Ontario introduces forms for DC plans offering variable benefits
The Financial Services Regulatory Authority of Ontario (FSRA) has introduced various variable benefit forms, which will enable Ontario members of defined contribution (DC) plans and their spouses to access variable benefits and access various options with respect to variable benefit accounts. Variable benefits became permitted in Ontario effective January 1, 2020, as discussed in the January 2020 News & Views. A DC pension plan is not required to offer variable benefit accounts.
The new variable benefit forms are as follows:
Form VB 1 - Waiver of Joint and Survivor Pension – Variable Benefit Account provides for spousal consent to the establishment of a variable benefit account for a plan member. This form is required because Ontario members who have spouses from whom they are not living “separate and apart” must obtain the spouse’s consent in order to establish a variable benefit account.
Form VB 2 - Application to Withdraw or Transfer up to 50% of Amount Transferred to a Variable Benefit Account enables a member to withdraw as cash or transfer to an unlocked RRSP or RRIF up to 50% of the amount transferred to a variable benefit account within 60 days of its establishment.
Form VB 3 - Direction of Retired Member to Transfer an Amount out of a Variable Benefit Account permits a retired member to transfer part or all of a variable benefit account to a locked-in retirement account (LIRA), a life income fund (LIF), another DC pension plan or a life insurance company for the purchase of a life annuity.
Form VB 4 - Spousal Waiver of Death Benefit from a Variable Benefit Account enables a spouse to waive his or her right to a death benefit under a variable benefit account.
Form VB 5 - Direction of Spouse as Specified Beneficiary to Continue Receiving Variable Benefit Payments enables a spouse who was designated a “specified beneficiary” by a member to elect to continue to receive variable benefit payments. The election must be made within 90 days after the death of the retired member.
Form VB 6 - Direction of Spouse as Specified Beneficiary to Transfer an Amount out of a Variable Benefit Account permits a spouse who is receiving variable benefit payments as a “specified beneficiary” to transfer part or all of the variable benefit account to a LIRA, a LIF, another DC pension plan or a life insurance company for the purchase of a life annuity.
FSRA is also developing family law forms for use in the event of a marriage breakdown where there is family property to be divided in the form of a variable benefit account.
The adoption of the new variable benefit forms for Ontario members and their spouses will assist in the administration of variable benefit accounts. Variable benefit accounts can be an attractive feature for DC pension plan members and their spouses as they face the need to convert accumulated retirement assets into retirement income.