Introduction
In Ontario, registered pension plans are subject to examinations as prescribed under the Pensions Benefits Act of Ontario (“PBA”). As a principles-based and outcomes focused regulator, FSRA relies on proactive and collaborative engagements as key tools to improving the health of pensions plans and achieving desirable outcomes. Examinations are part of FSRA’s proactive approach to relationship management that supports our objective of promoting good plan administration and protecting and safeguarding the rights and pension benefits of pension plan beneficiaries. Examinations allow FSRA to identify compliance issues and encourage best practices in plan administration.
What to expect during an examination of SEPPs & MEPPs
Plans for examination are selected quarterly utilizing a dynamic and risk-based approach that considers multiple criteria including environmental scanning (i.e. economic, sectoral challenges) and plan-specific risk analysis (i.e. plan funding, plan investments, history of compliance with filing and remittances).
Once a plan is selected, the plan administrator can expect a phone call advising that an examination will be conducted and the reason why the plan was selected. At that time, an overview of the process, purpose, and next steps will be provided.
Following the call, FSRA will issue an examination start letter which details the information communicated in the call. Along with the start letter, the administrator is provided with the Preliminary Examination Tool which is an excel based self-assessment developed as a fact-finding exercise to collect plan information. FSRA utilizes this tool as an initial risk assessment to help guide the examination moving forward, so that it is proportionate to the preliminary risks assessed.
The administrator is asked to complete and submit the Preliminary Examination Tool along with supporting documentation within 2-3 weeks from receipt of the start letter. This time frame is assumed to be sufficient to gather relevant information and organize any resources the administrator may need to assist with the examination.
Once the Preliminary Examination Tool and supporting documentation is received, FSRA will begin a thorough review of the information provided. At this stage, FSRA will engage with the administrator periodically to seek any clarification, request any additional documentation, and keep the administrator apprised of findings as they are identified. This is intended to ensure transparency throughout the process and provide the administrator opportunities to better understand the findings prior to final report back.
At the conclusion of the examination, FSRA will provide the administrator with a draft version of the final report in the form of a letter outlining observations, findings, recommendations, and compliance items. A call with the administrator will be arranged to discuss the letter and ensure a clear understanding of FSRA’s recommendations.
The final letter will be issued after the call and will reflect any appropriate revisions discussed with the administrator, as well as a request for response to the letter within 60 days of receipt. The response will include an action plan and timeline to address the areas of risk and non-compliance summarized in the letter.
Follow-ups may be arranged with the plan post examination and can range from a phone call to another full examination. These follow-up engagements are risk-driven and proportionate to the outcomes of the examination, with a focus on advancing the action items established at the conclusion of the examination.
In terms of logistics, the examination program is structured such that it can be conducted in a hybrid format to include remote functionality. FSRA recognizes the evolution of remote work arrangements and as such is equipped to better meet the needs of our stakeholders who operate remotely, while maintaining the ability to conduct examinations on-site at the plan’s premises, where appropriate. With respect to timing, a full examination can range from 4 – 8 weeks. This includes transitional time in collecting and receiving supporting documentation, review and analysis, and feedback loops within that time where we re-engage with the Administrator periodically throughout.