Welcome to the first post of 2020! In this post, we highlight some of the more significant legislative and regulatory developments in Ontario pensions in January 2020 and late 2019.
Pension Benefits Act (Ontario)
As we reported in our November 7, 2019 post, in October, 2019, the Ontario government introduced Bill 132, Better for People, Smarter for Business Act, 2019 (“Bill 132”). In December 2019, Bill 132 received Royal Assent. Among the amendments to the Pension Benefits Act (Ontario) (“PBA”) now in force as a result of Bill 132 are the following:
Former and Retired Member Biennial Statements: Under the PBA, a plan administrator is required to provide biennial statements to former and retired members. The CEO of FSRA (formerly the Superintendent of Financial Services) may now waive this requirement if he is satisfied that the administrator is unable to locate the former or retired member after making reasonable efforts to do so. The factors that the CEO must consider in determining whether the plan administrator has made reasonable efforts are set out in the legislation and include the amount of the pension and the searches undertaken by the administrator.
Electronic Communication: The PBA has been amended to add provisions intended to do the following: (i) facilitate electronic communication by deeming members and former members of a pension plan to have consented to receive certain documents in electronic form if certain conditions are met; and (ii) allow a plan administrator to send documents containing personal information electronically if the documents are sent through a secure information system that requires the recipient to identify themselves prior to accessing the document.
Not part of Bill 132 but in force effective January 1, 2020 are new rules under the PBA in respect of variable benefits. Prior to the new rules, Ontario members of defined contribution (“DC”) pension plans who terminated employment and wanted to begin receiving their retirement income were required to transfer their DC account balance out of the plan. The administrator of a DC plan is now permitted, but not required, to offer life income fund-type payments directly from the plan through the establishment of a variable benefits account. The new rules are quite extensive and include: provisions in respect of transfers in and out of the variable benefits account; the steps required to exercise a right to transfer; payment of death benefits; disclosure obligations; withdrawals from a variable benefits account; and family law matters.
Effective December 11, 2019, the General Regulation under the PBA was amended to change the threshold for determining whether pension fund financial statements must be audited from $3,000,000 to $10,000,000. As a result, audited financial statements are not required to be prepared or filed for plans with a year end on or after December 11, 2019. Unaudited financial statements are still required.
Financial Services Regulatory Authority
The Financial Services Regulatory Authority of Ontario (“FSRA”) has had a busy start to the New Year. On January 13th, it announced that it was seeking feedback on a supervisory approach for single employer defined benefit plans that are actively monitored, plans where there may be a concern over the security of benefits. Comments on the approach must be provided to FSRA by February 27, 2020.
FSRA also recently announced that the results of its targeted review of member termination and retirement option statements will be released in February. As discussed in our April 17, 2018 post, in late 2017, FSRA’s predecessor, the Financial Services Commission of Ontario (“FSCO”), announced that it was undertaking a series of “targeted reviews” of selected pension plans; and in February 2018, announced that it was undertaking a review of member option statements on termination and retirement. According to FSCO, the targeted reviews of selected pension plans was intended to: (i) help ensure compliance with the PBA and FSCO policies; (ii) identify common issues and trends; and (iii) determine if and what further guidance or education the industry may need
For further information on these changes, please contact Kim Ozubko at firstname.lastname@example.org or (416-597-4338), and subscribe to our A.M. Pension Blog series to stay informed on the latest developments.