Federal Government Drafts Regulation to Amend Pension Benefits Standards Regulations
May 28, 2026
The federal government published draft regulations in the Canada Gazette, Part I, which would amend the Pension Benefits Standards Regulations (“PBSR”).
First, the proposed amendments would permit defined contribution (DC) plan members who elect to receive variable benefits at retirement to unlock up to 50% of their funds. Currently, DC plan members can unlock up to 50% of their locked-in funds only if they transfer their pension funds to an external locked-in retirement vehicle. The amendments introduce a variable benefit account with both locked and unlocked portions, allowing members who choose variable benefits at retirement to transfer up to 50% of their funds to the unlocked portion, which is not subject to maximum annual withdrawal limits and which continues to be managed by the plan administrator. This transfer would require spousal or common-law partner consent through a new form.
Second, the proposed amendments operationalize the federal buy-out annuity framework first introduced in 2019 through amendments to the Pension Benefits Standards Act (PBSA), which has been awaiting supporting amendments to the PBSR. The proposed PBSR amendments would prescribe the types of annuities that can be purchased and the information that must be sent to individuals for whom annuities have been purchased, which would allow plan administrators to transfer their pension obligations to a regulated life insurance company. The PBSR amendments would provide that these annuities must not be assigned, used as security, surrendered, or commuted during the lifetimes of the annuitant or their spouse or common-law partner. “Immediate” life annuities must offer the same options for assignment, distribution, and adjustment of benefits following relationship breakdown as those provided for under the PBSA, while “deferred” life annuities must provide benefits consistent with what members would have received by remaining in the plan until pensionable age.
Plan administrators would also be required to provide affected plan members:
- a written explanation of any plan amendment permitting the purchase of life annuities within 60 days of the amendment; and
- notice of the purchase of a life annuity (including specified information) within 60 days of the purchase.
Click on ‘More information’ below to read the Regulation:
