Missing Pension Plan Members and Unclaimed Balances

June 27, 2018 | Kim Ozubko

Missing or unlocatable pension plan members and unclaimed balances under registered pension plans are a significant challenge for plan administrators. On June 21, 2018, the Canadian Association of Pension Supervisory Authorities (“CAPSA”) published draft “Guideline #9: Searching for Un-locatable Members of a Pension Plan” (“Draft Guideline”). On June 22, 2018, the federal government published a consultation paper entitled “Modernization of the Unclaimed Balances Regime and Proposals for an Unclaimed Pension Balances Framework” (“Consultation Paper”).” CAPSA is accepting comments on the Draft Guideline until August 2, 2018; the federal government is accepting comments on the Consultation Paper until August 21, 2018. In this blog post, we briefly review both the Draft Guideline and the Consultation Paper.

Draft Guideline

Significant time and effort is spent by plan administrators in trying to find members who have terminated their plan membership but still have benefits under the plan. As described in a letter to stakeholders released with the Draft Guideline, the Draft Guideline “is part of CAPSA’s strategic initiative to provide guidance to plan administrators on searching for un-locatable/missing members.”

The Draft Guideline sets out a number of best practices for plan administrators in dealing with missing members. These include:

  • Records Retention and Management: To minimize the loss of member and beneficiary information, CAPSA recommends that plan administrators develop and implement a comprehensive records retention policy. According to CAPSA, that policy should include a component that sets out how the plan administrator will maintain contact with former and retired members.
  • Searching for un-locatable members: CAPSA reminds plan administrators that it is their responsibility to conduct a search for un-locatable or missing members but acknowledges that in most jurisdictions in Canada, there is no legislative framework or standardized process in place for doing so. Common search tools, as noted by CAPSA, include: searches of government databases, professional search organizations and the mailing of registered letters to the last known address of the member.
  • Steps to consider after an Unsuccessful Search: CAPSA identifies a number of potential options available to plan administrators after an unsuccessful search including the Canada Revenue Agency letter forwarding service. CAPSA also suggests that “where feasible, plan administrators could establish a database/registry of missing members on the sponsoring employer or the administrator’s website.”

Consultation Paper

Unclaimed balances arise when a pension is supposed to be paid under a plan, but the person entitled to the benefit has not claimed it. According to the federal government, the “proposed unclaimed pension balances framework is intended to safeguard the unclaimed pension funds of unlocatable beneficiaries and help beneficiaries reclaim their funds, and help relieve the burden for plan administrators of administering these unclaimed balances.” The proposed framework, which would apply to federally registered plans only, would be set out under the Pension Benefits Standards Act, 1985 (Canada) (“PBSA”) and includes the following elements:

  • Designated Entity: Section 10.3 of the PBSA allows the federal Minister of Finance, with the approval of the Governor in Council, to designate an entity to receive and hold the assets related to the pension benefit credits of people who cannot be located and to disburse those funds in a lump sum. To date, no entity has been designated. Under the Consultation Paper, it is proposed that the designated entity be the Bank of Canada.
  • Application to Terminated vs. Ongoing Plan: It is proposed that the new framework apply only to terminated plans although it is noted, in the Consultation Paper, that consideration may be given to expanding the framework to ongoing pension plans at a later date.
  • Transfers to the Designated Entity: It is proposed that the transfer of unclaimed balances to the designated entity be subject to the approval of the federal pension regulator, the Office of the Superintendent of Financial Institutions.
  • Information Provision: When transferring funds to the designated entity, it is proposed that the plan administrator be required to provide certain information related to the funds including the name, last known address and social insurance number of the person who accrued the pension balance and the name and address of the plan administrator.

The Consultation Paper also sets out the proposed approaches to claiming funds from the designated entity, payment of interest and fees, and tax obligations.

For further information, please contact Kim Ozubko at kozubko@millerthomson.com or (416-597-4338),
or subscribe to our A.M. Pension Blog and webinar series to stay informed on latest developments.


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