The variable benefit provisions of the Ontario Pension Benefits Act (PBA), together with the Variable Benefit Regulations, came into force on January 1, 2020.

The Variable Benefit Regulations are made up of three Regulations:

A plan administrator is now allowed to make Life Income Fund (LIF)-like payments directly from a defined contribution (DC) pension plan if the plan terms permit a retired member to establish a variable benefit account under the DC plan, rather than the retired member transferring their DC account balance to a financial institution to start receiving retirement income.

This variable benefit regime permits (but does not require) a DC pension plan to offer variable benefits to its retired members.

Variable benefits are considered ‘variable’ because a retired member can direct how much income is to be annually paid out of their variable benefit account, subject to the minimum amount required to be withdrawn by the federal Income Tax Act (ITA) and the maximum amount as set out in the Variable Benefit Regulations.

Should a DC plan sponsor wish to provide variable benefits, the plan sponsor must amend the plan terms to provide for variable benefits. The plan sponsor and plan administrator must ensure that all legislative and regulatory requirements are met.

If a plan sponsor chooses to amend its pension plan to provide variable benefits, then the plan administrator must develop its own processes and forms to document that all statutory and regulatory requirements have been met. In addition, the plan administrator must use certain forms approved by FSRA (Variable Benefit Forms) in the circumstances outlined in the variable benefit provisions of the PBA and the Variable Benefit Regulations.

The following Variable Benefit Forms are the FSRA approved Forms that are required to be used under the PBA and the Variable Benefit Regulations:

  • Form VB 1 - Waiver of Joint and Survivor Pension – Variable Benefit Account
    This Form is to be used if a retired member has a spouse and wishes to establish a variable benefit account.

  • Form VB 2 - Application to Withdraw or Transfer up to 50% of Amount Transferred to a Variable Benefit Account
    This Form is to be used within 60 days of establishing a variable benefit account by a retired member who wishes to unlock and withdraw or transfer up to 50% of the amount transferred to the variable benefit account at the time it was established.

  • Form VB 3 - Direction of Retired Member to Transfer an Amount out of a Variable Benefit Account
    This Form is to be used by a retired member who is receiving variable benefit payments and wishes to transfer an amount out of their variable benefit account on a locked-in basis.

  • Form VB 4 - Spousal Waiver of Death Benefit from a Variable Benefit Account
    This Form is to be used by a spouse who wishes to waive the right to receive a death benefit from a retired member’s variable benefit account.

  • Form VB 5 - Direction of Spouse as Specified Beneficiary to Continue Receiving Variable Benefit Payments
    This Form is to be used by a spouse who is a specified beneficiary who wants to elect within 90 days after the death of a retired member to continue to receive variable benefit payments. Form VB 5 is not designed to be an option form. It is designed to be a supplementary form to be completed only if a spouse as a specified beneficiary elects to continue receiving variable benefit payments.

  • Form VB 6 - Direction of Spouse as Specified Beneficiary to Transfer an Amount out of a Variable Benefit Account
    This Form is to be used by a spouse who is a specified beneficiary receiving variable benefit payments and who wishes to transfer an amount out of a variable benefit account on a locked-in basis.

If the variable benefit account is to be valued and/or divided on marriage breakdown, the following FSRA family law forms must be used:

Member/Spouse forms:

  • Application for Family Law Value – Variable Benefit Account (FSRA Family Law Form FL–VB1)
    This Form is to be used by a retired member and/or a married spouse of the retired member to request the Family Law Value of the variable benefit account.
  • Joint Declaration of Period of Spousal Relationship – Variable Benefit Account (FSRA Family Law Form FL–VB2)
    This Form is to be jointly completed by the retired member and their spouse to provide proof of the starting date and/or the separation date of their spousal relationship period.
  • Contact Person Authorization – Variable Benefit Account (FSRA Family Law Form FL VB3)
    This Form is to be used by the retired member and their spouse to authorize their lawyers or another person, if applicable, to communicate with, and receive information from, the plan administrator about the calculation and division of the Family Law Value of the variable benefit account.
  • Application to Transfer the Family Law Value – Variable Benefit Account (FSRA Family Law Form FL–VB5)
    This Form is to be used by the retired member’s spouse to request the transfer of their share of the Family Law Value of the variable benefit account.

Plan administrator form:

  • Statement of Family Law Value - Variable Benefit Account (FSRA Family Law Form FL–VB4)
    This Form is to be used by the plan administrator to provide the retired member and their spouse the Family Law Value of the variable benefit account upon receipt of a completed Application for Family Law Value – Variable Benefit Account (FSRA Family Law Form FL–VB1).