If a pension plan is amended to reduce pension benefits, the plan administrator must first file the amendment with the Financial Services Regulatory Authority of Ontario (FSRA) for registration before it takes effect. Most plans can only be amended to reduce future benefits that members will earn, not benefits that were earned prior to the date the amendment was filed with FSRA for registration.
The registration process includes:
- Completing and submitting an Application for Registration of a Pension Plan Amendment (Form 1.1)
- Providing a certified copy of the plan amendment, actuarial report and any other documents related to the plan amendment (e.g., excerpts of the collective agreement, etc.)
FSRA will consider the amendment void if it reduces:
- A benefit earned before the date the amendment was filed with FSRA for registration
- A pension or deferred pension already earned under the pension plan before the date the amendment was filed with FSRA for registration
- An ancillary benefit for which a plan member has met all eligibility requirements before the date the amendment was filed with FSRA for registration.
However, these void amendment rules do not apply to:
- Multi-employer pension plans that are established by a collective agreement or trust agreement
- Defined benefit pension plans that limit the employer’s contributions to a fixed amount through a collective agreement
- Members of a defined benefit pension plan who are significant shareholders of the employer, where the member and the employer providing the pension plan file written consent to the benefit reduction amendment
- Amendments required to avoid a pension plan being revoked under the Income Tax Act (Canada). See Reduction of Accrued Benefits and/or Refunds or Payments to Avoid Revocation by Canada Revenue Agency of Registration of a Pension Plan for details
- Certain asset transfers authorized by sections 80 through 81.0.1 of the PBA