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Upcoming Changes to BC Pension Legislation

Posted under: IPP

The New Act

The new Pension Benefits Standards Act (the New Act) will come into force September 30, 2015 and going forward all pension plans in British Columbia are required to adhere to the New Act.

What are the changes for IPPs?

Individual Pension Plans (IPPs) are generally set up for connected persons (individuals who own 10% or more of the company shares). Plans for connected persons will continue to be exempt from the majority of the New Act and its Regulations and will not be required to be registered with the Financial Institutions Commission (FICOM), an agency of the BC provincial government.

However, starting September 30, 2015 any plan with members who are non-connected will be required to be registered provincially and will not have the same exemptions that connected plans do. This change is not retroactive and any plan with high earning non-connected members registered with the Canada Revenue Agency (CRA) before September 30, 2015 will not be required to be registered provincially and will have the same exemptions as connected plans do.

How will this affect plans that now have to be registered under the New Act?

Plans registered under the New Act will now be required to submit annual filings and actuarial reports to FICOM as well as to CRA. These plans will be subject to an annual provincial filing fee (currently $200) and an additional $250 will apply to GBL’s annual flat fee. There will also be enforcement of plan funding on an annual basis and required funding on plan wind up to ensure all plan members receive their full Commuted Value. Business owners contemplating IPPs for key employees should carefully consider this loss of flexibility.