Pallister government weakens pension security for Manitobans

Monday, August 23, 2021

Pensions Story

Dear Sisters, Brothers and Friends,

As you will recall, this past spring the Pallister government passed legislative changes to the Pension Benefits Act that will weaken retirement security for Manitobans. The Pallister government has now passed a Regulation (link below) which brings some of these changes into force effective October 1, 2021. The most concerning changes deal with unlocking provisions.

· Under the new rules, individuals, regardless of their age, with funds in Manitoba locked-in accounts will be able to unlock funds in the event of certain financial hardships (such as low expected income, eviction for rental arrears, mortgage foreclosure and medical/dental expenses not covered by other insurance/government programs). While we certainly appreciate that individuals might face dire financial hardship, people are almost always better off leaving their money in pension plans. As we said to government at committee in the spring, any unlocking changes should be coupled with financial literacy tools to help individuals make informed decisions, as most Manitobans are not financial planning or pension plan experts. Making these changes without making such tools available is just unfair and irresponsible.

· In addition, individuals aged 65 and over will have the option to unlock all money in Manitoba locked-in accounts with a financial institution. This is a risky plan that opens up Manitobans to be preyed upon by mutual fund managers wanting to extract sizeable commissions by having people gamble their money in the market rather than the reliability of regular pension payments.

· The new regulation also changes the division of pension assets in the event of a relationship breakdown, so that pension assets will not necessarily have to be split 50-50.

The Pallister government's other key pension promise to reduce solvency requirements for defined pension plans from 100 per cent to 85 per cent has not been included in this most recent regulatory change, although we are advised to expect this change to be made sometime this fall. We will update you when that occurs.

You can view all of the details included in this regulatory change to the Pension Benefits Act in detail at: https://web2.gov.mb.ca/laws/regs/annual/2021/063.pdf

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