On October 4, 2023, the British Columbia government announced updates to the Pensions Benefits Standards Act that will allow employers to offer variable life benefit plans to employees with defined contribution plans interested in a new pension option that the federal government developed.
Registered pension plans across Canada must comply with pension standards legislation and the federal income tax legislation. In response to consultation with national pension organizations, variable life benefits were created in 2020 under federal income-tax legislation.
Regulations will be developed in 2024 in consultation with Finance Canada and provinces. British Columbia joins Saskatchewan, Quebec, and the federal government in updating pension standards to allow variable life benefits to be offered from defined contribution plans. These changes also require consequential amendments to the Family Law Act, specifically on how the rules for dividing a pension between spouses who separate apply to variable life benefits.
The proposed changes also amended the definitions of "commuted value," "defined contribution provision," and "pension" about variable life benefits and added new definitions of "defined contribution account," "variable life benefit" and "variable life benefit fund."
Some sections of Bill 33, Pension Benefits Standards Amendment Act, 2023 will come into force on assent, others by March 31, 2024, and others by proclamation.
The National Payroll Institute will monitor these changes and advise its members accordingly.