The Ontario Ministry of Finance has published a new consultation paper in the lead up to the development of a new framework governing variable life benefits (VLBs).
Also known as variable payment life annuities, 2021 amendments to the federal Income Tax Act gives provinces the authority to regulate the relatively new pension option. In order to establish VLBs in Ontario, however, amendments to both the Pension Benefits Act (PBA) and the Pooled Registered Pension Plans Act, 2015 (PRPPA) are also required.
New lifetime options for retirees
“The ministry is seeking to gather input and perspectives on a future framework for VLBs that provides new lifetime options for retirees, where members’ interests are protected,” the ministry states in the consultation document, Variable Life Benefits, 2024 Ontario Consultation Document. “The ministry is consulting on a future legislative and regulatory framework. A future regulatory impact assessment will be completed once the specific framework is developed.”
The consultation paper discusses current options for retirees, how VLBs work (members can invest a portion or the entirety of their pensions in a VLB in exchange for monthly payments, they write), hurdle rates, the frequency of VLB adjustments – investment, mortality, mortality experience adjustments are all discussed – family law considerations (in the event of a marriage breakdown, the province’s family law rules apply), fees and plan termination. Questions also probe appropriate reporting times for funds and disclosure requirements.
“The plan administrator would be responsible for managing the investments in the VLB fund to provide a lifetime stream of monthly payments to all VLB members,” it continues. “The Ministry of Finance will also take into consideration opportunities for harmonization with the approaches in other Canadian pension jurisdictions.”
The deadline for emailing technical comments regarding the consultation to the ministry is January 10, 2025.
