On April 7, 2022, Justin Trudeau’s Government released its sixth budget, called A Plan to Grow Our Economy and Make Life More Affordable (Budget 2022).
Budget 2022 is the first “post-pandemic” budget released by the Federal Government and announces (and in some cases reintroduces) certain pension and benefits reforms and updates that reflect a longer-term government agenda. This Sidebar summarizes the elements of Budget 2022 that will be of interest to employers from a pension and benefits perspective.
Proposals Affecting Registered Pension Plans (RPPs) Generally
There were two Budget 2022 announcements that will impact all Canadian RPPs, namely:
These limits will be determined on an annual basis on the first day of the plan’s fiscal year, based on the value of assets and unpaid borrowed amounts on that day and the actuarial liabilities set out in the plan’s most recent actuarial valuation report. The annual redetermined limit would not apply to borrowings entered into before that time. The proposed changes are deemed to come into force on Budget Day (being April 7, 2022). Also note that the current borrowing rule in respect of real estate investments is not affected.
Proposals Affecting Federally-Regulated RPPs Specifically
Budget 2022 also includes announcements that will specifically impact federally-regulated RPPs, namely:
Proposals Affecting Other Types of DC Savings Plans
Budget 2022 included announcements that may have an impact on other types of employer-sponsored DC savings plans. More specifically:
Proposals Affecting Health Care and Employee Benefits
Budget 2022 provides a number of proposals relating to health care and other benefits, which may in turn affect employer-sponsored benefit plans that include these types of benefits:
Extension of Employment Insurance (EI) Sickness Benefits
Budget 2022 proposes to increase the length of EI sickness benefits from 15 to 26 weeks, as of summer 2022. This measure is anticipated to require changes to the EI Premium Reduction Program. We anticipate that further regulations will be introduced in the near term to integrate the longer EI sickness benefit period with the existing rules on supplemental unemployment benefit plans and short-term disability programs that qualify for the EI Premium Reduction Program. We will continue to monitor developments in this regard.
Other Notable Measures
Budget 2022 announced a number of other pension and benefit-related proposals, including:
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If you have any questions regarding this update, please do not hesitate to call a sidebar with any of us – we’re here to help.
This Sidebar client update provides general information and should not be relied upon as legal advice. This publication is copyrighted by Brown Mills Klinck Prezioso LLP and may not be reproduced in whole or in part in any form without the express written consent of Brown Mills Klinck Prezioso LLP. ©