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Federal government delays proposed changes to employee stock option tax rules

An in-depth look at this and other subjects covered in the current issue of the Morneau Shepell News & Views

TORONTO, Jan. 23, 2020 /CNW/ - Morneau Shepell released the January 2020 issue of its monthly newsletter, News & Views, in which the company looks at the following topics:

  • British Columbia amends Pension Benefits Standards Regulation – British Columbia has amended its Pension Benefits Standards Regulation to increase going concern funding requirements and reduce solvency requirements for provincially regulated defined benefit pension plans. The amendments also permit single employers to offer target benefit plans on a go-forward basis. The new funding framework applies to actuarial valuations with effective dates on or after December 31, 2019.
  • Ontario permits variable benefits in DC pension plans – On January 1, 2020, new variable benefit rules came into effect in Ontario, allowing former members of a defined contribution pension plan to receive a retirement income directly from the plan. The introduction of variable benefit accounts can make a pension plan more attractive to members, offer lower investment management fees and retain assets in the pension plan.
  • Developments affecting federally regulated pension plans – In the latest issue of its InfoPensions newsletter, the Office of the Superintendent of Financial Institutions included a number of announcements affecting federally registered pension plans. The announcements include introducing electronic filing of plan amendments, a new basic rate for annual plan assessments and an optional contribution schedule to inform trustees or custodians of amounts to be remitted by employers.
  • Federal government delays changes to employee stock option tax rules – The federal government has announced that changes to the tax treatment of employee stock options that had been proposed in June 2019 have been delayed and would not come into effect on January 1, 2020, as previously scheduled. A revised timeline for the implementation of the proposed changes is expected to be announced in the 2020 federal budget.
  • New and extended employment leave provisions in SaskatchewanSaskatchewan has adopted a number of new and extended employment leave provisions that will affect pension and benefit plan sponsors. The changes include increasing maternity, adoption and parental leave periods, introducing leave for the care of critically ill adult family members, and expanding interpersonal violence leave to include victims of sexual violence.
  • Tracking the funded status of pension plans as at December 31, 2019 – Morneau Shepell describes the funded status of pension plans at the end of 2019 based on three typical investment portfolios. A graph shows the changes in the financial position of a typical defined benefit plan since the end of 2018. A table shows the impact of past returns on plan assets and the effect of interest rate changes on solvency liabilities of a medium duration pension plan.
  • The impact of pension expense under international accounting as at December 31, 2019 – Morneau Shepell has shown the evolution of the pension expense for a typical defined benefit pension plan. Since the beginning of 2019, the pension expense has increased by 26 per cent (for a contributory plan) due to a decrease in discount rates despite the high returns on assets (relative to the discount rate).

About Morneau Shepell
Morneau Shepell is the leading provider of technology-enabled HR services that delivers an integrated approach to well-being through our cloud-based platform. Our focus is providing everything our clients need to support the mental, physical, social and financial well-being of their people. By improving lives, we improve business. Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement and benefits consulting, actuarial and investment services. Morneau Shepell employs approximately 6,000 employees who work with some 24,000 client organizations that use our services in 162 countries. Morneau Shepell is a publicly traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.

SOURCE Morneau Shepell Inc.

For further information: Heather MacDonald, Morneau Shepell, 416.390.2625, hmacdonald@morneaushepell.com