2026 Federal Budget: Selected Pension and Registered Plan Measures

On November 5, 2026, the federal government tabled its 2026 budget (Budget 2026), which included a number of provisions related to registered pension plans and other registered plans.

The following is an overview of the key pension and registered plan provisions in Budget 2026 and the accompanying Supplementary Information for Tax Measures, which are discussed under the following headings in further detail below:

• Merging Tax Rules Applicable to Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs)
• Enabling Information-Sharing Between the Canada Revenue Agency (CRA) and Pension Plan Administrators for Deceased Members
• Amending Administrative Requirements for Federally Regulated Registered Pension Plans (RPPs)
• Advancing Environmental, Social, and Governance (ESG) Disclosure Requirements, Reducing Regulatory Burden and Tax Treaty Considerations
• Tax Consequences of Revocation of an RPP
• Registered Disability Savings Plans (RDSPs)
• Individual Pension Plans (IPPs)

Merging Tax Rules Applicable to RRSPs and RRIFs

Budget 2026 proposes to merge the Income Tax Act (Canada) (ITA) rules applicable to RRSPs and RRIFs, and to introduce a new “RRSP-for-life.” The proposed changes would eliminate the need for individuals to convert their RRSP to a RRIF at age 71, and would also allow an eligible surviving spouse or common-law partner of a deceased RRSP annuitant to become the “successor holder” of the RRSP. The proposed changes also aim to simplify tax-free transfers to qualified survivors after the death of an RRSP annuitant. The proposed “RRSP-for-life” would retain the core features of RRSPs and RRIFs, including requiring individuals over the age of 71 to make minimum withdrawals.

The federal government is seeking Canadians’ views on this proposal by January 8, 2027. Interested parties are invited to send representations to the federal Department of Finance at [email protected]. The specific issues being considered by the federal government are:

• Whether and how the RRSP rules could include a “successor holder” (i.e., a spouse or common-law partner) feature similar to other registered vehicles. This could permit an RRSP to remain open until the death of the successor holder (i.e., the original holder’s surviving spouse or common-law partner) and avoid the value of RRSP property being included in the income of the deceased.
• Whether and how the current RRSP indirect “rollover” provisions that apply on death (including an income inclusion and offsetting deduction for a qualifying survivor) could be replaced with rules to permit a direct tax-free transfer to a qualified registered vehicle of a qualifying survivor. This would be the case, for example, for various types of locked-in vehicles provided under pension benefits standards legislation such as locked-in retirement accounts and life income funds.

Budget 2026 notes that merging the RRSP and RRIF rules could also require consequential changes to the federal Pension Benefits Standards Regulations, 1985 (as well as similar provincial pension standards legislation).

Enabling Information-Sharing Between the CRA and Pension Plan Administrators for Deceased Members

In some circumstances, RPP administrators may have difficulty maintaining contact with former plan members. Where a plan administrator is unable to contact a former plan member, this can result in the member failing to claim their pension benefits. Where a member is deceased, a plan administrator may be unable to locate their beneficiary(ies), and as a result, be unable to distribute the former member’s benefits appropriately.

Notably, the CRA holds taxpayer data that could, in some cases, help identify missing plan members (and/or their beneficiary(ies)) and allow plan administrators to distribute their benefits appropriately. However, section 241 of the ITA generally prohibits the CRA from providing any “taxpayer information” (including confirmation as to whether or not a plan member is deceased).

Budget 2026 proposes to amend the ITA to permit the CRA to confirm, to the administrator of an RPP (for both federally and provincially regulated pension plans), whether or not a plan member is deceased. This measure would apply on Royal Assent of the enacting legislation.

Amending Administrative Requirements for Federally RPPs

Budget 2026 proposes to amend the Pension Benefits Standards Regulations, 1985 and the Pooled Registered Pension Plans Act (1) to remove certain required communications to spouses and common-law partners, (2) to allow certain members of pooled registered pension plans to set their own contribution rates, and (3) to make other technical amendments. The government also intends to “identify ways to reduce burden and red tape” for federally regulated RPPs through a review of the Pension Benefits Standards Regulations, 1985 and the Pooled Registered Pension Plans Act.

Advancing ESG Disclosure Requirements, Reducing Regulatory Burden and Tax Treaty Considerations

Budget 2026 confirms that the federal government continues to advance disclosure requirements for ESG considerations, including climate-related risks, for federally regulated RPPs, as part of a broader initiative to improve the transparency and governance of these plans. Budget 2026 also notes that the federal government aims to expand its network of tax treaties to ensure that Canada remains a competitive location for future investments by pension funds.

Tax Consequences of Revocation of an RPP

Budget 2026 proposes to set out, and in some respects clarify, specific tax consequences where the CRA revokes the registration of an RPP. The revoked RPP would be subject to a special tax of 10% of the fair market value of the RPP’s property immediately before the revocation (subject to cancellation or waiver of the tax liability by the CRA if it considers it just and equitable to do so in the circumstances). The revoked RPP would also be deemed to be a “retirement compensation arrangement” (RCA) under the ITA, and the administrator of the revoked RPP would be deemed to be the custodian of the RCA. An amount equal to the fair market value of the RPP’s property (less any revocation tax payable by the RPP as mentioned above) would be deemed to be contributed to the RCA, resulting in the RCA being required to remit a 50% refundable tax on the deemed contribution. These proposed changes would apply to revocations of RPPs on or after January 1, 2027.

RDSPs

Budget 2026 proposes, as of January 1, 2027, permanently allowing a qualifying family member to open an RDSP on behalf of an adult beneficiary whose ability to enter into a contract for an RDSP is in doubt due to a mental impairment and who does not have a legal representative. A qualifying family member may be a parent, spouse or common-law partner, or sibling of the beneficiary. This would make permanent the temporary measure currently in place that allows a qualifying family member of such a beneficiary to open an RDSP and be the plan holder.

IPPs

Budget 2026 proposes several changes to the rules governing IPPs.

IPP Definition

IPPs are, for purposes of the ITA and its regulations, defined benefit (DB) RPPs that (1) have fewer than four members and at least one of them is related to a participating employer in the plan, or (2) are a designated plan and it is reasonable to conclude that the rights of one or more members to receive benefits under the plan exist primarily to avoid the application of (1). Budget 2026 proposes to expand the definition of an IPP also to include DB RPPs where all members are either (1) related to a participating employer, or (2) not dealing at arm’s length with a member that is related to a participating employer, in each case, irrespective of how many members there are. This proposed change would apply as of January 1, 2027.

Surplus

Budget 2026 proposes to impose a requirement that if the value of an IPP’s assets exceeds 200% of its actuarial liabilities, the IPP would become a “revocable plan” for RPP registration purposes. This proposed change would apply as of January 1, 2028.

Anti-Avoidance Rules

IPPs are not currently subject to certain anti-avoidance rules that apply to other registered plans held by individuals, such as Tax-Free Savings Accounts or RRSPs. Budget 2026 proposes to subject IPPs to the same anti-avoidance rules that currently apply to other registered plans of a “controlling individual” and to expand that definition to include a member of an IPP who controls the plan or a participating employer in relation to the IPP. This would subject IPPs to advantage rules that prevent the exploitation of the tax attributes of registered plans, prohibited investment rules and non-qualified investment rules.

If an IPP were then to acquire a prohibited or non-qualified investment, or if the controlling individual in respect of an IPP were to receive an advantage, the controlling individual of the IPP would owe a tax equal to 50% of the fair market value of the prohibited or non-qualified investment, or 100% of the value of the advantage. These proposed changes would apply as of January 1, 2028, and certain transitional rules would apply.

For further information, please contact any member of our Pension, Benefits & Executive Compensation group.