The mandatory contributory Canada and Quebec Pension Plans (basic social security scheme) provide a maximum retirement pension equal to 25 per cent of the contributor's career average monthly pensionable earnings (up to a specified maximum level of earnings), and are intended to provide a basic level of earnings replacement in retirement. Occupational pension plans are therefore an important supplementary element in helping workers to achieve adequate retirement income through additional earnings replacement.

Pooled Registered Pension Plans (PRPPs): The PRPP is re a new accessible retirement savings option for employees and self-employed persons that pools the funds in members' accounts to achieve lower costs in relation to investment management and plan administration. Like RPPs, PRPPs must be registered with the CRA to benefit from tax-deductible contributions and tax-deferred treatment and must also be registered with the relevant federal or provincial pension supervisory authority.

The federal government has entered into a multilateral agreement with the provincial governments of British Columbia, Nova Scotia, Ontario, Québec and Saskatchewan with respect to PRPPs. The agreement is intended to make the licensing, registration and regulation functions for PRPPs more efficient.

Unregistered plans: Unregistered pension plans (usually known as Retirement Compensation Arrangements (RCAs) and Supplemental Employee Retirement Plans (SERPs)) may be established for high-income employees to provide for contributions or benefits in excess of the limits specified under the RPP tax rules. Unregistered plans may be unfunded (in which case they are paid from company resources on a pay-as-you-go basis) or funded (whereby the company allocates resources to fund the pensions).

Unregistered plans do not receive tax advantages and are not covered further in the following sections.

Other plans: Other tax-assisted plans that may be used for retirement saving include: Registered retirement savings plans (RRSPs -- individual tax-deferred retirement savings plans); Deferred profit-sharing plans (DPSPs -- tax-deferred plans that may be provided by an employer); and Tax-Free Savings Accounts (TFSAs - individual tax-prepaid plans that may be used for any savings purpose, including retirement saving). These plans are not subject to the various pension standards legislation (but do receive tax advantages under the Income Tax Act) and are not covered further in the following sections.

The pension plan administrator must establish a written Statement of Investment Policies and Procedures based on the prudent person portfolio approach that a reasonable and prudent person would apply to the investment portfolio of a pension fund.

There are quantitative investment limits established at federal level which are adopted by most of the provincial authorities to provide a harmonized standard for all jurisdictions.

Of total assets invested, a maximum of:

- 30 per cent may by invested in holding voting shares of a single company;
- 10 per cent may be invested in securities issued by a single company or by a group of affiliated companies.

For defined benefit RPPs, the tax rules generally limit survivor benefits to a maximum of two-thirds of a member's accrued pension.

Defined benefit registered pension plans: Pension plans must submit actuarial valuations to the OSFI every three years (annually if the plan was in deficit the previous year). The actuarial valuation must be prepared in accordance with standards established by the Canadian Institute of Actuaries and must include a going concern valuation, which uses assumptions consistent with the plan continuing in operation, and a solvency valuation, which uses assumptions consistent with the termination of the plan.

The Office of the Superintendent of Financial Institutions (OSFI) has published guidelines with regard to the selection of service providers.

Fee structures and amounts are regulated in plan rules.

The Office of the Superintendent of Financial Institutions (OSFI) has the power to terminate a plan if it deems this to be in the best interest of the plan members. This action may be warranted in a situation where an insolvent sponsoring employer has stopped funding the plan and has failed to file a termination report, thereby threatening the security of the members' benefits.

If the plan is terminated, OSFI oversees the process to ensure that it is handled in accordance with the legal rules. In this respect, a termination report will be filed with the regulator and no disbursement of funds will be permitted until the OSFI approves this report.
Most provincial regulators also have the authority to terminate a plan if it is in the best interest of plan members. The provincial standards legislation provides a process similar to that described for OSFI with respect to the filing and approval of a termination report, and the distribution of assets under prescribed circumstances.

If the sponsor is acquired by another company, the successor employer may choose to continue the existing plan, to transfer the assets from the old plan into its own plan or not to continue the plan, unless the plan is established by a collective labour agreement.

If the successor employer continues to operate the plan as it existed prior to the acquisition, employees continue to accrue benefits as before. If members of the existing plan become members of the new employer's plan, the new employer may choose to assume the liabilities and transfer the assets to its own plan. If the employer chooses to transfer assets into the new plan, it needs the approval of the OSFI. If the new employer does not assume responsibility for the accumulated benefits, the old employer remains responsible for those pension benefits accumulated up to the date the business was sold. The new employer is responsible for the pension benefits accumulated thereafter.

Legislation requires the safeguarding of entitlements during merger and acquisition.

Ontario is the only Canadian jurisdiction to have a Pension Benefits Guarantee Fund that offers protection for pension benefits. It applies only to single employer plans and individual coverage is limited to a monthly maximum of CAD 1,000 plus a proportion of benefits included in the calculation of the wind-up liability.

Good governance principles dictate that there is transparency and full disclosure to all members.

There are no legal provisions for resolving complaints or disputes between plan members or beneficiaries and the trustees or fund administrators. However, good governance principles aim at resolving disputes before legal action is taken.