Ontario Pension Plan Update: Ongoing Consultations of Interest
Date: September 15, 2023
Ontario’s Ministry of Finance (Ministry) and the Financial Services Regulatory Authority (FSRA) have issued two separate consultations of interest to employers related to the design and governance of pension plans in Ontario.
Consultations on “A Permanent Framework for Target Benefit Plans”
The Ministry has published a second consultation paper regarding its proposed target benefit framework. The paper is a response to feedback received on the first consultation paper released earlier this year. (For further details on the initial consultation process, please see our FTR Now of May 4, 2023, Ontario Government Consultation on Permanent Framework for Target Benefit Plans.)
The proposed framework will replace temporary regulations for Specified Ontario Multi-Employer Pension Plans first introduced in 2007, which are scheduled to expire in 2024. The proposed framework is solely limited to multi-employer pension plans (MEPPs), establishing a framework that would enable such pension plans to convert into target benefit plans. The proposed framework does not apply to single employer pension plans.
In response to stakeholder feedback, the Ministry has revised certain proposals in the second consultation paper including:
- revising the approach to the provision for adverse deviations (PfAD) to allow plan administrators the discretion to establish their plan’s PfAD in line with the plan’s funding and benefits policy
- streamlining requirements for the conversion process
- permitting plan administrators to include a reduction by the plan’s going concern funded status in the commuted value calculation upon termination if required by the terms of the plan
- requiring plan administrators to establish and file a communications policy, including new proposed minimum requirements for the information to be communicated to members
The proposed framework will be of interest to employers who participate in MEPPs as well as unions and boards of trustees involved in the governance of such plans.
Comments on the proposed changes can be submitted until October 17, 2023.
FSRA Guidance on Pension Plan Administrator Roles and Responsibilities
FSRA, the Ontario pension regulator, has released a proposed update to the Pension Plan Administrator Roles and Responsibilities Guidance (Guidance).
The Guidance provides FSRA’s interpretation of the role and responsibilities of pension plan administrators and, while not law, reflects many of FSRA’s expectations for pension plan administrators. The amended Guidance provides further guidance with respect to fiduciary duties, and proposes new sections addressing:
- managing and retaining records, including guidance on the use of management and retention policies, data security and schedules of reasonable retention periods
- responding to complaints and inquiries in a manner that is accessible, fair, timely, transparent and effective
- communicating information to plan members accurately, in a clear manner and within a reasonable period of time
The revised Guidance will be of interest to pension plan administrators, especially as the revised Guidance includes a clear statement that it reflects, “FSRA’s view of requirements under the PBA [Pension Benefits Act] so that non-compliance can lead to enforcement or supervisory action.” The Guidance also contains FSRA’s views about good or best practices.
Comments on the proposed guidance are due by September 28, 2023.
Should you have any questions or require further information, please contact any member of Hicks Morley’s Pension, Benefits and Executive Compensation Group.
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