The British Columbia Financial Services Authority (BCFSA) has issued a new regulatory statement providing additional guidance on recent amendments to the Pension Benefits Standards Act (PBSA) and Pension Benefits Standards Regulation (PBSR) relating to annuity purchases from ongoing defined benefit pension plans.
Reporting Obligations
The statement outlines a new expectation that pension plan administrators notify BCFSA within 30 days of an asset transfer for an annuity purchase. Specifically, effective October 30, 2026, plan administrators will be expected to provide the following information to the Superintendent within 30 days of transferring assets for an annuity purchase:
- the date of the annuity purchase;
- the name of the annuity provider;
- the number of annuitants, broken down by category (i.e., deferred entitlements (deferred members and surviving spouses), active members, pensioners);
- the solvency ratio prior to the annuity purchase;
- the solvency ratio immediately after the annuity purchase;
- the amount of any top-up contribution required to satisfy conditions under section 83 of the PBSR; and
- the annuity purchase price.
Individuals for whom Annuities can be Purchased
Section 89.1 of the PBSA is amended to expand the category of individuals for whom an annuity purchase in respect of defined benefits can be made from an ongoing plan that qualifies for a statutory discharge. The amendments mean that the discharge will be available in relation to annuity purchases for:
- surviving spouses of deceased members who are entitled to a defined benefit and have not yet commenced a pension; and
- active members whose defined benefits are frozen and who are no longer accruing benefits.
The BCFSA clarifies that annuity purchase discharges are not available for active members whose service accruals have ceased but whose benefits may continue to increase (such as under a final average earnings formula tied to future salary increases). Administrators are also prohibited from purchasing an annuity for an active member who may later become eligible to elect a commuted value transfer, unless the member provides written consent in advance of the purchase.
Solvency Requirements
The amendments to the PBSR (which sets out the requirements for a statutory discharge to be available in relation to an annuity purchase) will establish threshold funding requirements for annuity purchases. Those thresholds refer to a plan’s solvency ratio immediately before the purchase. Note that additional contributions may be required to ensure that the defined benefit component of the plan satisfies prescribed post-purchase solvency thresholds.
We encourage pension plan administrators to review the new regulatory statement and consider its implications for any contemplated annuity purchases. Please contact our Pension and Employee Benefits Group for more information.