There have been a number of significant legislative and case-law developments in the area of pensions and benefits law in 2018. In Part I of a two-part blog post, we highlight some of the key legislative developments in Ontario and the federal jurisdiction. In Part II, we will highlight some of the key case-law developments.
Digital Privacy Act
In June 2015, the Canadian federal government passed the Digital Privacy Act pursuant to which a number of amendments were made to the Personal Information Protection and Electronic Documents Act (Canada) (“PIPEDA”). The most significant of such amendments were the provisions in respect of mandatory breach notification and recordkeeping. Effective November 1, 2018, these provisions came into force.
As a result of the new provisions, organizations subject to PIPEDA, which could include an employer plan sponsor or administrator, are required to notify the federal Privacy Commissioner and the affected individuals of a breach involving plan member information where it is reasonable to believe the breach creates a “real risk of significant harm” to affected individuals. The affected organization is also required to notify any other organization or government institution which it believes may be able to reduce the risk of or mitigate the harm caused by the breach. Under the new recordkeeping provisions, the affected organization must also keep a record of the breach.
On November 15th, Bill 57, Restoring Trust, Transparency and Accountability Act, 2018 (“Bill 57”) was introduced for first reading in the Ontario legislature. If passed, Bill 57 will make several amendments to the Pension Benefits Act (Ontario)(“PBA”), including:
- the addition of provisions expressly allowing plan administrators to permit members, former members and retired members to designate beneficiaries electronically; and
- the addition of provisions permitting unlocking for former members of a pension plan who are non-residents, provided that, if the former member has a spouse, that spouse has waived his or her rights to the former member’s pension.
Defined Benefit Plan Funding Reform
Effective May 1, 2018, the rules under the PBA in respect of the funding of defined benefit plans were significantly revised. The most significant change was the elimination of the requirement to fund an Ontario registered defined benefit pension plan on a solvency basis if the solvency funded status of the plan is 85% or greater.
In its November Fall Economic Statement, the Ontario government indicated that it is moving forward with legislative and regulatory changes that, if passed, “will facilitate the implementation of variable benefit accounts, allowing retired members of defined contribution pension plans to receive income directly from their plans.” According to the government, the introduction of variable benefit accounts will expand the options available to retired members and reduce “red tape” for retired members of defined contribution plans.
Retired members of defined contribution plans registered in Ontario cannot currently receive retirement income directly from the plan.
Administrative Monetary Penalties
Effective January 1, 2018, the PBA was amended to give the Ontario Superintendent of Financial Services (the “Superintendent”) the authority to impose a general or summary administrative monetary penalty on a person, which could include a plan sponsor or administrator, if the Superintendent is satisfied that the person is contravening or not complying with or has contravened or failed to comply with a prescribed provision of the PBA or PBA Regulations. The maximum amount of penalty, which cannot be paid from the plan fund, is defined in the legislation: $25,000 by a person, other than an individual, and $10,000 by an individual.
In November 2018, the Financial Services Commission of Ontario published an Administrative Penalties Guideline which provides further information and guidance on the new regime.
For further information on any of the above changes, 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.