Group Retirement and Pension Frequently Asked Questions

Defined Contribution Registered Pension Plans

During this uncertain time, can we suspend contributions to our registered pension plan?

Currently, there are no provisions under pension legislation that allow a plan sponsor to suspend contributions entirely if employees continue to be paid by the employer. Plan Sponsors can amend their plans to reduce the contributions to a minimum of 1% but cannot suspend all contributions. If a reduction is not a possibility, the plan can be terminated.

If we elect to reduce the contributions to our registered pension plan, do we have to amend our registered pension plan and provide the members with notice?

Yes, the plan would require an amendment. As a reduction in contribution rate is viewed as an adverse amendment, notification to members is required. In some jurisdictions, notice must be provided to members prior to the amendment taking effect.

Has there been an extension to the period of time we have to remit contributions?

No, our carriers have confirmed that all contributions must be remitted as usual in accordance with the plan terms and the legislation. Generally, contributions must be remitted within 30 days of being deducted from an employee’s pay for employee contributions and for contributions the employer is required to make.

If my employee is on emergency leave due to COVID-19, do I have to continue contributions to the registered pension plan even though I am not paying the employee?

The requirement to continue to contribute for such leaves is addressed in the Employment Standards Act. Keep in mind that employment standards legislation provides the minimums that must be adhered to. Employers should be reviewing their internal policy regarding leaves, collective agreements, employment contracts etc. to determine if contributions are required for such periods.

Our company has temporarily ceased some or all of our operations due to COVID-19 and will no longer be remitting contributions to our pension plan for impacted employees, should we terminate those laid off members from the plan?

As no pension contributions are due to be paid for impacted employees given the temporary closure of business and employees have been temporarily laid off, members should not be terminated from the plan at this point. Once the company reopens or employees are recalled, pension contributions will resume. In any provinces that require expected contributions forms (e.g. Ontario – Form 7), the Pension Plan Administrator will need to submit updated forms.

Is the government offering extensions on filing requirements?

This will vary by jurisdiction but, for Ontario registered pension plans, the Financial Services Regulatory Authority (FSRA) has confirmed that Pension Plan Administrators may request automated deadline extensions of up to 60 days in the FSRA Pension Services Portal. This applies to Annual Information Returns and Financial Statements (including audited statements).

If an extension of more than 60 days is needed, Plan Administrators should contact the assigned Pension Officer directly, preferably by email.

Your Cowan Consultant can help you request an extension, determine who your Pension Officer is, and email them on your behalf if required.

What if an employee does not access to a printer or scanner to complete paper enrollment forms, beneficiary changes etc.?

Reach out to your Cowan Consultant to discuss options that may be available to your plan members.

Group Registered Retirement Savings Plans (RRSP)

Our company sponsors a Group RRSP to which we also contribute. Can we temporarily stop contributions?

Contributions made by employees via payroll deduction and any contribution the employer decides to make is part of the employment contract and a part of the employees’ overall compensation. Any changes to the terms of that contract would need to be decided between the employee and employer and communicated to the carrier.

Our Group RRSP rules apply a suspension of employer contributions where an employee makes a withdrawal from the plan, can we waive this rule temporarily?

The employer establishes the rules regarding the suspension of contributions, therefore if the employer agrees, the rule can be waived. This change should be communicated to the carrier.

Our Group RRSP plan doesn’t allow for withdrawals while employed, can we waive this rule temporarily?

The employer establishes the rules regarding withdrawals while employed, therefore if the employer agrees, the rule can be waived. This change should be communicated to the carrier.

Plan Member Questions

Can I reduce or stop contributing to my pension plan?

Reduction or cessation of member contributions is only permitted if allowed by the plan rules. Typically, if membership in the pension plan is voluntary, a member may suspend membership while employed. You should speak to your employer/plan administrator.

Can I withdrawal my pension assets for financial hardship?

No, assets in a pension plan cannot be withdrawn due to financial hardship while you are active in the plan.

I was terminated from my job because my company closed temporarily due to COVID-19, can I withdraw my pension assets?

At this time, the termination is viewed as a temporary layoff if it is related to COVID-19, therefore pension assets cannot be withdrawn.

How does the change to the Registered Retirement Income Fund (RRIF) minimum affect my future RRIF payments?

The pre-March 18, 2020 RRIF minimum amount has been paid out without withholding tax. At this time unpaid minimum amounts can continue to be paid at the pre-March 18, 2020 level without withholding tax on the amount in excess of the “new minimum”. If you want post-March 18, 2020 payments based on the new minimum, you will need to request a reduction. Post-March 18, 2020 payments will NOT be automatically adjusted.

Note: these answers are not legal interpretations and you should seek a legal opinion where appropriate as well review your internal policies, collective agreements, employment contracts etc.