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Ontario releases description of proposed variable benefit regulations

On March 20, 2018, the Ontario Ministry of Finance posted a description of proposed regulations concerning the payment of variable benefits from the defined contribution (DC) provision of an Ontario-registered pension plan. The Ontario Pension Benefits Act (PBA) includes provisions that, upon proclamation into force, will permit a pension plan with a DC component to offer variable benefits (VBs) to retired members through a VB account that will operate similarly to a life income fund (LIF). Until now, a DC member has had to transfer funds into a locked-in retirement account (LIRA), a LIF or purchase a life annuity in order to access retirement funds.

Establishment and operation of a Variable Benefit account

In order to establish a VB account, a member who has a spouse will be required to provide a spousal waiver of the joint and survivor pension within the 60 days prior to the establishment of the VB account. The waiver would be either a prescribed form or certified domestic contract.

The plan administrator must provide an initial statement containing prescribed information to the retired member within 30 days after establishing the VB account. The retired member is required to respond to the initial statement from the plan administrator and indicate the amount, frequency and method delivery of VB payments. The frequency and method of delivery of VB payments that the retired member first elects will remain the default for each subsequent year following, until a new election is made.

A minimum amount of annual income must be paid from a VB account each year, including in a year funds are transferred out. The minimum annual income is determined according to the Income Tax Act (ITA) rules for calculating the minimum income for registered retirement income funds.

The maximum annual income is the amount stipulated for LIFs under the PBA.

Transfers to and from the Variable Benefit account

The PBA permits transfers into a VB account from a DC pension plan and pooled registered pension plan. The regulation would also permit transfers from LIFs and LIRAs.

Transfers from the account would be permitted to a LIRA, a LIF or to purchase a life annuity.

Statement requirements

The proposal also summarizes the requirements for the various statements required from a DC pension plan that offers VB accounts.


Once the proposed regulations are adopted, the only remaining Canadian jurisdictions that will not permit a DC pension plan to offer VB accounts to members will be New Brunswick and Newfoundland and Labrador. Pension plans that choose to offer VBs will have additional administrative responsibilities, but will be able to offer their former members an additional retirement option that will not require them to move their funds to a financial institution or purchase a life annuity.

Public comments on the proposed regulations may be submitted by May 4, 2018.

News & Views - April 2018 (PDF)