In January 2026, Quebec became the first province to allow defined contribution (DC) pension plans and voluntary retirement savings plans in the province to offer dynamic pension decumulation options to their plan members.

The province’s consultation on draft regulations to govern these vehicles concluded in the summer of 2025. These came into force at the start of the year, allowing DC pension plans and voluntary retirement savings plans to add variable payment life pension (VPLP) decumulation options for members. As reported by the Insurance Portal, funds accumulated in locked-in retirement accounts (LIRAs) may also be transferred to a VPLP.

In a VPLP, as they’re known in Quebec (the vehicles go by different names in different provinces), income provided to the plan member is based on a reference interest rate and the VPLP fund’s mortality assumptions. Payments are adjusted annually based on the fund’s performance and based on those assumptions.

The development of the dynamic pension option in the province follows after the federal government introduced the dynamic pension concept in its 2019 budget. Legislative amendments to the federal Income Tax Act, to allow for their existence followed in 2021. The amendments also gave provinces the authority to regulate the relatively new pension option.

Other provinces are now in varying stages of developing their own legislation and regulations governing dynamic pensions going forward.

A notable challenge 

“Because they’re new, it does take a lot of work to update the regulatory framework to allow for these across the country. It has been slow, but I do think they’ve been doing a lot of work to make sure they get it right,” says Laura Strachan, principal, pension and group benefits with Eckler Ltd.

She adds that the development of such a framework from scratch, one that is harmonized with similar efforts in other provinces, as well, is a notable challenge. “While I’m really keen to see these take off – I think it’s a really valuable option for retirees – I would also rather that the regulations come in having (received) the right amount of thought and care to deliver for members. If it takes a bit of extra time, I’d rather it that way.” 

She also notes that provincial developments can be hindered by politics unrelated to the dynamic pensions themselves. In Ontario, for example, consultations occurred in 2024, ahead of the province’s snap election in early 2025, stalling the effort somewhat until earlier this year.

The argument for the development of VPLAs is discussed by René Beaudry, partner with Normandin Beaudry, in a recent C.D. Howe Institute intelligence memo entitled A Smarter Way to Turn Retirement Savings into Lifetime Income. In it, he notes that the rapid shift away from defined benefit (DB) pension plans to make defined contribution (DC) pension plans the more prevalent option provided by employers, has placed a new burden on retirees. “Not only must they save for retirement, but they must also figure out how to turn those savings into a reliable income for the rest of their lives. For many Canadians, that second challenge is proving even more difficult than the first,” Beaudry writes.

$1-trillion in retirement savings 

He adds that Canadians over age 55 now have well over a $1-trillion in retirement savings accumulated in registered retirement savings plans (RRSPs) and DC pension plans. “Yet the options available to convert these savings into lifetime income remain limited and often inadequate.” The predictable result, he says, is a large number of retirees are underspending in fear of running out of money, while others withdraw too much and face financial stress later in life. “Neither outcome represents an efficient or reassuring retirement system.” 

VPLAs, as they’re known in the federal Income Tax Act, VPLPs, as they’re known in Quebec and variable life benefits (VLBs) as they’re known in Ontario – dynamic pensions, collectively – reportedly restore longevity protection by pooling risks to produce better outcomes than individuals managing risks can attain on their own. “Individuals simply receive a pension payment that adjusts automatically, based on the fund’s experience,” Beaudry adds. “The simplicity is not trivial. As people age, financial decision-making can become more difficult. A system that removes complex investment decisions can provide both security and peace of mind.” 

Provincial developments 

In future articles, the Insurance Portal will look more closely at efforts underway in each province to make dynamic pensions a reality. In short, each must develop enabling legislation, followed by the regulations that will govern the operation of such solutions.

Quebec was the first province to introduce regulations that now allow certain retirement savings programs to offer VPLAs funds. Both Beaudry and Strachan say the development can serve as a blueprint for broader adoption across Canada.

In its 2026 budget, Ontario introduced VLBs as a new retirement income option for DC plan members after January 1, 2027. “Proposed regulations would be informed by stakeholder consultations that are planned for later this year. The government is targeting January 1, 2027, as the date when eligible plans could begin to offer VLBs,” it states.

“If they’re looking to adopt things that are as harmonized as possible, there are some good examples to follow,” Strachan says of the Quebec and Ontario examples.

Two other provinces with legislation in place, but not regulations as of yet, include British Columbia and Saskatchewan. Both also have existing VPLAs in place, one in British Columbia for University of British Columbia faculty which predates tax policy changes that initially restricted VPLAs, and the other in Saskatchewan for the province’s Public Employees Pension Plan which operates under its own act and regulations.

“Manitoba, Alberta and the Maritimes don’t yet have legislation in place that I’m aware of,” Strachan adds.

“We are really hoping for (the provinces and territories) to be as harmonized as possible. Of course there will be some differences, but I do understand that CAPSA (Canadian Association of Pension Supervisory Authorities) members from all provinces are working to meet regularly and discuss a lot of the key questions to ensure that they are as harmonized as they can be. Hopefully with those two precedents in place, I’d like to think it will make things a bit easier for the other jurisdictions.”