NEWS RELEASE
For Immediate Release 2004FIN0014-000201 March 26, 2004	Ministry of Finance
CHANGES INCREASE FLEXIBILITY FOR B.C. PENSION HOLDERS

VICTORIA – Regulatory amendments to the Pension Benefits Standards Act will allow British Columbia pension holders greater flexibility, financial independence and fewer restrictions on several of their pension plan requirements, Finance Minister Gary Collins announced today.

 

“Updating the regulations ensures that B.C.’s public and private pension plans are in step with the other provinces,” said Collins. “These changes give pension holders greater control over how they manage their retirement income and allows them to administer their pension assets to meet their needs.”

 

The most significant changes affect Life Income Funds (LIF). Pension holders who leave an employer and its pension plan before retirement must transfer their pension into a locked-in RRSP. Upon retirement the funds are transferred into a Life Income Fund (LIF). Currently, when a pension holder reaches age 80 the LIF must be used to purchase an annuity - a contract between a pensioner and a life insurance company where the company agrees to provide lifetime income in exchange for the remaining value of a LIF. Today’s amendments will:

 

• Update and index the small benefit threshold. The small benefit threshold for 2004 is $8,100, which will allow pension holders with pension assets too small to provide a meaningful lifetime retirement income to access those assets directly.
• Implement less restrictive life income fund (LIF) provisions by:
• Removing the requirement for a BC pension holder to purchase an annuity by age 80.
• Introducing a revised maximum annual withdrawal limit for LIFs so pensioners have better access to their pension funds.
• Make a minor change to the Public Service and Municipal Service Pension Plans to ensure that those who work in public safety occupations are subject to the same rules upon early retirement as those in other occupations.
• Anticipate changes to the federal Income Tax Act that will allow for B.C. pension plans to provide LIF-type monthly payments to pensioners. Under the current structure, these types of flexible pension plan payments are not permitted.

 

 

 

“These changes are consistent with good governance of pension plans,” said Cheryl Neighbour, Executive Director, Operations, UBC Faculty Pension Plan. “They give people with locked in retirement income savings more flexibility in managing their estates, while ensuring a good level of income security.”

 

Regulatory amendments to the Pensions Benefits Standards Act will be made through an Order In Council.

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1 factsheet(s) attached.
Media contact:	Karen Johnston Communications Director Ministry of Finance 250 356-2821
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