On November 5, 2026, the federal government released its 2026 Budget, Masters of our destiny (Budget). After several budget cycles with little for pension plans, this year's Budget includes several notable measures affecting individuals, plan sponsors and administrators.
What was announced
- RRSP-for-life: This new account would replace the requirement to convert an RRSP to a RRIF at age 71. Holders could keep it after age 71, subject to minimum withdrawals starting at age 72. Surviving spouses could become successor holders. Consultations are open until January 8, 2027.
- Revocation of pension plan registration: The Budget introduces specific tax consequences where the CRA revokes a plan's registration. The plan would also become a retirement compensation arrangement (RCA). A special tax of 10 per cent of the fair market value of the plan's property would be levied on the plan, subject to waiver or cancellation by the CRA. A deemed contribution of the value of all RPP assets (minus the 10 per cent tax) would be deemed made to the RCA, triggering a 50 per cent refundable tax on the deemed contribution. These measures would apply after 2026.
- Overhaul of Individual Pension Plan (IPP) rules: Three changes are proposed: IPPs with assets above 200 per cent of its pension liabilities would become revocable plans, the IPP definition would be expanded to capture more DB plans with related members, and IPPs would become subject to the advantage, prohibited investment, and non-qualified investment rules. Transition rules would apply.
- Federally regulated plans: The Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act would be amended to ease electronic communications, remove certain communication requirements for spouses and make technical changes. The government also plans to explore possible changes to the regulations under each statute.
- Missing members: Proposed amendments would allow the CRA to confirm to plan administrators whether a member is deceased.
These measures contain some welcome tax simplifications but will significantly increase the compliance burden on IPPs. They also reinforce the importance of ongoing compliance. Many measures are still proposals, so much will depend on draft legislation and the outcome of consultations.