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On November 5, 2026, the Minister of Finance and National Revenue, François-Philippe Champagne, tabled the federal government’s Budget 2026, titled Masters of Our Destiny. This Sidebar highlights elements of Budget 2026 that will be of interest to employers, and sponsors and administrators of pension and benefits plans.

An “RRSP for Life”

Budget 2026 announces the government’s intention to merge the core features of the registered retirement savings plan (“RRSP”) and the registered retirement income fund (“RRIF”) under the Income Tax Act (“ITA”) to create a single “RRSP for life.” This would eliminate the need to convert an RRSP to a RRIF, but minimum withdrawal requirements after age 71 would still apply.

The government is initiating consultations with Canadians on two RRSP-related proposals:

• whether and how the RRSP rules could be modified to include a “successor holder” feature for a surviving spouse or common-law partner, similar to other registered vehicles. This could allow an RRSP to remain open until the death of the successor holder, rather than having the RRSP property value included in the deceased’s income; and
• whether and how the current indirect “rollover” provisions applicable on the death of an RRSP annuitant (i.e., an income inclusion for the deceased and an offsetting deduction for a qualifying survivor) could be modified to permit a direct tax-free transfer to a qualifying survivor’s qualified registered vehicle (e.g., locked-in vehicles such as life income funds and locked-in retirement accounts).

The government invites written submissions on the proposed changes to the ITA by January 8, 2027, which may be sent to the Department of Finance at RRSP-consultation-REER@fin-gc.ca. Budget 2026 notes that these changes could require consequential amendments to the federal Pension Benefits Standards Regulations, 1985 (the “PBSA”) and similar provincial legislation.

CRA Confirmation of Pension Plan Member Deaths

Budget 2026 proposes to amend the ITA to permit the Canada Revenue Agency (“CRA”) to confirm to the administrator of a registered pension plan (“RPP”), including both federally and provincially registered plans, whether or not a plan member has died. In cases where the RPP administrator is unable to locate a former employee who is entitled to pension benefits, this measure would facilitate payment of the survivor benefits to the surviving spouse or other beneficiary in a timely manner. The measure would apply on Royal Assent of the enacting legislation.

Tax Consequences of Revoking an RPP’s Registration

If an RPP fails to comply with registration conditions under the ITA, the CRA may issue a notice to the administrator of the RPP that the registration of the plan is revoked. However, the tax consequences of revoking an RPP’s registration are not fully specified under the current ITA rules. Budget 2026 proposes that, for revocations of RPPs after 2026:

• the revoked plan would pay a special tax equal to 10% of the fair market value of its property immediately before the revocation, which the CRA could waive or cancel;
• the revoked plan would be deemed to become a retirement compensation arrangement (“RCA”); and
• the plan’s property, less any revocation tax, would be deemed to be contributed to the RCA, triggering the 50% refundable tax on the deemed contribution.

Reducing Administrative Burden for Federally Regulated Pension Plans

Budget 2026 proposes to amend the PBSA and the Pooled Registered Pension Plans Act to make it easier to use electronic communications, remove some required communications to spouses and common-law partners, allow certain members of pooled registered pension plans to set their own contribution rates or amounts, and make technical amendments. The government also intends to review the related regulations to identify ways to reduce burden and red tape for federally regulated pension plans.

Advancing ESG Disclosure for Federally Regulated Pension Plans

Budget 2026 confirms that the government intends to move forward with advance disclosure requirements for federally regulated RPPs with respect to environmental, social, and governance considerations, including climate-related risks.  This is described as a component of a broader initiative to improve the transparency and governance of federally regulated plans.

Strengthening Tax Rules for Individual Pension Plans

Budget 2026 proposes three significant changes to the ITA rules for individual pension plans (“IPPs”):

• Expanded IPP definition. Under the current ITA rules, an IPP is a defined benefit RPP with fewer than four members, at least one of whom is related to a participating employer (for example, a controlling shareholder). As of January 1, 2027, the IPP definition would include defined benefit RPPs where all members are either related to a participating employer or non-arm’s length with a member who is related to a participating employer, regardless of the number of members.
• Anti-avoidance rules. Anti-avoidance rules currently applicable to registered plans held by an individual (such as tax-free savings accounts, RRSPs, and RRIFs) would also apply to IPPs as of January 1, 2028, with transitional rules for investments acquired before 2028. As a result, if the IPP acquires a non-qualified or prohibited investment, or if it receives an excessive tax advantage, the controlling individual of the IPP would be liable for a 50% tax on the fair market value of a non-qualified or prohibited investment and a 100% tax on the value of an advantage.
• Excessive surplus. As of January 1, 2028, an IPP whose assets exceed 200% of its pension liabilities would become a revocable plan. The same tax consequences of becoming a revoked RPP, as described above, would also apply.

Restrictions on Non-Compete Agreements

In the Spring Economic Update 2026, the government launched the Whole-of-Government Competition Plan to ensure that government policies prioritize competition. Budget 2026 announces that, as part of this initiative, the government will work with the provinces and territories to expand restrictions on non-compete agreements in employment contracts across Canada to support worker mobility, moving toward harmonized restrictions based on the federal approach.

Canada Growth Incentive

Budget 2026 introduces a new Canada Growth Incentive (“CGI”) capital gains exemption for qualifying individuals other than trusts. The CGI tax exemption would apply to capital gains realized on the disposition of qualifying shares issued on or after November 5, 2026, and before 2037. Qualifying shares must be issued by a Canadian-controlled private corporation in a qualifying business with no more than $100 million in assets (including related corporations), be issued solely for cash or for employment services provided by the qualifying individual, and meet other prescribed conditions.

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If you have any questions regarding this update, please do not hesitate to call any of us—we’re here to help.

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This Sidebar client update provides general information and should not be relied upon as legal advice. This publication is copyrighted by BMKP Law LLP and may not be reproduced in whole or in part in any form without the express written consent of BMKP Law LLP. ©

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