Canadian lawmakers consider single set of pension rules

If Canada's provincial and federal governments synchronize their pension regulations — replacing the current 10 variations on a theme — the move would reduce costs and headaches for sponsors with plan participants in more than one province, and could even encourage more companies to offer retirement plans, sources say. But any change will be slow in coming.

The Canadian Association of Pension Supervisory Authorities, North York, Ontario, last month released its "principles for a model pension law" — proposals to "harmonize and simplify pension regulation across Canada." CAPSA, an association of Canadian pension plan regulators, is inviting feedback from pension plan sponsors, participants and other interested parties through the end of June, and from the responses will draft a single model law to present to provincial and federal governments.

Currently, nine provinces have their own pension laws — none is the same. (Prince Edward Island has no provincial pension legislation.) A federal agency, the Office of the Superintendent of Financial Institutions, oversees plans for national employers like banks and railways. There is no federal law overseeing all pension plans in Canada; cross-provincial plans now must comply with multiple sets of regulations.

According to Statistics Canada, the country's census bureau, 23% of all corporate plans not under federal jurisdiction had members in more than one province as of Jan. 1, 2002, the most recent data available CAPSA officials said.

"If you take a plan with employees in two or five or eight jurisdictions, you have to comply (with each jurisdiction), which makes life quite complex for plan sponsors and pension regulators," said Nurez Jiwani, a member of CAPSA's Model Law Committee and director of regulatory coordination at the Financial Services Commission of Ontario, Toronto.

CAPSA's 46 proposed principles essentially are a summary of current practices across the country, Mr. Jiwani said. They include: a definition of the pension administrator committee; procedures for conversions between plan types and plan termination; and participantmembership eligibility.

"The cost of compliance is considerable" for plans under more than one jurisdiction, said Priscilla Healy, a Toronto-based lawyer and member of the board of directors of the Association of Canadian Pension Management, Toronto, a national advocacy association for the pension industry. The extra expense, which includes higher systems costs, is "not useful money," Ms. Healy said: it's money not being spent on employees, and not on the plan sponsor's business.

CAPSA's Mr. Jiwani said there hasn't been a study done to determine the exact cost of complying with current regulations.

A single set of regulations would be an "ideal situation," said Shirley McIntyre, director of pensions at TransAlta Corp., Calgary, Alberta. The move would reduce costs, paperwork "and certainly headaches," Ms. McIntyre said. TransAlta's C$500 million (US$379 million) plan covers employees in Alberta and Ontario.

"If plans are cheaper and easier to administer, it could encourage more companies to offer pension plans," Ms. McIntyre said.

Ms. Healy concurred; complex regulations discourage employers from offering pension plans, she said, but a model law "could create a more favorable environment" for the start of new plans.

But an agreement among jurisdictions — even the 80% consensus CAPSA is hoping for — will not come easily or quickly. In its report, CAPSA highlighted 20 key points for discussion. Among the most contentious, Ms. Healy said, is the proposed requirement that the plan administrator consist of a committee whose members include plan participants. Currently, only Quebec law involves plan participants on such a committee, Ms. Healy said.

CAPSA believes the revised administrator definition will improve "the protection of members' rights and benefits, and (increase) the transparency of pension plan administration," the report said.

Overall, CAPSA is expecting a favorable response from plan sponsors, and detailed submissions from labor organizations and actuaries, Mr. Jiwani said. Complete agreement among the 10 jurisdictions is unlikely, he said, but an 80% consensus "would be quite an achievement."

CAPSA is accepting written responses through June 30. The Regie des rentes du Quebec, Quebec City, the provincial agency regulating Quebec pensions, is consulting with pension stakeholders in that province, and CAPSA members are planning to meet in person with pension stakeholders in all major cities across the country, Mr. Jiwani said. If the proposed principles require significant changes, CAPSA will invite a second round of responses. It's too early to tell how long the whole process will take, he said.