Summary of stakeholder comments – Consultation on revised Pension Plan Amendments Guidance | Financial Services Regulatory Authority of Ontario

Purpose of consultation

The Financial Services Regulatory Authority of Ontario (FSRA) is taking steps to help ensure that pension plan administrators are following the provisions of the Pension Benefits Act. FSRA is revising its Pension Plan Amendments Guidance after receiving substantive feedback from stakeholders during its second consultation in Fall/Winter 2023.

The Pension Plan Amendments Guidance outlines for plan administrators:

FSRA’s interpretation and approach to certain Pension Benefits Act (PBA) provisions relating to retroactive adverse amendments
FSRA’s approach to amendments that purport to replace a variable indexation formula with a fixed indexation rate for benefits already accrued
FSRA’s approach to notice requirements for certain adverse amendments

Outcome of consultation:

As a result of FSRA’s second consultation, the following changes have been reflected in the final version of the Guidance:

updated the language to clarify purpose and scope of Guidance, including the scope of application of the Guidance to certain plan types (Purpose section and footnotes under the Scope, Interpretation and Approach sections)
updated certain language to provide great clarity and transparency relating to FSRA’s interpretation and approach on the topic of “Retroactive Adverse Amendments.”
updated language to encourage administrators to contact FSRA where there are special circumstances, such as wind up, that may exist in the context of the question of replacing a variable indexation formula (Replacing a variable indexation formula with a fixed rate section)
updated language to clarify references to certain statutory obligations (Notice requirements for prospective adverse amendments section)

The Guidance will be effective upon publication and will replace the version released in August 2022.

Feedback from the sector:

FSRA received 16 submissions with feedback on the Guidance during or following the consultation period. The most recent consultation began on November 14, 2023 and ended on January 19, 2024. The submissions and comments are also available on FSRA’s website. In the case of two submissions, there were multiple signatories to the submission. In another case, multiple stakeholders wrote in separately endorsing a single submission.

FSRA thanks all commenters. FSRA carefully considered all comments before finalizing and issuing the Guidance.

Contributors:

The following stakeholders took the time to share their perspectives with FSRA:

	Organization	Commenter
1.	Multi-Employer Benefit Plan Council of Canada (MEBCO)	Alex McKinnon, President
2.	Canadian Benefits Law	J.D. Vincent, Founder
3.	N/A	Terry Searles
4.	Ontario Bar Association (OBA)	Tyler Jensen, Senior Policy Counsel
5.	Mercer	Anastasia Soldatos, Principal
6.	Segal	Kevin Rozek, Senior Vice President, Canadian Business Leader
7.	Canadian Life & Health Insurance Association (CLHIA)	Noeline Simon, VP Taxation, Pension and Reporting
8.	Osler Hoskin & Harcourt LLP	Andrea Boctor, Partner, Chair, Pensions and Benefits
9.	McCarthy Tetrault LLP	Susan Nickerson, Partner, Head, Pensions, Benefits, & Executive Compensation
10.	Blake, Cassels & Graydon LLP	Jeff Sommers, Partner
11.	Stikeman Elliott LLP	Natasha vandenHoven, Partner, Head of the Pensions & Benefits Group
12.	Brown Mills Klinck Prezioso LLP	Lindsay McLeod, Partner
13.	Fasken Martineau DuMoulin LLP	Ross Gascho, Partner, Leader, Pensions and Benefits; Allyson Marta, Partner
14.	Torys LLP	Stephanie Kalinowski, Partner
15.	The Association of Canadian Pension Management (ACPM)	Ric Marrero, CEO; Karen Burnett Chair, Ontario Regional Council
16.	Willis Towers Watson	Rohan Kumar, Director-Retirement-Actuarial; Michelle Rival, Director-Retirement
17.	Ontario Federation of Labour	Laura Walton, President
18.	Canadian Union of Public Employees (CUPE)	Fred Hahn, President
19.	United Steelworkers Local Union 1005	Ron Wells, President
20.	Ontario Public Service Employees Union (OPSEU)	JP Hornick, President
21.	United Steelworkers Local Union 2251	Mike D Prat, President
22.	Cavalluzzo LLP	Cynthia Crysler, Partner, Leader, Pensions and Benefits
23.	Goldblatt Partners LLP	Susan Philpott, Partner
24.	Koskie Minsky LLP	James Harnum, Partner
25.	Ursel Phillips Fellows Hopkinson LLP	Karen Ensslen, Lawyer
26.	Wright Henry LLP	Danielle Stampley, Partner

Feedback summary and FSRA’s responses:

General views on the Guidance (Scope)

Stakeholders	Summarized comment	FSRA’s response
ACPM OBA MEBCO Ontario Federation of Labour United Steelworkers Local Union 2251 United Steelworkers Local Union 1005 Joint submission (Cavalluzzo LLP, Goldblatt Partners LLP, Koskie Minsky LLP, Ursel Phillips Fellows Hopkinson LLP, Wright Henry LLP)	Stakeholders submitted that the Guidance should clearly state it does not apply to Multi-Employer Pension Plans (“MEPPs”). Other stakeholders submitted that the Guidance should clarify that certain elements of the Guidance or issues are less of a concern for MEPPs or inapplicable for MEPPs.	FSRA has clarified the section of the Guidance dealing with Retroactive Adverse Amendments to recognize that for MEPPs there is a broad ability to amend the plan. The Guidance also states that the Interpretation relating to fixed vs conditional indexation provisions does not apply to MEPPs that are exempt from the void amendment prohibitions under s. 14(2).
Canadian Benefits Law	A stakeholder submitted that FSRA should consider expanding the Guidance to address prospective adverse amendments including instances where notice provided to members may be misleading.	FSRA appreciates the submissions on this point. It is noted that the scope of the Guidance is only intended to address the Interpretations and Approach outlined in the Purpose section of the Guidance and not to comprehensively address all concerns that may arise on the filing of plan amendments. FSRA has clarified this in the Guidance. With respect to plan amendment notices that may be misleading, FSRA agrees this would be a concern. Administrators’ obligations regarding clear communication are addressed in FSRA’s Administrator Roles and Responsibilities Guidance. The Guidance has been revised to reference that document and the obligations set out therein.

General views on the Guidance (Purpose)

Stakeholders	Summarized comment	FSRA’s response
Ontario Federation of Labour CUPE Ontario United Steelworkers Local Union 2251 United Steelworkers Local Union 1005	Stakeholders submitted that FSRA should consider a more prominent and clearer purpose statement at the outset of the Guidance.	FSRA appreciates the submissions and has revised the Guidance to provide additional clarity on the Purpose at the outset.

General views on the Guidance (Jurisdiction)

Stakeholders	Summarized comment	FSRA’s response
Ontario Federation of Labour CUPE Ontario United Steelworkers Local Union 2251 United Steelworkers Local Union 1005 Joint submission (Cavalluzzo LLP, Goldblatt Partners LLP, Koskie Minsky LLP, Ursel Phillips Fellows Hopkinson LLP, Wright Henry LLP)	A number of stakeholders submitted support and endorsement for the Guidance for its protection of beneficiary interests, including support for the Approach section, noting that FSRA is acting within its mandate to issue such Guidance and that the Guidance is necessary for advancing FSRA’s statutory mandate.	FSRA appreciates the submissions and endorsements.

Retroactive adverse amendments

Stakeholders	Summarized comment	FSRA’s response
Mercer ACPM CLHIA Joint submission (Osler Hoskin & Harcourt LLP, McCarthy Tetrault LLP, Blake, Cassels & Graydon LLP, Stikeman Elliott LLP, Brown Mills Klinck Prezioso LLP, Fasken Martineau DuMoulin LLP, Torys LLP)	A number of stakeholders expressed concern related to disagreement with FSRA’s interpretation of the relevant PBA provisions governing retroactive amendments.	FSRA appreciates the submissions received from stakeholders setting out their view as to the operation of the relevant PBA provisions. FSRA recognizes that stakeholders who have provided feedback to FSRA have had differing and strong views as to the interpretation of the relevant PBA provisions, with some stakeholders agreeing with FSRA’s interpretation as set out in the Guidance and some disagreeing. FSRA’s interpretation of the relevant provisions is set out in detail in the Interpretation section of the Guidance and in Appendix A, with the intention to provide full transparency to stakeholders on FSRA’s views of the relevant statutory provisions. FSRA interprets legislation through the lens of its statutory objects set out under the FSRA Act. In FSRA’s view, the PBA clearly does not contemplate the registration of retroactive amendments that impact member rights without limitation. FSRA’s interpretation recognizes that the PBA does, however, provide for some discretion to FSRA to register retroactive amendments where it is reasonable to do so based on the considerations set out in the Guidance. FSRA believes its Approach to exercising its discretion under the PBA strikes the appropriate balance by focusing on its objects of protecting member rights and promoting good plan administration while recognizing that in limited situations these objects may nevertheless allow for the registration of a retroactive amendment.
Mercer Joint submission (Osler Hoskin & Harcourt LLP, McCarthy Tetrault LLP, Blake, Cassels & Graydon LLP, Stikeman Elliott LLP, Brown Mills Klinck Prezioso LLP, Fasken Martineau DuMoulin LLP, Torys LLP) Joint submission (Cavalluzzo LLP, Goldblatt Partners LLP, Koskie Minsky LLP, Ursel Phillips Fellows Hopkinson LLP, Wright Henry LLP)	Stakeholders provided various comments on FSRA’s reference to the Brewers and Kerry decisions.	FSRA appreciates and has considered comments from stakeholders on how these cases are relevant to the Guidance. FSRA’s view is that the existing language is helpful in providing an explanation of certain elements of these cases to stakeholders and so has maintained these references in their original form.
Mercer	Stakeholders provided comments on certain examples given by FSRA of amendments with retroactive adverse effects that FSRA may not register (i.e.., plan eligibility changes) as well as amendments that FSRA may register (i.e., corporate reorganizations).	FSRA has revised the list of examples of amendments with retroactive adverse effects to remove the reference to changes to plan eligibility. FSRA has retained the reference to corporate reorganizations, as such amendments will be assessed on a case-by-case basis under FSRA’s Approach as described in the Guidance.
Mercer ACPM	Stakeholders expressed concerns relating to the clarity of FSRA’s description as to when a retroactive amendment with negative impacts may be adverse and regarding references to considerations of equity and the administrator’s fiduciary obligations.	FSRA understands and agrees that predictability is important for administrators. As a principles-based regulator, FSRA often describes its approach to supervision in general terms that reflect the outcomes that FSRA desires to achieve as opposed to listing its approach to specific enumerated scenarios. FSRA’s intent in doing so is to provide guidance that is applicable across a wide range of circumstances. FSRA is committed to transparency and, as described in the Guidance, intends to publish details of retroactive amendments that it registers under its approach. FSRA also appreciates the commentary regarding the use of the term “equity” as a consideration in its approach. However, we believe that the equity of the amendment is a relevant consideration when an amendment is made that otherwise negatively affects members’ rights retroactively. FSRA has revised the language relating to the administrator’s obligations in filing an amendment to more clearly articulate the administrator’s fiduciary obligations.
Joint submission (Cavalluzzo LLP, Goldblatt Partners LLP, Koskie Minsky LLP, Ursel Phillips Fellows Hopkinson LLP, Wright Henry LLP)	Stakeholders expressed endorsement of several of the considerations set out in the Guidance for FSRA’s consideration for the exercise of its discretion to register an amendment with retroactive and potentially negative impacts.	FSRA appreciates the stakeholder submissions.
OBA CLHIA WTW OBA	Stakeholders expressed concern that the criteria listed by FSRA to be considered in evaluating an amendment leaves too much uncertainty as to when an amendment will be registered. Stakeholders also suggested providing a greater level of detail on the amendment process as it relates to effective dates, timing of notice, and filing etc.	As noted in the above response, FSRA agrees that predictability is important and is committed to publishing details as to how it has exercised its discretion. FSRA believes that the considerations set out in the Guidance provide transparency as to how FSRA will evaluate amendments and should provide guidance to stakeholders in a broad range of scenarios. FSRA notes, and has clarified in the Guidance, that the Guidance is not intended to provide a full walk-through to the amendment filing process but instead focuses on the three issues as set out in its Purpose section. FSRA may consider in the future if more comprehensive Guidance on plan amendments may be useful to stakeholders.
Mercer ACPM	Stakeholders expressed concern with certain process elements as described in the Approach section of the Guidance. Specifically, a comment was submitted that it may be impractical to seek advice or a decision in advance of making an amendment. It was also submitted that administrators should not be required to file legal advice with FSRA when making an amendment that may be a retroactive adverse amendment.	Under FSRA’s Approach, administrators are not required to seek advice or receive a determination from FSRA prior to filing an amendment, but are encouraged to discuss such amendments prior to filing so that they might benefit from FSRA’s initial views with respect to the proposed amendment. FSRA has revised the language referring to legal advice to indicate that it is encouraged to provide a legal opinion to FSRA to expedite FSRA’s review.
WTW	A stakeholder suggested clarifying that the list of amendments with retroactive negative effect that are not Retroactive Adverse Amendments is non-exhaustive.	FSRA believes the existing language is clear that the list is non-exhaustive and that other types of amendments may qualify under FSRA’s Interpretation and Approach.
Joint submission (Cavalluzzo LLP, Goldblatt Partners LLP, Koskie Minsky LLP, Ursel Phillips Fellows Hopkinson LLP, Wright Henry LLP) Ontario Federation of Labour CUPE Ontario United Steelworkers Local Union 2251 United Steelworkers Local 1005	Stakeholders submitted agreement with the Guidance on impermissibility of using retroactive amendments to cure non-compliant administration of a pension. Stakeholders suggested a clearer statement regarding the inability to use retroactive amendments to cure non-compliant administration of a pension.	FSRA has revised the language in the Guidance to more clearly communicate that section 13(2) of the PBA does not permit an administrator to cure non-compliance with plan terms or the PBA through filing a “retroactive” amendment.
Ontario Federation of Labour CUPE Ontario United Steelworkers Local Union 2251 United Steelworkers Local 1005	Stakeholders suggest an emphasis on the transparency consideration and a clear statement on impermissibility of the retroactive amendment if the amendment impairs transparency.	FSRA appreciates the submission and notes that the Guidance addresses transparency as a key consideration in reviewing retroactive amendments. FSRA agrees that different elements of transparency are important considerations in determining if a retroactive amendment should be allowed under its Approach.

Rectification

Stakeholders	Summarized comment	FSRA’s response
ACPM Mercer OBA WTW	Stakeholders have expressed disagreement with FSRA’s comments that it does not have authority under the PBA to rectify drafting errors by registering a Retroactive Adverse Amendment.	FSRA understands the perspectives and concerns raised by stakeholders but continues to be of the view that it does not have authority to rectify drafting errors.

Replacing variable with fixed indexation formula

Stakeholders	Summarized comment	FSRA’s response
ACPM Mercer WTW	Stakeholders disagreed with FSRA’s description that section 14(1) of the PBA prohibits amendments with the potential to reduce accrued benefits in the context of replacing a variable indexation formula with a fixed indexation formula and without exception. Stakeholders also commented that FSRA’s Interpretation could harm the ability of administrators to purchase annuities from insurers on a wind-up and suggested that exceptions be made in certain circumstances.	FSRA believes the language in this section is accurate. FSRA recognizes that there may be special circumstances which present challenges for administrators and encourages them to discuss these circumstances with FSRA.
WTW	A stakeholder expressed disagreement with the reference to the McGrath case in FSRA’s Interpretation and recommended further articulating or explaining why the amendment in McGrath was considered by the court to be permissible.	The footnote referencing McGrath is only intended to provide an example of where a change to the indexation formula may be permissible, it does not deal with the circumstances of a variable indexation formula being amended to provide fixed indexation. FSRA does not believe expanding further on the McGrath case is necessary.

Notice requirements

Stakeholders	Summarized comment	FSRA’s response
ACPM CLHIA Joint submission (Osler Hoskin & Harcourt LLP, McCarthy Tetrault LLP, Blake, Cassels & Graydon LLP, Stikeman Elliott LLP, Brown Mills Klinck Prezioso LLP, Fasken Martineau DuMoulin LLP, Torys LLP)	Stakeholders suggested that further Guidance should be provided on circumstances where section 26(4)(a) exception would apply and to whom notice should be sent in different circumstances.	There are a variety of different circumstances where the exception in section 26(4)(a) may apply and FSRA will consider the application of the section on a case-by-case basis. FSRA further believes that Administrators are best positioned to know which stakeholders will be impacted by an amendment and should therefore receive notice. FSRA on a case-by-case basis has provided advice or direction to administrators on request. FSRA therefore does not intend to expand on these areas in the Guidance.
CLHIA	Stakeholders suggested that the Guidance should reference the 45 day period after notice was transmitted before FSRA may register an adverse amendment.	FSRA has revised this section to mention the 45 day period.
CLHIA ACPM Joint submission (Osler Hoskin & Harcourt LLP, McCarthy Tetrault LLP, Blake, Cassels & Graydon LLP, Stikeman Elliott LLP, Brown Mills Klinck Prezioso LLP, Fasken Martineau DuMoulin LLP, Torys LLP)	Stakeholders suggested that the Guidance provide direction as to what the Notice should contain to comply with the PBA and that FSRA should provide detail as to how long after the 45 day period the amendment will be registered.	FSRA notes that the Guidance does provide direction as to certain requirements for the Notice. While FSRA endeavours to register amendments in a timely manner, FSRA’s registration timeline for each amendment may vary based on the nature of the amendment.
ACPM	A stakeholder submitted that the failure to give advance notice should not invalidate an amendment should FSRA later require notice to be provided.	FSRA has not taken the view that an amendment would necessarily be invalidated in cases where FSRA requires notice to be provided after filing.
WTW	A stakeholder submitted that exceptions to notice should be made where the amendment is made to comply with applicable legislation or rules and that no notice to former members should be required where the amendment is subsequently determined by FSRA to be adverse.	FSRA appreciates the submissions on this point. With respect to exceptions for compliance amendments, FSRA notes that this would require a legislative change. With respect to notice required for former members, FSRA may consider this on a case-by-case basis in discussions with plans.

Penalties

Stakeholders	Summarized comment	FSRA’s response
CLHIA	A stakeholder submitted that the Guidance should provide an exemption from penalties where a good faith determination has been made that a filed amendment is not adverse.	FSRA has noted this feedback.