Frequently Asked Questions on Pension Benefits Act Exemption for Individual Pension Plans (IPPs) or Designated Plans (DPs)

A1. This term is defined under the federal Income Tax Regulations (ITR). In general terms, a “designated plan” is a registered pension plan that contains a defined benefit provision that is not maintained pursuant to a collective bargaining agreement, and where the total pension credits of all “specified individuals” under the plan for the year exceeds 50% of the total pension credits of all individuals under the plan for the year.

The ITR defines a “specified individual” as someone who is either “connected” to an employer that participates in the plan or whose earnings exceed 2.5 times the Year’s Maximum Pensionable Earnings (YMPE).

A2. This term is defined under the federal Income Tax Regulations (ITR). In general terms, an “individual pension plan” is a registered pension plan that contains a defined benefit provision, and that at any time in the year or preceding year, either:

1. has three or fewer members and at least one of the members is “related” to a participating employer; or
2. is a “designated plan” (see Q1) and it is reasonable to conclude that benefits are being provided to one or more members of the designated plan primarily to avoid the plan qualifying as an IPP under the criteria set out in (a).

The federal Income Tax Act sets out criteria for when individuals qualify as being “related” to a participating employer in a pension plan.

A3. See Q1 and Q2. In practice, most (but not all) IPPs also qualify as designated plans for purposes of the federal Income Tax Regulations.

Ontario’s Pension Benefits Act and regulations usually treat IPPs and designated plans in the same way.

A4. This term is defined in section 8500(3) of the federal Income Tax Regulations (ITR). In general terms, a “connected person” is an individual who either has a 10% or greater ownership interest (voting and/or non-voting) in the employer that participates in the pension plan, or who is “related” to the employer.

A5. This is a term defined under Regulation 909 made under the Pension Benefits Act (PBA). Regulation 909 defines a “significant shareholder” as an individual who (alone or in combination with a parent, spouse or child) owns or has a beneficial interest, directly or indirectly, in shares that represent 10 per cent or more of the voting rights attached to the shares of the employer who contributes to the pension plan.

The term “significant shareholder” as defined under Regulation 909 is similar to, but not the same as, the term “connected person” defined under the federal Income Tax Regulations.

A6. No. The exemptions for pension plans under sections 101.1 and 101.2 of the PBA refer to “connected persons” as defined under the federal Income Tax Regulations. Whether an individual qualifies as a “significant shareholder” as defined in Regulation 909 made under the PBA is not relevant to the requirements under sections 101.1 and 101.2 of the PBA. See Q4 and Q5.

A7. The employer’s election must be filed using FSRA pension Form 15 – PBA Exemption Election Form. In that form, the employer must set out an effective date of the exemption which is at least 14 calendar days, and no more than 60 calendar days, after the Form 15 is filed with FSRA.

A8. Under section 101.1 of the PBA, if the Form 15 and all the Consent Forms that are required be filed with the Form 15 have been properly completed and filed with FSRA, the plan’s exemption from the application of the PBA will occur on the effective date of exemption set out in the filed Form 15, regardless of when FSRA replies to the filing of the Form 15.

The filing of the Form 15 is not an application that requires approval by FSRA before the exemption of the plan from the application of the PBA can become effective. However, FSRA intends to review the Form 15 filings as they are received and will confirm in writing whether the forms are compliant.

A9. If the employer’s election meets the requirements of section 101.1 of the PBA, then on the effective date of the exemption, the plan will no longer be subject to the application of the PBA. At that time, FSRA will cease to have any jurisdiction or regulatory powers over any matter that was ongoing before FSRA under the PBA.

Note, however, that the plan’s exemption from the application of the PBA does not affect any annual pension assessments that may be owing to FSRA by the employer of the plan, as pension assessments are issued to pension plans under the authority of the Financial Services Regulatory Authority of Ontario Act, 2016, not the PBA.

A10. As noted on the Form 15 – PBA Exemption Election Form, all forms related to the exemption under section 101.1 of the PBA are to be submitted to FSRA by email to [email protected]. There is no option for submitting the forms via the PSP.

A11. FSRA will accept electronic signatures on documents and forms submitted electronically to FSRA. Please note that an electronic signature must comply with the legal requirements under the Electronic Commerce Act, 2000. This generally means that the person whose electronic signature is being used must have the authority to execute the document in question and that the person’s electronic signature must be reliable (for example, it cannot be in a form that can be edited or modified). Ultimately, it is up to the person completing the document to determine whether the electronic signature is compliant..

A12. Please consult with a Commissioner for Oaths or other person authorized to take declarations under the Evidence Act to find out what they would require in order to take and sign the declaration about a spouse set out in the Form 15.1.

People authorized to take declarations under the Evidence Act include:

• an officer of the Canadian Forces who is on full-time service;
• a judge;
• a magistrate;
• an officer of a court of justice;
• a commissioner for taking affidavits or oaths or other competent authority of the like nature;
• a notary public;
• the head of a city, town, township or other municipality;
• an officer of any of Her Majesty’s diplomatic or consular services, including an ambassador, envoy, minister, charge d’affairs, counsellor, secretary, attache, consul-general, consul, vice-consul, pro-consul, consular agent, acting consul-general, acting consul, acting vice-consul and acting consular agent;
• an officer of the Canadian diplomatic, consular or representative services, including, in addition to the diplomatic and consular officers mentioned above, a high commissioner, permanent delegate, acting high commissioner, acting permanent delegate, counsellor and secretary;
• a Canadian Government trade commissioner or assistant trade commissioner.

A13. No. Once the plan’s exemption becomes effective, the plan is no longer subject to the PBA and therefore loses the creditor protection that is provided for pension plans by the PBA.

A14. No. A person who is the named beneficiary of a plan member, former member or retired member, where the person is not currently entitled to direct payment of a pension benefit from the plan, and where the person is not the spouse of a plan member, former member or retired member, is not a person who must consent to the employer’s election under section 101.1 of the PBA.

A15. In order for pension plan to qualify to become exempt from the PBA under section 101.1 of the PBA, every member of the plan (if any) must be a “connected person” as defined under the federal Income Tax Regulations, and every former member and retired member of the plan (if any) must have been a “connected person” prior to becoming a former member or retired member.

Whether a person qualifies as a “significant shareholder” is not a criteria for a plan to become exempt from the PBA under section 101.1 of the PBA. See Q4, Q5 and Q6.

A16. Whether a person qualifies as a “significant shareholder” is not a criteria for a plan to become exempt from the PBA under section 101.1 of the PBA. See Q4, Q5 and Q6.

In order for pension plan to qualify to become exempt from the application of the PBA under section 101.1 of the PBA, every member of the plan (if any) must be a “connected person” as defined under the federal Income Tax Regulations (ITR), and every former member and retired member of the plan (if any) must have been a “connected person” prior to becoming a former member or retired member.

Since the children in this question are members of the plan, they (as well as their parents, who are also members of the plan) must all qualify as “connected persons” under the ITR in order for the plan to become exempt from the application of the PBA under section 101.1 of the PBA.

A17. No, because not all of the members of the plan qualify as “connected persons”. See Q16.

A18. The employer that sponsors the plan must make the election and the election and exemption will only be effective if the following forms are filed with FSRA:

1. Form 15 – PBA Exemption Election Form: To be completed by the employer to elect for the plan to be exempted, as well as the plan administrator.
2. Form 15.1 – Consent Form: Member: To be completed by every member, former member or retired member of the plan. Note that if any such person refuses to complete a Form 15.1, the employer cannot make the exemption election. In this Q19 example, both of the married plan members would need to complete their own Form 15.1 to permit the employer to make the election.
3. Form 15.2 – Consent Form: Spouse: To be completed by every person who is the spouse of a member, former member or retired member of the plan, where the spouse is not living separate and apart from the member, former member or retired member, and the spouse is themself not a member, former member or retired member of the plan. Note that if any such spouse refuses to complete a Form 15.2, the employer cannot make the exemption election. In this Q19 example, neither person would complete a Form 15.2 (despite being spouses of each other), since both people are themselves members of the plan and each person would need to complete a Form 15.1 to permit the employer to make the election.
4. Form 15.3 – Consent Form: Other Person: To be completed by every person who is entitled to pension benefits under the plan (other than a member, former member or retired member of the plan or the spouse of a member, former member or retired member of the plan). Note that if any such person refuses to complete a Form 15.3, the employer cannot make the exemption election. In this Q19 example, there is no other person who needs to complete a Form 15.3 to permit the employer to make the election.

A19. Anyone can sign the Form 15 on behalf of the employer or plan administrator, as long as that person has been duly authorized by the employer or plan administrator to sign the form on their behalf.

Note, however, that for Part 1 of Form 15 the plan administrator or plan employer name is required. The agent/consulting firm is not the plan administrator and should not be identified as such.  

A20. A Commissioner for Oaths is a person who is authorized under legislation to take affidavits or declarations by asking you to swear or affirm that what is in a document is true. In Ontario, they are regulated by the Commissioners for Affidavits Act.

In Ontario, a Notary Public has all the powers of a Commissioner for Oaths, as well as other powers. Notary Publics are regulated by the Notaries Act.

Every lawyer and paralegal in Ontario also qualifies as a Commissioner for Oaths.

For more information, see: https://www.ontario.ca/page/find-notary-public-or-commissioner-oaths-taking-affidavits.

A21. See Q21.

Individuals who want to complete the Form 15.1 – Consent Form: Member may want to ask the employer or the administrator of the pension plan to assist them in locating a Commissioner for Oaths.

A22. Any person authorized under the Evidence Act can take and sign the declaration. People authorized to take declarations under the Evidence Act include:

• an officer of the Canadian Forces who is on full-time service;
• a judge;
• a magistrate;
• an officer of a court of justice;
• a commissioner for taking affidavits or oaths or other competent authority of the like nature;
• a notary public;
• the head of a city, town, township or other municipality;
• an officer of any of Her Majesty’s diplomatic or consular services, including an ambassador, envoy, minister, charge d’affairs, counsellor, secretary, attache, consul-general, consul, vice-consul, pro-consul, consular agent, acting consul-general, acting consul, acting vice-consul and acting consular agent;
• an officer of the Canadian diplomatic, consular or representative services, including, in addition to the diplomatic and consular officers mentioned above, a high commissioner, permanent delegate, acting high commissioner, acting permanent delegate, counsellor and secretary;
• a Canadian Government trade commissioner or assistant trade commissioner.

A23. An exemption of the pension plan from the application of the PBA means that the pension plan is no longer subject to the requirements of the PBA and its regulations. As a result, once the exemption is effective, any plan filings that were previously required under the PBA and regulations would no longer be required to be filed with FSRA. Once a plan is exempted from the application of the PBA, all outstanding filings for the plan on FSRA’s systems will be closed.

A24. Except as noted below, once a pension plan is exempted from the application of the PBA, any outstanding fees that were charged under the PBA and had yet to be paid to FSRA will no longer be payable.

Note that annual pension assessments are not charged under the PBA, and are charged under the under the authority of the Financial Services Regulatory Authority of Ontario Act, 2016. Any annual pension assessments owing to FSRA at the time the plan is exempted from the application of the PBA will still be owing to FSRA.

If a completed and signed election to exempt the plan from the application of the PBA (Form 15 – PBA Exemption Election Form), along with all the required, completed and signed Consent Forms (Form 15.1, Form 15.2, Form 15.3), are filed with FSRA on or before March 31, 2021, then no pension assessment in relation to FSRA’s 2021-2022 fiscal year will be charged to the plan.

There is no fee for making the election to exempt the plan from the application of the Pension Benefits Act.

A25. There is no deadline or expiry date for filing the election. The pension plan will remain subject to the PBA and FSRA’s regulatory oversight until an election if filed under section 101.1 and the plan becomes exempted from the application of the PBA.

A26. If a pension plan becomes exempted from the application of the PBA, all access to FSRA’s Pension Services Portal in respect of the plan will be cancelled.

A27. In order for an individual pension plan or designated plan not to incur a FSRA pension assessment for the 2021-2022 FSRA fiscal year, a completed and signed Form 15 – PBA Exemption Election Form, along with all required, completed and signed Consent Forms (Form 15.1, Form 15.2, Form 15.3), must be filed with FSRA no later than March 31, 2021.

A28. No. A fee that has already been paid to FSRA before the plan is exempted from the application of the PBA is not refundable.

A29. Yes. The exemption of the plan from the application of the PBA only applies to the PBA. Please contact your advisor or the Registered Plans Directorate of the Canada Revenue Agency at 1-800-267-3100 to determine what effect, if any, an exemption of the plan from the application of the PBA has on the plan’s treatment under the federal ITA.

A30. No. Section 42(1.1)(a) of the PBA provides that the transfer of a person’s CV under section 42(1)(a) can only be made to a receiving plan that is registered under the PBA or under the pension legislation of another Canadian jurisdiction, or if the receiving plan is established or governed by a statute in a Canadian jurisdiction or is a prescribed plan in the regulations made under the PBA.

An IPP or DP that is exempt from the application of the PBA will not qualify as the kind of plan described in section 42(1.1)(a) of the PBA.

A31. Before the plan is exempted from the application of the PBA, all the requirements of the PBA apply to the plan, including the locking in requirements of the PBA.

After the plan is exempted from the application of the PBA, none of the requirements of the PBA will apply to the plan anymore (except for those requirements that provide for and govern the exemption of the plan from the application of the PBA). Therefore, after the plan is exempted from the application of the PBA, the locking-in requirements under the PBA will no longer apply to the money held in the plan’s pension fund.

A32. Yes, section 101.3 of the PBA will automatically exempt an IPP or DP from the application of the PBA if the plan has been, or becomes, deregistered by the Canada Revenue Agency under the federal Income Tax Act, even if the plan has members or beneficiaries that do not qualify as “connected persons” for purposes of the federal Income Tax Regulations.

A33. No. Section 101.3 of the PBA only applies to an IPP or DP that has been deregistered by the Canada Revenue Agency under the federal Income Tax Act.

A34. A plan that is exempted from the application of the PBA is no longer subject to FSRA’s oversight, and we cannot comment on what marriage breakdown requirements might apply to a plan that is not subject to the PBA or FSRA’s oversight. We recommend that you seek advice from a family law professional about this question.

A35. Yes. The employer must get the consent of any person who is the spouse of a member, former member of retired member of the plan on the day the spouse gives their consent to the employer’s election (unless the spouse is themself a member, former member or retired member of the plan on that day, or unless the spouse is living separate and apart from the member, former member or retired member due to marriage breakdown on that day). It does not matter that the spouse only became a spouse of a former member or retired member after that person ceased being an active member of the plan.