In late 2017, the Ontario pension regulator, the Financial Services Commission of Ontario (“FSCO”), announced that it was undertaking a series of “targeted reviews” of selected pension plans. There have now been two FSCO targeted reviews announced with more expected later this year. In this post, we discuss what a plan administrator can expect from a targeted review of its plan.
Purpose of Targeted Reviews
According to FSCO, the targeted reviews of selected pension plans will: (i) help ensure compliance with the Pension Benefits Act (Ontario) (“PBA”) and FSCO policies; (ii) identify common issues and trends; and (iii) determine if and what further guidance or education the industry may need. Upon completion and analysis of a targeted review, FSCO intends to share its findings with stakeholders on an aggregate basis. Plan-specific data will not be shared.
The Targeted Review Process
FSCO has not indicated the basis on which plans are being or will be selected for a targeted review but has committed to posting a notification on its website before each targeted review begins.
If a plan is selected for a targeted review, the plan administrator will be contacted by FSCO, by mail or email, and advised that its plan has been selected for review. The plan administrator will be advised that it has a defined period of time (30 days in both reviews undertaken to date) to provide requested information.
Targeted Review Announcements
As mentioned, to date, FSCO has announced two targeted reviews. More specifically, in November 2017, it announced that it would be undertaking a review of Form 7, Contribution and Reporting Monitoring Process; and in February 2018, FSCO announced that it would be undertaking a review of Member Option Statements on termination and retirement.
Form 7 Targeted Review
According to FSCO, the focus of the Form 7 review is to identify whether: (i) administrators are completing Form 7 correctly; and (ii) pension fund trustees are reporting non-remittances and / or variances. Under the PBA, pension plan administrators are required to complete Form 7 and file the form with the pension fund trustee on an annual basis. In turn, the trustee is required to notify the Ontario Superintendent of Financial Services if it does not receive a Form 7 or if a contribution is not paid in accordance with Form 7.
FSCO considers the contribution reporting and monitoring process an important tool that helps it become aware of any non-remittance and contribution variances. It is not surprising, therefore, that a review of Form 7 was the first targeted review announced by FSCO.
Member Option Statement Targeted Review
Member option statements are an important part of plan administration and member communication. The required content and timelines for delivery to members are defined under the PBA and related Regulations.
The focus of the Member Option Statement review is also compliance focused. FSCO has indicated that the review will focus on whether plan administrators are: (i) meeting legislated requirements for statement content and prescribed timelines; and (ii) calculating commuted values in accordance with plan provisions. The statements to be reviewed are restricted to those in respect of Ontario members who were active members up to their date of termination or retirement.
While the purpose of the targeted reviews is not to “catch” non-compliant plan administrators, the introduction of the reviews again signals an increased emphasis on compliance in Ontario. Plan administrators need to be aware of, and comply with, their obligations under the PBA.
For further information, please contact Kim Ozubko at firstname.lastname@example.org or (416-597-4338),
or subscribe to our A.M. Pension Blog and webinar series to stay informed on latest developments.