May 11 Benefits and Pensions Monitor Daily News Alerts
Joe Hornyak
Former editor of Benefits and Pensions Monitor and founder of Joe Hornyak Communications
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Guidance Lifts Transfer Freeze
OSFI has updated a guidance on its freeze on transfers from pension plans. It will now automatically consent to portability transfers to locked-in vehicles for members within 10 years of pensionable age as long as the amount transferred out of the pension plan does not compromise the plan’s financial position. It says “Some plans allow members who are within 10 years of pensionable age […] to transfer the value of their pension benefit out of the plan. Therefore, the portability freeze has resulted in individuals not having expected access to funds that they had planned on using for their retirement.” The updated directive will help accommodate plan members who were counting on being able to access funds, while at the same time guarding against transfers out that would impair plan solvency. It applies only to transfers to locked-in retirement vehicles, such as LIRAs or LIFs. Transfers to other pension plans or to purchase an annuity still require the consent of the superintendent. Any transfers to locked-in vehicles that were in process on March 27 for members who were within 10 years of pensionable age at the time their plan membership ended would be processed. However, any amounts in a plan on March 27 would continue to be subject to the freeze, save for transfers allowed with the consent of the superintendent. It also indicated that plan administrators must process transfers on behalf of members who are eligible for early retirement. The freeze is meant to be temporary, but an end date was not announced. OSFI says it “will need a better understanding of the solvency position of pension plans and evidence of some level of financial market stability before considering adjustments to the freeze.”
Gori Cautions About Reopening Economies
Manulife Financial Corp’s chief executive has cautioned against reopening economies shut by the COVID-19 pandemic. A “dramatic increase” in testing and contact tracing, and progress on development of treatments and a vaccine are needed before economies can begin returning to normal, said Roy Gori said at its annual shareholder meeting. “We cannot afford to get this wrong,” he said. “Subsequent pandemic waves could create greater economic and social devastation than we’ve already seen.”
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