Legislative changes for federal pensions winding through Parliament | National Union of Public and General Employees

Legislative changes for federal pensions winding through Parliament

Major changes include immediate vesting of pension benefits and allowing pension surplus to increase to 25 percent.

Ottawa (13 May 2010) – A series of proposed changes to the legislation governing federally-registered pension plans, the Pension Benefits Standards Act, 1985 (PBSA) are winding its way through Parliament. The changes are part of omnibus legislation known as Bill C-9, an Act to implement certain provisions of the 2010 federal budget tabled in Parliament back in March.

Parliament has completed second reading of Bill C-9. It is not known when the legislation will be adopted and details on the coming into force dates for the various provisions have yet to be released.

The legislation contains over 1,000 pages and covers a multitude of tax and other matters. The proposed pension amendments are designed to implement a number of the measures announced by the federal Finance Minister in October 2009. 

The one major pension change that is not part of the PBSA is the amendment to the Income Act which will allow the pension surplus threshold for employer contributions to pension plans to increase to 25 percent from 10 percent.

The bulk of PBSA amendments are minor changes to a number of provisions related to the federal government’s decision to move to immediate vesting of pension benefits.

Nevertheless, the entire package of amendments constitutes the most extensive reform of federal pension legislation, which applies to some of the largest pension plans in the country.

Besides the move to immediate vesting, other key PBSA amendments include:

  • requiring an employer to fully fund benefits if the whole of a pension plan is terminated;
  • authorizing an employer to use a letter of credit, if certain of conditions are met, to satisfy solvency funding obligations in respect of a pension plan that has not been the contribution. The exemption threshold applicable will terminated in whole; 
  • permitting a pension plan to provide for variable benefits, similar to those paid out of a Life Income Fund, in respect of a defined contribution provision of the pension plan;
  • establishing a distressed pension plan workout scheme under which the employer and representatives of members and retirees may negotiate changes to the plan’s funding requirements, subject to the approval of the Minister of Finance;
  • permitting the Superintendent of Financial Institutions to replace an actuary if the Superintendent is of the opinion that it is in the best interests of members or retirees; 
  • providing that only the Superintendent may declare a pension plan to be partially terminated; and
  • requiring the administrator to make additional information available to members and retirees following the termination of a pension plan.


The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

More information:

NUPGE expresses disappointment in federal pension changes

Issues and Campaigns: