Amendments to pension legislation aim to safeguard funds for which Manitobans have worked hard
Bill 8, or the Pension Benefits Amendment Act, seeks to modernize the Pension Benefits Act and the relevant regulations and to promote protected, secure and stable retirement income, effective Oct. 1, Scott Fielding, Manitoba’s finance minister, has announced.
Pursuant to the amendments, an individual of any age can unlock their funds in a Manitoba-based locked-in account with a financial institution if they are experiencing certain financial challenges, including low expected income, eviction for rental arrears, mortgage foreclosure and medical or dental expenses not falling under other insurance or government programs.
“As part of our pledge to Manitobans, we are reducing red tape by removing the requirement for government to approve requests for one-time 50 per cent unlocking of a person’s pension funds, available to individuals who are at least age 55, and we have introduced modernization measures to reduce administrative inefficiencies for individuals, financial institutions and government,” said Fielding in the news release.
Upon reaching age 55, a person can make a one-time 50-per-cent transfer to a prescribed registered retirement income fund. At age 65 or older, the individual has the option to fully unlock the funds in locked-in accounts with financial institutions, including in locked-in retirement accounts or life income funds, such that they can more flexibly navigate their retirement.
In case of a relationship breakdown, parties can more flexibly divide the pension assets based on their shared circumstances, as opposed to the current rule which sets a 50-50 split or no division.
- enabling a pension plan to allow a member who remains employed beyond the normal retirement age to stop giving contributions and accruing benefits
- clarifying the determination of ancillary benefits
- permitting an employer to use solvency reserve accounts to finance a solvency deficiency
- allowing certain multiemployer plans
- permitting rules to address a pension committee vacancy relating to an inactive plan member
Fielding noted that Manitoba has heard hundreds of inquiries regarding the possibility of partially unlocking pension funds for needs such as medical expenses, since these amendments have been introduced.
The development of the new legislation was informed by recommendations from the Pension Commission of Manitoba and by insights learned during online consultations. The resulting pension framework will align better with developments in other provinces and at the federal level, said the news release.