at arm’s length with a member who is | Family plans with four or more members | January 1, 2027 |
| IPP investment rules | Advantage, non-qualified investment and prohibited investment rules, with taxes of 50% and 100% | All IPPs, mainly those holding private or non-arm’s-length investments | January 1, 2028 |
| IPP surplus limit | An IPP becomes revocable if its assets exceed 200% of its actuarial liabilities | IPPs with large surpluses, especially multi-generational plans | January 1, 2028 |
| RRSP for life | Merges the RRSP and RRIF rules and ends conversion at age 71; minimum withdrawals continue | Holders of RRSPs, RRIFs and locked-in accounts | Consultation open until January 8, 2027 |
| CRA death confirmation | The CRA could confirm a member death to a registered pension plan administrator | Administrators with members they cannot locate | On Royal Assent |
| Federally regulated plans and PRPPs | Easier electronic communications, fewer required notices to spouses, and member-set contribution rates in PRPPs | Plans under the Pension Benefits Standards Act, 1985, and PRPPs | No date announced |
| Federal public sector plans | Restores coordinated pension accruals of 2% of salary per year of service with the CPP or QPP | Public service, RCMP and Canadian Forces pension plans | No date announced |
Effective January 1, 2027, a revoked registered pension plan (RPP) would be subject to a tax equal to 10% of plan assets, be treated as a Retirement Compensation Arrangement (RCA), and become subject to the RCA refundable tax regime. In more detail:
Table 2. Example: a pension plan with $1,000,000 of assets is revoked after 2026
| Step | Amount |
| Plan assets immediately before revocation | $1,000,000 |
| Special tax (10% of plan assets) | $100,000 |
| Deemed contribution to the RCA | $900,000 |
| Refundable tax remitted to the CRA (50% of the deemed contribution) | $450,000 |
| Invested assets remaining in the plan | $450,000 |
This materially increases the cost of non-compliance and elevates the importance of registration administration, permitted amendments, and regulatory filings.
An Individual Pension Plan (IPP) is a registered defined benefit pension plan, usually sponsored by an owner-managed corporation for one member or a family. Budget 2026 proposes three changes to IPPs: a limit on surplus, new investment rules and a broader definition of an IPP.
Beginning January 1, 2028, an IPP would become revocable if assets exceed 200% of actuarial liabilities. This could be particularly significant in multi-generational IPPs, especially after the deaths of retired founding members while younger family members remain active participants.
The CRA would have to issue a notice of intent at least 30 days before revoking a plan’s registration, and a revoked IPP would face the tax consequences described above. The budget refers to “pension liabilities” and does not yet say how they would be measured for this test.
Also commencing January 1, 2028, IPPs would become subject to registered-plan investment rules. These are the advantage, non-qualified investment and prohibited investment rules that already apply to other registered plans, such as RRSPs and Tax-Free Savings Accounts (TFSAs). A tax of 50% of fair market value would apply to a non-qualified or prohibited investment, and a tax of 100% would apply to the value of an advantage. Transitional rules would apply to investments acquired before 2028.
This should have little effect since most IPPs already follow registered-plan investment rules, even in jurisdictions where they are exempt from provincial pension legislation that otherwise imposes such rules. IPPs that hold private or non-arm’s-length investments should review them before 2028.
The definition of an IPP is also being broadened to include additional non-arm’s-length relationships. Effective January 1, 2027, it would extend to any defined benefit RPP in which every member is related to a participating employer, or does not deal at arm’s length with a member who is, regardless of the number of members. This is expected to have minimal effect on most IPPs.
GBL will work with advisors to monitor funded status, asset growth and long-term surplus accumulation strategies for our IPPs. For background on how these plans work, see All Eyes on the IPP (2026).
Budget 2026 proposes to merge the rules for Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs) into a single “RRSP for life”. Although not strictly a pension measure, the proposed RRSP for life framework could affect retirement planning, commuted value transfers and drawdown strategies by removing the age-71 RRSP conversion requirement while retaining minimum withdrawals.
Several jurisdictions currently provide partial or full unlocking opportunities at the time assets are transferred from a locked-in accumulation vehicle to a retirement income vehicle. Depending on the final design of the RRSP for life, policymakers may need to consider how those unlocking mechanisms will operate in a system where mandatory conversion is no longer required.
Consequential amendments to federal and provincial pension standards legislation governing Locked-In Retirement Accounts (LIRAs), locked-in RRSPs (LRSPs), Life Income Funds (LIFs) and similar locked-in arrangements may ultimately be required. The budget itself notes that changes could be needed to the Pension Benefits Standards Regulations, 1985 and to similar provincial rules.
The consultation also considers replacing the current indirect rollover framework that applies on death, under which rollover treatment is generally achieved through an income inclusion and offsetting deduction mechanism. The government is seeking views on whether this approach could be replaced with a simpler direct tax-free transfer of RRSP for life assets to qualifying registered vehicles of eligible survivors. It is also considering a “successor holder” feature that would allow a surviving spouse or common-law partner to keep the plan open.
While largely administrative in nature, a direct transfer framework could simplify estate administration, reduce tax reporting complexity, and make the transfer of registered retirement assets to surviving spouses and other qualifying beneficiaries more straightforward.
This is a consultation proposal, with stakeholder feedback requested by January 8, 2027. Written submissions can be sent to the Department of Finance at RRSP-consultation-REER@fin.gc.ca.
The budget proposes allowing the Canada Revenue Agency (CRA) to confirm a member death to a registered pension plan administrator. This measure is intended to help locate beneficiaries, settle death benefits and reduce dormant records. The need for this change would typically arise in situations involving mid-sized to large plan sponsors with terminated members and retirees for whom current contact information is unavailable.
The measure would apply on Royal Assent of the enacting legislation.
Amendments to the Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act would support increased electronic communications, reduce certain spouse-related communications and provide additional flexibility for pooled plans. These changes are consistent with broader modernization efforts.
Specifically, the amendments would make electronic communications easier to use, remove certain required notices to spouses and common-law partners, and allow certain members of Pooled Registered Pension Plans (PRPPs) to set their own contribution rates. The government also plans to review the regulations under both Acts for further ways to reduce administrative burden. The Acts apply to pension plans for federally regulated employment, such as banking, telecommunications and interprovincial transportation.
Proposed amendments to federal public-sector pension statutes would restore coordinated pension accruals of 2% of salary when combined with CPP/QPP benefits. The statutes are the Public Service Superannuation Act, the Royal Canadian Mounted Police Superannuation Act and the Canadian Forces Superannuation Act. The 2% accrual is per year of service, when combined with the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP).
This proposal continues the development of a measure, first announced in Budget 2025, where the federal government indicated that enhancements to the CPP and QPP had resulted in employees and the government contributing more than was necessary to maintain the intended retirement benefit structure. The stated objective was to maintain pension benefit levels while reducing excess contributions and restoring the intended 2% coordinated pension accrual rate with the expanded CPP/QPP benefits. While Budget 2026 confirms the government’s intent to restore the coordinated 2% accrual formula, the precise impact on benefit calculations, contribution requirements, pension plan liabilities and the interaction with CPP enhancement will depend on the detailed legislative amendments.
Sponsors and actuaries involved in federal pension work should monitor legislative details and actuarial impact assessments.
Most of the pension measures announced in Budget 2026 do not require immediate action. However:
Budget 2026 raises the cost of losing registered status and tightens the rules for IPPs. The first changes would apply on January 1, 2027, and the main IPP changes on January 1, 2028. Most plans need only monitor the legislation for now, but IPPs with a large surplus, should be reviewed well before 2028.
Federal Budget 2026, tabled on November 5, 2026, proposes new tax consequences for revoked registered pension plans, three changes to Individual Pension Plans (IPPs), a consultation on an “RRSP for life”, authority for the CRA to confirm member deaths to plan administrators, administrative amendments for federally regulated plans, and a restored 2% coordinated accrual in the federal public-sector pension plans.
No. As of November 2026, the Budget 2026 pension measures are proposals. The tax measures need implementing legislation, the RRSP for life is under consultation until January 8, 2027, and details may change before anything is enacted.
Under Budget 2026, a registered pension plan whose registration is revoked after 2026 would pay a special tax of 10% of the fair market value of its assets, which the CRA may waive or cancel. The plan would then be treated as a Retirement Compensation Arrangement (RCA), and its remaining assets would be subject to the 50% RCA refundable tax.
Beginning January 1, 2028, an IPP whose assets exceed 200% of its actuarial liabilities would become revocable. The CRA would have to give at least 30 days’ notice before revoking the plan’s registration. Multi-generational IPPs are the most likely to be affected, particularly after the death of a retired founding member.
No. The Federal Government has made changes to IPPs over the years. GBL works closely with clients and their advisors to ensure that IPPs are not being managed aggressively and will be less likely to face future issues due to government and regulatory changes. The vast majority of GBL’s IPPs will not be impacted by the provisions of Budget 2026.
For most IPPs, there should be no effect. From January 1, 2028, IPPs would be subject to the advantage, non-qualified investment and prohibited investment rules that apply to RRSPs and TFSAs, with taxes of 50% or 100% on offending investments and advantages. IPPs that hold private or non-arm’s-length investments should review them before 2028.
The RRSP for life is a Budget 2026 proposal to merge the rules for RRSPs and Registered Retirement Income Funds (RRIFs) into a single plan. Individuals would no longer have to convert an RRSP at age 71, but minimum withdrawals would still be required after age 71. The proposal is under consultation until January 8, 2027.
Several jurisdictions allow partial or full unlocking when assets move from a locked-in accumulation vehicle, such as a Locked-In Retirement Account (LIRA), to a retirement income vehicle, such as a Life Income Fund (LIF). If conversion is no longer mandatory, those rules may need to change. The budget notes that amendments to the Pension Benefits Standards Regulations, 1985 and similar provincial rules could be required.
Budget 2026 proposes to allow this. The CRA would be permitted to confirm to the administrator of a registered pension plan that a plan member is deceased, effective on Royal Assent of the enacting legislation. This would help administrators locate beneficiaries and settle death benefits.
| Questions about how Budget 2026 affects your pension plan or IPP? We can review your defined benefit pension plan or Individual Pension Plan against the proposed rules. Reach out to us for a consultation by visiting www.gblinc.ca or calling Ryan Ackers at 403.249.1820 x 238. |
Pat Johnston, FCIA, FSA, is Senior Vice President & Actuary with GBL and has over 40 years of actuarial and pension experience. In 2003, he founded Pension Strategies Inc., which joined GBL in 2023. Pat continues to provide services for corporate and public sector pension plans, IPPs, RCAs, family law pension-related services, and other expert evidence work.
GBL is a national actuarial consulting firm headquartered in Calgary, with an office in Toronto. GBL is Canada’s largest provider of Individual Pension Plans (IPPs) and administers more than 2,000 active IPPs and RCAs. Since 1995, GBL has served plan sponsors and administrators with pension and health benefits consulting, actuarial valuations and executive compensation strategies. GBL also maintains a monthly Pension Plan Interest Rates database (CANSIM, commuted value and marriage breakdown rates) for the Canadian actuarial and pension administration industry.
This article is for general information only and is not actuarial, legal or financial advice. The measures described are proposals and may change before they are enacted. Results for a specific plan or member will differ.
