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This article was published 28/11/2019 (217 days ago), so information in it may no longer be current.
Manitobans will have more flexibility to manage their retirement savings, and employers offering defined benefit pension plans will face less onerous funding requirements under reforms introduced in the legislature on Wednesday.
Amendments to the Pension Benefits Act would allow individuals to fully unlock pension monies at age 65, giving them the ability to manage their own retirement funds.
The proposed amendments would also permit Manitobans with locked-in accounts to free up pension assets if they faced certain financial hardships.
And there would be more flexibility in the splitting of pension assets in the event of the breakdown in a relationship.
"These changes will give Manitobans more flexibility to manage their own money and provide employees better access to their funds to save them from severe financial hardship," Finance Minister Scott Fielding said after introducing Bill 8 in the legislature.
Fielding said the changes follow recommendations from the province’s pension commission as well as feedback from an online consultation.
Employers are currently required to fund defined-benefit pension plans on the basis that 100 per cent of the funds are available to cover obligations in the event that the plan is terminated.
To reduce the burden on businesses, Bill 8 proposes that the 100 per cent funding obligation be reduced to 85 per cent. "Employers will be subject to stronger funding requirements on the basis the plan continues to operate indefinitely," the government said.
Don Leitch, president and CEO of the Business Council of Manitoba, congratulated the government on moving ahead with long-sought pension reforms.
He said Manitoba had lagged behind other provinces in modernizing its pension legislation.
"This is very good news," he said. "We were way behind the times. So I would compliment the government for fulfilling its commitment to get it done."
Kevin Rebeck, president of the Manitoba Federation of Labour, was less enthusiastic about the proposed amendments.
He said he is concerned that government would make it easier for folks to unlock their pension plans and manage their own funds in the marketplace.
"Workers as a whole almost always do better leaving their money invested with the pension plan, which has got much lower administrative fees (and) provides much greater, predictable, reliable returns," he said.
Rebeck was also troubled by the amendment to reduce solvency provisions for defined-benefit pension plans, calling it, potentially, the "slippery slope" to future losses in pension protection for workers.
Fielding said, however, that the loosening of the funding provisions could prevent some businesses from going into receivership and may prevent employers from transitioning from defined-benefit plans to defined-contribution plans.
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