Defined Contribution Plan Law Changes

The 2020 Pension and Retirement Bill that was passed into law includes changes to investment return allocations for members of relief associations with a defined contribution plan. Inactive members and deferred members must now be credited with investment returns on the assets of the special fund and investment fees. Note that these changes apply to defined contribution plans only; no changes were made to interest options for defined-benefit plan members.

Investment gains or losses for inactive members must be credited on a pro rata basis, in proportion to the share of the special fund assets to the credit of each individual inactive member account. This means that investment returns for inactive members must now be allocated in the same manner as investment returns are credited to active members. This law change affects allocations to inactive members beginning with the 2020 Defined Contribution Allocation Table.

Beginning January 1, 2021, deferred members of defined contribution plans must be credited with investment returns. This new requirement applies to members who are currently deferred, and to future deferred members. There are three options for crediting investment returns to defined-contribution plan deferred members. The options are:

1. Crediting the rate actually earned on a separate investment account;
2. Crediting the rate actually earned on a separate investment vehicle;
3. Crediting full investment gains and losses, allocated in the same manner as for active members.

If a relief association’s bylaws do not define a method for crediting investment returns, deferred members will be credited with full investment gains and losses under option 3 above, beginning on January 1, 2021.

Beginning January 1, 2025, the default deferred interest credit method for all relief associations with a defined contribution plan is to allocate interest or additional investment performance to each deferred member account beginning on the date that the member separates from active service and membership and ending on the last date the account is valued before the final distribution of the deferred service pension.

Additional Resources

More information can be found in a Statement of Position that provides additional information regarding statutory requirements for deferred interest types, credit methods, membership eligibility and the timing of deferred interest rates. Another resource on deferred interest types and credit methods for defined contributions plans can be found in a training video on this topic. Relief associations can refer to our Bylaw Guides for language on each of the interest types and credit methods identified above.

Last Updated April 2025