Has Your Pension Plan Filed U.S. Form W-8BEN-E?

That’s right, there is now another filing for Canadian pension plan sponsors, this time having to do with American tax rules.

American citizens, unlike citizens of most other countries, are required to pay taxes on all income worldwide, regardless of where it is earned and regardless of where the citizen was living at the time. To track and enforce compliance, Uncle Sam passed the Foreign Account Tax Compliance Act (FATCA) as of July 1, 2014, which requires financial institutions worldwide to report on investment income credited to any of their clients who are US citizens.

As an aside, many financial institutions in Europe and elsewhere find this requirement so onerous that they have actually closed the accounts of US customers. Fortunately, registered pension plans in Canada are exempt from the requirement, but they are NOT exempt from filing exemption forms with EACH financial institution holding pension fund assets, where that institution is itself a “foreign financial institution” under FATCA.

Pension plan administrators must file Form W-8BEN-E with each such financial institution, including financial institutions located outside of Canada (such as investment managers based in France, for example). In addition, if any of the filing information changes, the plan administrator must notify all financial institutions where it has filed Form W-8BEN-E of any such changes within 30 days.

Because the pension plan administrator is certifying required information, we strongly advise that pension plan sponsors confer with their counsel to ensure they have met the requirements of FATCA. Contact Penad for more information on how to ensure you are in compliance with this requirement.


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80 Million People in Caribbean and Latin America at Risk of Poverty in Old Age if Pension Changes Not Made

Angel Curria of the OECD launched the first edition of “Pensions at a Glance: Latin America and the Caribbean” on April 20 at the Inter-American Development Bank (IDB) in Washington DC. The Pensions at a Glance report provides detailed comparative indicators of pension structures in 26 countries.

One key finding is that 63 to 83 million people in the region will be at risk of living in poverty by 2050 due to inadequate savings and pensions, as a result of only 45 per cent of workers contributing to any kind of retirement plan.

IDB president Luis Alberto Moreno, speaking at the April 20 meeting, said that governments in the region must act now to take advantage of “a demographic dividend that cannot be missed. If we get more people to contribute to our pension systems, and if we adjust the systems to rising life expectancy, we will be able to provide adequate coverage to future generations.”

One key finding of Pensions At a Glance is that today there are eight people of working age for every person in retirement, but that rate will drop to 2.5 to 1 by 2050, which underlines the need for governments to act now to ensure that workers are steered into adequate schemes while there is still time.


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Best Year Ever? Canada Pension Plan Touts $45B Gain, but Wait ….

Assets in the CPP grew by 18.3 per cent in the year ending March 31, reported the Canada Pension Plan on May 21.

That is a $45.5 billion dollar gain, taking CPP Fund assets to $264.6 billion.

Not bad. A bottle (or two) of 1989 Louise Pommery Cuvee Brut champagne may be in order, especially since $40.6 billion of the growth came from investments, and only $4.9 billion from contributions.

While we applaud the CPP for their stellar results, we all need to remember that a large portion of CPP assets are invested outside of Canada. This means that the value of those assets rise when the Canadian dollar declines against foreign currencies where the CPP holds investments.

Since the Canadian dollar did poorly over the CPP’s 2015 financial year, this accounted for $7.8 billion of the overall growth.


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Thalidomide Survivors Finally Get Life-Long Pensions

The Canadian federal government announced on Friday May 22 that most eligible thalidomide survivors will receive payments of either $75,000 or $100,000 annually, tax-free. Those victims requiring lower levels of support will receive $25,000 in pension.

Thalidomide was an over-the-counter morning sickness drug that caused over 10,000 babies to be born with various medical problems including severely deformed limbs, blindness, deafness, cleft palate, and internal deformities in the late 1950’s and early 1960’s. Other countries such as the UK and Germany have been paying victims annual pensions for decades.

It took the Canadian government over fifty years to provide a pension (some minor lump-sum payments were made in years past). The government fought against taking responsibility for the damage to survivors, despite the fact that the government had allowed the drug onto the market amid warnings from around the world about the tragic consequences of using the drug.


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Ontario Legislation to Create Provincial Pension Plan in 2017

The Ontario government has taken steps to help the more than three million people who do not have any kind of workplace pension scheme. A bill was passed on April 29 that mandates all employees to contribute 1.9 percent of their pay to the newly formed Ontario Retirement Pension Plan, to a maximum of $1,643 per year. Employers will be required to match contributions.

Ontario has lobbied the federal government to enhance the Canada Pension Plan to mandate increased contributions (and eventual pensions) for workers who do not belong to workplace pension plans, but the federal government has refused to do so.

The new Ontario Retirement Pension Plan will be structured to be very similar to the Canada Pension Plan, as the Ontario government still hopes that the Ontario plan can eventually be assimilated into the federal plan.

Until that happens, provincial workers now have the comfort of knowing that their retirement will be a little bit more secure thanks to this new plan. Opponents of the ORPP see the employer pension contributions as a payroll tax and claim it will kills jobs and damage businesses.


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Ready for Retirement?

Some U.S. pension facts (the gist of which you may be able to extrapolate to your country) …

— 30% of workers in a 2012 study reported that they had less than $1,000 in savings and investments. (Source: Employee Benefit Research Institute)

— Nearly 75% of retirees have not saved enough and said they would save more if they could do it all over again. (Source: Health and Retirement Study)

— 56% of workers report that they have not attempted to calculate how much money they will need to have saved for a comfortable retirement. (Source: Employee Benefit Research Institute)


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A Fresh New Logo

This year is the 30th anniversary of the founding of Penad Pension Services Limited, a leading pension administration and systems specialist. To mark this exceptional milestone (not many companies live to see their 30th birthday!), Penad has commissioned the release of a new logo and a new take on its overall brand identity.

For thirty years, Penad has been at the forefront of HR benefits administration automation in the pension field. In fact, Penad was the very first company in Canada, if not the world, to develop a PC-based pension administration software system, which radically streamlined admin and resulted in much faster processing of year-ends and benefit calculations, greatly increased accuracy, and an order of magnitude improvement in turnaround times. Basically, Penad’s flagship Defined Benefit administration solution dragged pension administration kicking and screaming out of the dark ages.

Building on 30 years of success!

Building on 30 years of success!

Penad has continued this history of innovation to the present day, with the development of PX3000™, a global leader in benefits administration systems. PX3000™ is used by banks, insurance companies, governments, and large corporations for the administration of Defined Benefit, Defined Contribution, Group Life & Health, and Social Security benefit plans.

The new Penad logo has been developed to reflect the vision of Penad entering its fourth decade in business. Only a fraction of 1% of businesses ever make it past the thirty year mark, so Penad has a lot to celebrate as it continues on its course towards a bright future. The new logo has been developed to reflect the optimism and vision we hold for the new decade. Penad’s previous logo, which stood the test of time for thirty years (with some slight modifications along the way) was a statement of strength (the large, bold, upper case font) and a business-like attitude (the royal blue color).

The new logo softens both the color and the typography, going with a lighter blue, a mixed-case font, and a bright green cross stroke on the letter “a”. Taken together, the new look reflects a quiet confidence that we know who we are and why we are in business … to provide the best pension and benefit administration solutions on the planet. The logo also reflects the Penad team — we are approachable, communicative, creative – not a monolith but a group of individuals to whom our clients and peers can relate and with whom they can work.

Penad has been building world-class systems for three decades – in our fourth decade and beyond, we want to let the world know that we are still here, that we have great products, and we can help our clients develop solutions for success!


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