Letter to Ontario Ministry of Finance Re: Proposed Regulation to Implement Pension Benefits Act Section 39.1Release Date: 06/10/2014 Staff Reference: Ronald Sanderson
June 10, 2014
Mr. Bruce Macnaughton
Director, Pension Policy Branch
Ontario Ministry of Finance
5th Floor, Frost Building South
7 Queen's Park Crescent
Toronto, Ontario M7A 1Y7
Dear Mr. Macnaughton:
Proposed Regulation to Implement Pension Benefits Act Section 39.1
I am writing on behalf of Canada's life and health insurance industry in respect of the captioned proposal which was released on April 25, 2014.
Established in 1894, the Canadian Life and Health Insurance Association (CLHIA) is a voluntary non-profit association with member companies accounting for 99 per cent of Canada’s life and health insurance business. CLHIA members provide services to approximately two-thirds of private pension plans in Canada, primarily in defined contribution plans, and a larger proportion of other workplace savings arrangements such as group RRSPs. Our members are also significant providers of "retail" savings plans, including locked-in retirement accounts (LIRAs) and Life Income Funds (LIFs) that hold amounts transferred from workplace pension plans.
Section 39.1 of the Pension Benefits Act (the Act) is intended to permit the payment of variable income benefits from defined contribution pension plans to former members of such plans (and a lump sum benefit to a member's spouse, beneficiary or estate following a member's death). While such entitlements have historically been satisfied via the purchase of annuities or the transfer of funds to a LIF, section 39.1 allows, subject to regulations, the payment of LIF-like income benefits directly from the pension plan.