Legislative Updates (CAN)

2018 YMPE Announced

On November 1st, Canada Revenue Agency announced that the maximum pensionable earnings for 2018 will be $55,900, up from $55,300 in 2017.

Contributors who earn more than $55,900 in 2018 are not required or permitted to make additional contributions to the Canada Pension Plan.

The basic exemption amount for 2018 remains $3,500.

The 2018 contribution rate for employees and employers remain unchanged at 4.95%.

The 2018 contribution rate for self-employed will also remain unchanged at 9.9%.

The 2018 maximum employer and employee contribution to the plan will be $2,593.80, up from $2,564.10 in 2017.

The 2018 maximum self-employed contribution will be $5,187.60, up from $5,128.20 in 2017.

Check out our website for a breakdown of these rates and others.

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Expanded Canada Pension Plan Benefits Who, Exactly?

Robert Brown, a fellow with the Canadian Institute of Actuaries, wonders in this post (see link below) how the recent expansion to the Canada Pension Plan will impact various levels of beneficiaries.

One would expect, based on the press and government messaging at the time, that dramatically increasing benefits would benefit everyone (a rising tide lifts all boats, after all).

Not in this case, it appears. The lower income Canadians will basically see little benefit and in fact might even do worse under the new formula. Here is the article (click to open):

Robert Brown: Low-income workers may lose from expanded Canada Pension Plan

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Disclosure, Not Prescription: ESG Comes to Ontario DB Plans

As of January 1, 2016, all occupational defined benefit pension plans in Ontario are required to disclose any environmental, social and governance (ESG) factors that are incorporated in the pension fund’s investment policies and procedures.

This requirement is a first for Canada and was approved by the Ontario legislature in late 2014, after first being proposed in 2011. The UK, Germany, Sweden, France and Belgium also have similar regulations.

The amendment to the Ontario Pension & Benefits Act is supported by Ontario’s largest pension funds including the Ontario Teacher’s Pension Plan and OMERS, both of which have actively disclosed ESG since the 2000’s.

This new regulation is not prescriptive and does not require pension plans to adopt or promote any special ESG policies, but we expect that pension trustees will consider ESG investments more closely as a result of this requirement, as has happened in other jurisdictions. Several other provinces in Canada including BC, Alberta and Nova Scotia are considering following suit.

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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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2016 YMPE Announced

The Canada Revenue Agency announced on November 2nd that the maximum pensionable earnings for 2016 will be $54,900—up from $53,600 in 2015.

Contributors who earn more than $54,900 in 2016 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2016 remains $3,500.

The employee and employer contribution rates for 2016 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2016 will be $2,544.30 each and the maximum self-employed contribution will be $5,088.60. The maximums in 2015 were $2,479.95 and $4,959.90

 

For a breakdown of these and other rates check out our website

 

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New Pension Benefits Standards Act Becomes Law in BC on Sept 30, 2015: Are You Ready?

In British Columbia, the new Pension Benefits Standards Act, SBC 2012, c.30, (the New Act), as amended by Bill 10-2014, the Pension Benefits Standards Amendment Act, will come into force on September 30, 2015. The New Act is largely based on the recommendations of the Joint Expert Panel on Pension Standards (JEPPS).

The New Act has significant changes. For example,

• the administrator of a pension plan will be responsible to develop a governance policy regarding the structures and processes for overseeing, managing and administering the plan. This governance policy will help define the responsibilities of, among others, the plan sponsor, the plan administrator, and participating employers. See Section 50 of the new regulation for details.

• any record pertaining to a pension plan, or a copy thereof, MUST be retained in Canada. See Section 34.

• the duties and obligations of the various parties involved in a pension plan, including administrators, are spelled out in detail. Section 35 addresses the responsibilities of the administrator. Sections 45-48 describe employer responsibilities, and Section 51 addresses fundholders.

Please contact your Penad administrator for more information on these changes.

Click the links below for direct access to the documents in question:

Bulletin PENS 15-002 with Summary of Act Changes

Pension Benefits Standards Act

Pension Benefits Standards Amendment Act

Joint Expert Panel on Pension Standards

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Bill 34 and Bill 57 in Quebec: Amendments to the Supplemental Pension Plans Act

Have you heard about the changes happening in Quebec, where Bill 34 amends the Supplemental Pension Plans Act (SPPA)?

There are significant changes to MEPPS (multi-employer pension plans).

In addition, Bill 57, “an Act to amend the Supplemental Pension Plans Act mainly with respect to the funding of defined benefit pension plans” was introduced just last month, on June 11.

You can find a very good synopsis of the changes at McCarthy Tetreault. CLICK HERE FOR FULL ARTICLE …

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Disclosure, Not Prescription: ESG is Coming to Ontario DB Plans

As of January 1, 2016, all occupational defined benefit pension plans in Ontario will be required to disclose any environmental, social and governance (ESG) factors that are incorporated in the pension fund’s investment policies and procedures.

This requirement is a first for Canada and was approved by the Ontario legislature in late 2014, after first being proposed in 2011. The UK, Germany, Sweden, France and Belgium also have similar regulations.

The amendment to the Ontario Pension & Benefits Act is supported by Ontario’s largest pension funds including the Ontario Teacher’s Pension Plan and OMERS, both of which have actively disclosed ESG since the 2000’s.

This new regulation is not prescriptive and does not require pension plans to adopt or promote any special ESG policies, but we expect that pension trustees will consider ESG investments more closely as a result of this requirement, as has happened in other jurisdictions. Several other provinces in Canada including BC, Alberta and Nova Scotia are considering following suit.

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Solvency Information Return

Has your pension plan submitted its Solvency Information Return to OSFI in Canada? This is required for all defined benefit or combination-type pension plans in Canada registered under the Pension Benefits Standards Act, 1985.

This filing provides OSFI with information on contribution holidays and annual rates of return and is used by OSFI to calculate the Estimated Solvency Ratio and to monitor contribution holidays.

The filing, OSFI 575, is due on the later of 45 days after the plan year-end or on February 15.

Please contact a Penad pension administrator if you have any questions about this filing.

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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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