The Power of Perspectives

The Canadian Bar Association

Kim Covert

Repository for unclaimed pension entitlements a good idea

October 31 2017 31 October 2017

 

If you have a sneaking feeling that you forgot to close out a bank account a long time ago, maybe in a province where you used to live, the Bank of Canada’s unclaimed balances registry can help you either set your mind at rest or set you on your way to reclaiming your cash.

The Bank of Canada takes over accounts that have been inactive for 10 years. If there’s less than $1,000 in the account, it holds the money for 30 years, and if there’s more than $1,000, it will hold on to it for 100 years.

The CBA Pension and Benefits Law Section thinks it would be a good idea if the bank did the same thing for unclaimed pension monies.

The Section made the comment in its response to Finance Canada’s second consultation paper, Potential Policy Measures to Support a Strong and Growing Economy: Positioning Canada’s Financial Sector for the Future.

Since the department is looking at modernizing the current program, it might be an opportunity to expand the scope of the Bank of Canada’s authority to unclaimed pension money.

Pension plan administrators “routinely face the question of how to deal with pension entitlements of former plan members who cannot be located,” the Section says. “In most jurisdictions, including federally, there is no process for pension plan administrators to transfer these moneys out of the plan.”

In fact, only Alberta, British Columbia and Quebec have processes to deal with these funds, and even those processes have limitations, the Section says.

It is particularly problematic when the plan is being wound up, for example, or when the missing member reaches the age of 71 and federal regulations require that the member’s entitlements be transferred out of the fund.

“The CBA Section has long advocated for governments and pension regulators to create a mechanism that would allow for missing members’ entitlements to be transferred out of a pension plan while ensuring the security of those entitlements for the members’ benefit.”

The Section urges Finance Canada to make the legislative changes necessary for this kind of transfer, and to work with the provinces and pension regulators to give plans across the country the option to transfer unclaimed entitlements to the Bank of Canada.

“In conjunction with modernization of the Bank’s unclaimed balances program, the option to remit unclaimed pension monies should include internet-based tools through which missing members would be able to search for their entitlements,” the Section adds.

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