Asset Transfer Webinar

Webinar title: FSRA Asset Transfer Guidance Webinar
Webinar presentation date: February 17, 2021 at 11:00 a.m.
Webinar speakers: Mark Eagles, Director, Advisory Services. Tim Thomson, Senior Manager, Special Transactions.
Webinar duration: 1:04:40

Time: 0:00-1:20
Slides: 1-2
Speaker: Anita Saxby (FSRA Public Affairs)

Spoken words, slide 1: Good morning. My name is Anita Saxby and I'm part of FSRA's communications team. Thank you for joining us this morning. We're excited to talk to you today about FSRA's supervisory approach to DB asset transfers under the PBA. We're about to get started, but I wanted to first go over some housekeeping items. We're using Microsoft Teams live platform today for our webinar, that means that your microphone will automatically be off, including your video will also be off. So, all you need to do is listen, watch and enjoy. We welcome your questions; you can interact with us and ask your questions using the Q&A button on the top right of your screen. We will address questions at the end of our presentation. This webinar will be recorded and FSRA will share a link to this video in our next pension update eblast communication. If you have any connectivity issues during the webinar, please try exiting the webinar and joining again with a fresh connection.

Copy, slide 1: Supervisory Approach to DB Asset Transfers under the PBA. Date: February 17, 2021. Presenters: Mark Eagles, Tim Thomson.

Visual, slide 1: Presentation cover slide. White headline text left-aligned [positioned to the left] on FSRA’s Midnight Blue background colour. FSRA white logo [positioned to the right] on FSRA’s Midnight Blue background colour. White sub-headline text left-aligned [positioned to the left]. Ontario Coat of Arms white logo [positioned to the right] on FSRA’s Deep Orange background colour.

Spoken words, slide 2: Now I'd like to turn it over to our presenters today. I'd like to introduce you to Mark Eagles, Director, Advisory Services. And Tim Thomson, Senior Manager, Special Transactions. Mark, over to you to kick things off.

Copy, slide 2: Our Presenters. Mark Eagles, Director, Advisory Services. Tim Thomson, Senior Manager, Special Transactions.

Visual, slide 2: Presentation slide. Photo of Mark Eagles [positioned to the left] on a white background. Photo of Tim Thomson [positioned to the right] on a white background. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Time: 1:20-12:35
Slides: 3-9
Speaker: Mark Eagles

Spoken words, slide 3: Thank you, Anita. Good morning, everyone. First of all, I just want to thank everyone for joining us for the next hour. Being the pension dweeb that I am, I'm really amazed to see we have so many people signed up, I think we have over 270 people signed up for this webinar, which is excellent. Also, I would like to thank all of the FSRA pension and legal staff who have worked so hard over the last year and a half to get us to where we are with this asset transfer guidance and our new approach to reviewing asset transfers. Also, I'd like to thank our IT team and our FSRA communications team who have made this event possible. We're using this Microsoft Teams live event for the first time today. So this is something new for us. And I think a year ago, we didn't really even have a technology to do this. I certainly didn't, I didn't even have a laptop computer to allow me to work at home. I guess that's one of the sort of small silver linings of our COVID-19 pandemic.

Speaking of technology, our IT team will be happy to hear that I was unable to locate a cat filter. Maybe next time.

Also, I'd like to give many thanks to the members of our asset transfer Technical Advisory Committee that met with us over a period of a good nine months or so. And who gave us dozens of hours of their free time. And they're invaluable input, feedback and advice. Finally, a personal thank you to Caroline Blouin. She's our VP of pensions at FSRA. And it was her unwavering support that allowed us to totally rethink our asset transfer process and to get this guidance published. As you may have gathered, our webinars focused on defined benefit asset transfers under Section 80, 81 and 80.4. And Tim, and I will take turns speaking for the first 50 minutes or so on these topics, and then we'll have about 10 minutes at least 10 minutes of time to answer your questions at the end. You can submit written questions only. But at any time during the webinar, and there's a button I think in the top right where you can do that. If we have extra questions that we haven't been able to answer at 12 o'clock, we Tim and I will stick around for a few extra minutes we can try to answer some more. The only request I have is that you do not ask plan specific questions. We'd be happy to discuss those with you at a later date one on one.

Copy, slide 3: Agenda. Context & Desired Outcomes. The Application. The Review. Process. The Decision & After. Closing. Q&A.

Visual, slide 3: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA white logo [positioned to the right] on FSRA’s Midnight Blue background colour. Ontario Coat of Arms white logo [positioned to the right] on FSRA’s Deep Orange background colour.

Spoken words, slides 4: Okay, now starting in context and outcomes.

Copy, slide 4: Context & Desired Outcomes.

Visual, slide 4: Large and bold FSRA Teal headline text, center-aligned [positioned to the center] on a white background. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 5: So just to put some context around this and many of you if not all of you will be aware of much of what I'm just going to say right now. But just to emphasize it. Asset transfers really are important to employers who sponsor pension plans. The asset transfer allows those employers to address purchase and sale transactions that occur from time to time with many if not most, Employers, it allows them to carry out any corporate restructurings or organizations that they are going through. And it allows them to combine plans for greater efficiencies, all of which makes pension plans being more easily dealt with by those employers that sponsor them. What you might not have realized I didn't until we started looking into it is that there have been literally thousands of asset transfers over the last 30 years, we're sort of estimating somewhere around 3000. That's a lot. The Ontario PBA was amended around 2010 to change significantly change the rules that apply to asset transfers. And that was in response to a court case that occurred in the early 2000s. So since the 2010 change in the legislation FSCO before us, and now FSRA, we've noticed and I'm sure you have to that our review times of those applications have often been quite long, really longer than they need to be or should be. That gets in the way of all those things, those first three bullets above of having those be carried out, as well. We've heard over and over and we agree that member communication has become very lengthy, complicated, and really almost incomprehensible to most members. Finally, the transfer rules and the timing of those rules can be difficult to comply with, from time to time. So, these are the issues that are out there. And leading up to FSRA's launch in 2019, the pension sector identified several areas where they wanted the new regulator FSRA to focus on and asset transfers was one of those three main areas. As a result, we created an advisory committee that met over a few months in 2019 and into 2020. And out of that Advisory Committee came our new guidance, which was just published in January.

Copy, slide 5: Why the Focus on Asset Transfers? Asset transfers are important transactions to: Address purchase and sale situations. Carry out corporate restructurings / reorganizations. Combine plans for greater efficiencies. There have been thousands of asset transfers over the past 30 years that have identified challenges: Ontario amended asset transfer rules in the PBA in 2010. FSCO / FSRA review times have often been too long. Member communication is too lengthy and complicated. Transfer rules and timing can be difficult to comply with. Leading up to FSRA’s launch in 2019, the Pension sector identified asset transfers as a priority for FSRA to improve regulatory efficiency and effectiveness. FSRA created an Advisory Committee which met in 2019/20. FSRA’s new Guidance was created in collaboration with this Committee.

Visual, slide 5: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 6: So, what has changed, or what is changing because some of this is still in process. Well, as mentioned, the regulator itself changed, FSCO gave way to FSRA about a year and a half ago. While some of our duties remain the same, our approach has changed in some ways, subtly, some ways not so subtle. But we really are focusing on being principles-based and outcomes-focused. The guidance, of course, has just been published. And we're going to talk a bit more about that and more of what's on this page in our next half hour. But just wanted to sort of summarize it all here. We now have as a regulator, we have authority to vary the notice requirements that we never used to have. We are encouraging electronic submissions. And in fact, we would rather only receive submissions electronically from now on, just makes things a lot easier. I think going forward, it'll definitely be the way to go. Our review process again, which we'll talk about in more detail, is intended to be more streamlined to focus our efforts where they mean the most, the areas where there is some risk or uncertainty. We're relying on a new thing, these new certifications that we're asking the plan administrator and actuary to sign when they file a transfer application with us. And we're also changing the people here at FSRA, who review these transfers, it used to be all of our staff. Now we're focusing it on a small group of staff. Again, more about that later. We are encouraging dialogue, both before you file anything with us. And while it's with us as well. Many of these things won't be that complicated, and you may not need to talk to us, but if there's ever any questions, we want you to come to us and have that discussion. And finally, we're committing to service standards, which we'll go over a little later as well. Or actually the final thing is that we are also trying to harmonize our approach to the different types of transfers wherever we can.

Copy, slide 6: What has changed? The Regulator. FSRA is a principles-based and outcomes-focused regulator (see Objects and Principles next page). Regulatory Guidance. Principles-based, less procedural. Notice Variance (FSRA given authority under PBA). Content and timing. Electronic Submissions. Email or File Transfer Protocol (Portal submissions coming soon). New Review Process. Streamlined review - focused and risk-based. Administrator and Actuary certifications. Team approach - staff dedicated to asset transfers. Enhanced 2-way dialogue with applicants. Commitment to service standards. Harmonized Consent Process (s.80, 81 and 81.4). Letter of consent vs. Notice of Intended Decision (NOID).

Visual, slide 6: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 7: So this slide, I am just going to talk about fairly briefly the top of it. We mentioned here, what are our primary objects are under the FSRA Act, not the PBA, but the FSRA Act. And that is to promote good plan administration and to protect and safeguard beneficiary rights and benefits. So, that's always in the back of your mind, no matter what we're working on, and for whatever our guidance that we're developing or processes, and the same below, there is sort of a paraphrasing of our pension sector principles at FSRA. Again, everything that's on that slide is what we think about when we're trying to develop how we're going to approach a regulatory issue.

Copy, slide 7: FSRA – Objects and Principles. FSRA Objects (under the FSRA Act): Promote good plan administration. Protect and safeguard beneficiary rights and benefits. FSRA is committed to working with the pension sector to yield better outcomes: We assess risks by their nature, size, complexity and potential impact on stakeholders. Our regulatory responses are reasonable, proportionate, and taken with a view to protecting benefits and enabling the effective operation of our pension system. We are aware of the complexities within the pension sector and respective stakeholder roles. We are adaptable and acknowledge that sometimes “one size does not fit all”. We aim to educate and enable, and to make use of regulatory tools and powers in order to facilitate appropriate outcomes. We regularly assess the effectiveness and efficiency of our guidance documents. We commit to on-going collaboration and transparency with the pension sector.

Visual, slide 7: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 8: So desired outcomes, out of all this effort, we are hoping to achieve a bunch of things and number one is to protect beneficiaries’ entitlements. We also want to enable beneficiaries to be informed and to understand what's happening to their pension plan when there is an asset transfer that involves them. We want to allow for members benefits to be consolidated, which is often an outcome of an asset transfer, rather than having members benefits be split into two plans it allows them to be in one place. We also want to support the sustainability of the original plan and the successor plans, and their ability to deliver pensions over the long term.

Copy: slide 8: Desired Outcomes. Plan Beneficiaries. Protect the value of beneficiaries’ entitlements. Enable beneficiaries to be informed and understand the impact of the asset transfer on their past and future benefit entitlements. Allow consolidation of members’ pension benefits in one plan. Support the stability of the original and successor plans and their ability to deliver pension promises over the long-term.

Visual, slide 8: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 9: For sponsors and administrators, some of the desired outcomes are quite similar, although focused a little differently. We want to facilitate pension plan management for plan sponsors and administrators, they have to deal with corporate transactions and things like that, that affect their pension plans, and this is to allow them to do it more efficiently. We want to streamline the application review process and focus on key aspects that really matter. We also want to help administrators simplify and improve their member communications. We want to clearly communicate our expectations of the pension industry of the applicants. Finally, where we can we want to harmonize our regulatory approach under the different asset transfer sections. Alright, so at this point, I'm going to hand it over to Tim and he'll go over our application process.

Copy, slide 9: Desired Outcomes. Plan Sponsors & Administrators. Facilitate efficient pension plan management for plan sponsors and administrators. Streamline the application review process to focus on the key aspects of asset transfers. Simplify and improve member communication. Clearly communicate our expectations for applicants. Harmonize regulatory approach to transfers under sections 80, 81 and 80.4 (where possible).

Visual, slide 9: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Time: 12:35-29:30
Slides: 10-18
Speaker: Tim Thomson

Spoken words, slide 10: Thanks so much, Mark. I hope everyone can hear me. I think I've said that statement so many times in the last year, but I'll assume everybody can hear me. It's nice to meet you all virtually. I'm going to be going through the application process. The application preparation process is primarily in the hands of course, the plan administrators and their service providers. It can be a significant amount of effort, and we encourage applicants to contact us to discuss any possible hurdles and challenges and propose how they intend to overcome them. Like Mark mentioned this, and we will be really belabouring this point in this presentation. We are trying to be more collaborative; we think that this will allow us to try to proactively address any issues before our review. And as the name suggests, our process aims to guide the applicant to really help them ensure that they're taking the right steps to ensure compliance with the PBA and of course, ultimately ensure protection of members, beneficiaries, or member beneficiaries whose assets are transferring.

Copy, slide 10: The Application.

Visual, slide 10: Presentation slide. Large and bold FSRA Teal headline text, center-aligned [positioned to the center] on a white background. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 11: Under the PBA, there are three main types of asset transfers contemplated there, section 80 transfers, which deal when an employer due to a sale or assignment basically transfers their assets because of the sale or assignment of part or all an employer's business, whereas section 81 is really a transfer of assets between plans that has the same or related employer. Section 80, and 81 are contemplated under Ontario regulation 310/13 that gives all the specific rules and requirements for how those must be done. And then the third type of asset transfer our section 80.4 transfers under Ontario regulation 311/15. That deals very specifically with the conversion and transfer of assets from a single employer pension plan to a jointly sponsored pension plan.

Copy, slide 11: The Types of DB Asset Transfers. Section 80. O. Reg 310/13. Transfer of assets due to sale or assignment of all or part of an employer’s business. Section 81.O. Reg 310/13.

Transfer of assets between plans with the same or related employer. Section 80.4. O. Reg. 311/15. Conversion and transfer of assets from a SEPP to a JSPP.

Visual, slide 11: Presentation slide. FSRA Midnight Blue headline text. Illustration underneath revealing a tablet with a pie chart and graph, a pencil on top of the tablet and three pieces of paper underneath the tablet [positioned to the left]. Three lines extend to three separate sections. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 12: So here are the six major steps and deliverables in the application process. Although we don't have time to necessarily go through all the detailed rules and requirements for each of these steps in today's presentation, this portion of our presentation will focus on the key aspects of each of these steps and provide insight into some of the common issues we've seen in the past. Our hope is that we'll be able to then better position applicants to make a complete and compliant application by pointing out some possible hurdles that you want to avoid. But ultimately, we do want to work together in advance of an application submission. In order to then be able to hopefully streamline our review. With the hope that you know, we will uncover then fewer possible issues and be able to expedite our review process.

Copy, slide 12: Overview. Preparation. Notices. Amendments. Actuarial Reports. Certifications. Submission.

Visual, slide 12: Presentation slide. FSRA Midnight Blue headline text. Six different arrows, side by side, in a single row with text inside, placed on a white background. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 13: For the first step, the preparation, as I said before, we do really encourage applicants to engage with us early if you have a more large or complex application. Allow us to try to proactively address any issues before the application is filed. Furthermore, it's important that you address any unresolved regulatory issues that may impact the asset transfer in any of the plans involved. So, if there is more than one original plan and the successor plan, if there's an outstanding regulatory issue with us, that could affect the asset transfer that really needs to be dealt with first. Otherwise, it could delay our review of the asset transfer application. The application, of course, must include any agreements like Purchase and Sale agreements, for example, and consents required under the PBA or regs. Lastly, if your plan has a letter of credit, or an LLC, those transfer amounts must reflect any of those LLCs. And the implications must be determined since those LLCs are unique to a specified legal entity, and they could trigger a funding requirement under the asset transfer. Now, asset transfers between plans that had the same sponsor, or legal entity might be able to amend and transfer an existing LLC to the receiving plant where the issuer or trustee agree. Some common issues that we see with this part of the process is failing to address preexisting regulatory issues which I already talked about, and incomplete applications. We do really encourage that applications are filed in totality complete with us at one time. Certainly, that would avoid us having to go back and forth trying to get more information in order to be able to complete our review.

Copy, slide 13: The Application Steps – Preparation. Preparation. Engage early with FSRA for larger, more complex applications. Address unresolved regulatory issues that may impact the asset transfer in any of the plans involved in the transfer of assets. The application must include agreements and consents required under the PBA or Regulation. Transfer amounts must reflect any letters of credit (LOC) and LOC implications must be determined since LOCs: Are unique to specified legal entity; and Could trigger a funding requirement. Common Issues. Failing to address pre-existing regulatory issues. Incomplete applications can cause delays in the review process.

Visual, slide 13: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Five out of six arrows greyed out [top position] to highlight arrow with Preparation text. FSRA Pale Teal box [positioned to the right] with text inside and a red icon with a hand symbolizing common issues. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 14: Notices are a very important step one that we take obviously very seriously, because ultimately, it's the notices that ensure that the affected people in members are informed about the transaction, their rights and how their benefits will be affected. The notice content and timing are prescribed under the PBA regs, I'm not going to go into them in detail right now. We don't really have time during this webinar. But certainly, information is there. If you have any questions, you can contact us. We do encourage that the notices be straightforward and understandable. We know this is a little bit counterintuitive, since the regulations are quite detailed as to what has to be in a notice, I think there's over 50 things now that have to be in notices. But that said, that doesn't mean that they can't be written in a more straightforward manner. In fact, we encourage for example, having kind of a key information upfront page one for notices that lay out the key information to members and then you can get into more of the details later on in the notice. As Mark mentioned, applicants can now request FSRA to vary or waive notice requirements. And we will be discussing that a bit more in the review process section after this section. Some common issues we've seen, of course, the notice doesn't contain all the prescribed requirements. Things like admissions of contribution rates, benefit formulas, early retirement provisions, etc. Notices are complicated and lengthy. Yes, we understand why they're lengthy. That's because of the regulations, but that doesn't mean they have to be overly complex and they can be written in a plain language, simplistic manner to make them more understandable. That's something we really encourage. Member notices, sometimes they're not issued in the prescribed time. Also, there's been many situations we've seen where unions were not provided the notice. It's our position that all unions in the original plan or plans and the successor plan, whether they have members involved in the asset transfer or not, should be notified of the asset transfer.

Copy, slide 14: The Application Steps – Notices. Applicants must prepare and issue notices to ensure that affected persons are informed about the transaction, their rights and how their benefits will be affected. Notice content and timing are prescribed under the PBA and Regulations. Notices should be straight forward and understandable. Applicants can request that FSRA vary or waive notice requirements (to be discussed in the Review Process section). Common Issues. Notices do not contain all prescribed requirements. Notices are complicated and lengthy. Member notices are not issued in the prescribed time. Unions were not provided notice.

Visual, slide 14: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Five out of six arrows greyed out [top position] to highlight arrow with Notices text. FSRA Pale Teal box [positioned to the right] with text inside and a red icon with a hand symbolizing common issues. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 15: Amendments are also an important step in the asset transfer application process. Certainly, the applicant must file signed and adopted plan amendment for the asset transfer along with the completed FSRA form 1.1. Just a note about the form 1.1, we are going to be revising and posting that new form 1.1 electronically later this year and that will be required to be filled out and filed electronically. The amendments are filed separate from the application which we understand happens sometimes we do ask that the application when filed should note this, as many businesses have. We've been working from home primarily over the last year. Hopefully, that's not going to last forever. But certainly, it helps us a great deal with our move to a digital platform where you advise us if something has been filed kind of in a piecemeal fashion so that the reviewer is aware of that. Amendments to cease benefit accruals in the original plan are adverse amendments under the PBA. These amendments must be filed prior to the effective date. And the applicants must ensure that the notice requirements are complied with. Amendments to cease accruals are needed unless the accruals in the original plan will cease by operation of law, meaning like a change of employer or by existing plan provisions. It should be noted that notice of plan amendments follows the rules of the major authority. What I mean by this is that for asset transfers that have multi-jurisdictional pension plan members, members who are not just under Ontario jurisdiction, the notice requirements will follow our authority if we're the regulator overseeing the plan. The adverse amendment notification rules should follow Ontario rules in that situation. Some common issues that we've seen with amendments is that the original plan has not been amended to cease accruals, although that can maybe, not be a requirement, as I noted before with regards to a change of employer, but certainly an amendment is still needed for the asset transfer, whether the amendment is needed for ceasing accruals or not. Sometimes amendments are not signed, or they're not filed with the form 1.1. And lastly, plan amendments prior to and actually unrelated to the transfer were not filed private, prior to the asset transfer application. Now this can be a problem because we really do need a complete plan documentation history in order to complete our review. So, if we notice in our review, that there's some reference to an amendment to the plan that was made previous to the asset transfer, but we don't have it on file, then we have to go chasing after that which can cause a delay.

Copy, slide 15: The Application Steps – Amendments. The applicant must file signed and adopted plan amendments for the asset transfer along with a completed Form 1.1. If the amendments are filed separate from the application, the application should note this. Amendments to cease benefit accruals in the original plan, are adverse amendments under the PBA. These amendments must be filed prior to their effective date and applicants must ensure that notice requirements are complied with. Common Issues. Original plan not amended to cease accruals and/or contributions before effective date. Amendments are not signed and not filed with a Form 1.1. Plan amendments prior to (and unrelated to) the transfer were not filed (discovered during FSRA review).

Visual, slide 15: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Five out of six arrows greyed out [top position] to highlight arrow with Amendments text. FSRA Pale Teal box [positioned to the right] with text inside and a red icon with a hand symbolizing common issues. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 16: Actuarial reports, as you know, this is a major piece of the asset transfer application. It's the main financial report for the asset transfer application and therefore extremely important, we spend a lot of time reviewing this report in our internal review. For section 80 and 81 transfers, it's important to demonstrate compliance with the solvency ratio test. It means specifically the 5% rule, whereby the solvency ratio of the successor plan cannot decrease by more than 5% from what it was before the transfer. Secondly, the successor plans solvency ratio after the transfer can't drop more than 5% below the solvency ratio of the original plan or plans prior to the transfer. So these tests must be met only if the solvency ratio of the successor plan after the transfer is below 85% for a section 80 transfer, or below 100% for a section 81 transfer. And I know that's quite a mouthful but I'm sure that, your actuarial provider, if you're obviously working with one for this application, will be able to guide you through that as well. Now, funding of each plan continues on a pre-transfer basis until the assets are transferred. Not the consent given but the assets actually being transferred. The actuarial assumptions and methods for solvency valuations, they need to be consistent for the original and successor plans. If the transferred benefits aren't replicated in the successor plan, then the computed value test has to be met in that comparison is performed on the total pension benefits for each member. We do ask that if that's happening, that you please provide us a sample calculation with the application. Some common issues that we've seen with asset transfer actuarial reports are that the assets are not correctly allocated for partial transfers and multi-jurisdictional applications. I think Mark will talk about that a bit more later. But that's a bit of a complex situation with regards to the multi-jurisdictional pension plan rules. And valuations are sometimes not prepared as of the effective date of the transfer or they might potentially use projections as opposed to real data.

Copy, slide 16: The Application Steps – Actuarial Reports. For section 80 and 81 transfers, demonstrate compliance with the solvency ratio test. Funding of each plan continues on a pre-transfer basis until assets are transferred. Actuarial assumptions and methods for solvency valuations need to be consistent for the original and successor plans. If transferred benefits are not replicated in the successor plan, then it must demonstrate that the commuted value of a member’s pension benefit is at least as great in the successor plan as it was in the original plan. Actuaries should provide sample calculations with the application. Common Issues. Assets not correctly allocated for partial transfers in multi-jurisdictional applications. Valuations are not prepared as of the effective date of the transfer, or they use projections, as opposed to real data.

Visual, slide 16: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Five out of six arrows greyed out [top position] to highlight arrow with Actuarial Reports text. FSRA Pale Teal box [positioned to the right] with text inside and a red icon with a hand symbolizing common issues. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 17: Certifications, as Mark mentioned, this is a new documentation step that we have in the process that came out of the Technical Advisory Committee and our new guidance. We certainly encourage the use of these certifications, although it's not mandatory, but if you use them, we expect that our review times will be more streamlined and efficient and quicker. The information disclosure is really a helpful tool, not just for us, but also for applicants because it can really guide you through what is required. There's two main pieces in the information disclosure. There's the application summary, which is certified by each plan administrator, and the actuary certification which is signed by each plan actuary. Information disclosure should be completed for each original plan and the successor plan. It's important that these be filed, we do encourage them, we will rely on these, as Mark said to streamline our review process and use more of a risk-based approach to identify and review the aspects of the applications that ensure member protection. Of note is that if the application that has both DB and DC assets in it, the application can identify both the DB and DC components, or the DC assets can be dealt with in a separate filing. Both the application summary and the actuaries certification can be signed in counterpart. One thing to note with many multi-jurisdictional asset transfers that have Quebec members is that it's important to note that Quebec has a provision that requires that the surplus entitlement language in the receiving plan be at least as favourable to members as in the original plan. So that's something very important to keep in mind, for any Quebec members. Some possible issues that we might have with these certifications, we don't really have a history of issues right now, because this is a new part of the process is that other jurisdictions' legislations might not be fully considered. As you're all probably aware, under the multi-jurisdictional pension plan agreement. As the regulator that oversees the plan, we have to ensure that other jurisdictions, legislation are complied with for any members that are governed by that legislation. We expected the application for multi-jurisdictional pension plan asset transfers, we'll fully consider those. Lastly, certifications might not be submitted at all, which is really your choice. But we certainly encourage that they do be filed, or if they are filed, they might not be fully completed. If you're using them, please, we do ask that you fill out every section of those certifications.

Copy, slide 17: The Application Steps – Certifications. The Information Disclosure is a helpful tool for applicants and facilitates FSRA’s review. The Information Disclosure is not a PBA requirement, but applications filed with it will have quicker review times. It includes: the Application Summary, certified by each plan administrator; and the Actuary’s Certification, signed by each plan actuary. Information Disclosures should be completed for each original plan and the successor plan. Possible Issues. Other jurisdiction’s legislation(s) not fully considered. Certifications not submitted or not fully completed.

Visual, slide 17: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Five out of six arrows greyed out [top position] to highlight arrow with Certifications text. FSRA Pale Teal box [positioned to the right] with text inside and a yellow icon symbolizing possible issues. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background. Spoken words, slide 18: Finally, after all that work, it's time to submit the application to FSRA for us to do our review work. Just a few things of note here, applicants can request filing extensions of 60 days, if there's reasonable grounds or over 60 days, if there are extraordinary grounds. Filing extensions, they can be made after the due date, but we certainly prefer that they be made before the due date. And we ask that you file your applications electronically, as Mark mentioned before, either by email or if the documents are too large for an email, you can use FSRA's secure File Transfer Protocol, please just get in contact with your pension officer and they will provide you a link to use that. We really don't need hard copies. We prefer electronic copies and don't need hard copies to be sent afterwards. Some common issues that we've seen with submission is that applicants request filing extensions after the original due date. That's not necessarily not in compliance, but we certainly prefer it before the due date. And sometimes applications are filed piecemeal. I mentioned this before. It can delay our review times if we're having to chase after certain documentation. If you know if there's certain pieces that were filed way in advance, but maybe the application didn't reference them. So, it's important. We prefer that everything be filed at once. But we understand that in certain situations, for example, amendments might come in a bit earlier. So now I'm going to turn it back over to Mark who's going to give you some insight into our review process.

Copy, slide 18: The Application Steps – Submission. Applicants can request filing extensions of 60 days if there are reasonable grounds and over 60 days if there are extraordinary grounds. Please file your applications electronically (email or FSRA’s secure file transfer protocol). Hard copies are not required. Common Issues. Applicants request filing extensions after the original due date has already passed. Applications are filed piecemeal which can result in a staggered, less efficient review.

Visual, slide 18: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Five out of six arrows greyed out [top position] to highlight arrow with Submission text. FSRA Pale Teal box [positioned to the right] with text inside and a red icon with a hand symbolizing common issues. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Time: 29:30-44:37
Slides: 19-26
Speaker: Mark Eagles

Spoken words, slide 19: none.

Visual, slide 19: Presentation slide. Large and bold FSRA Teal headline text, center-aligned [positioned to the center] on a white background. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 20: Alright. Thank you, Tim. As you all know the PBA requires FSRA's consent in order to proceed with an asset transfer under these sections, and the PBA prescribes a number of requirements that have to be fulfilled in order to get that consent. So our role is really to determine if the PBA And regulations have been complied with. One of the big changes we're doing now, starting this year, is to commit to a service standard of 150 days. So that's something that we're working our way towards right now. If you've been involved in asset transfers in the past, you would know that in many cases, they took a year, sometimes they've taken two or three years, which is just not really workable. Our goal is 150 days. The part of that process that we're starting now is that when the new application comes in, we're going to have an initial 10-day period where we look at it, to see what's there, all the major components are there, the actual evaluations, plan amendment, a copy of notice, and so on. That's just an upfront high-level review, so that our staff can get back to you after about 10 days and let you know if it looks like something's missing, and it may be that something isn't missing, and we've just not read it, right. But it gives you the opportunity to tell us that and/or to tell us when that missing piece will be filed. It also allows our staff to tell you who they are and who the person is who's doing the review. You'll have a contact for that. We're going to ask of you if we ever need information or documents that are missing, we're going to ask you, if you can reply in 30 days. You can see that in the past, again, sometimes we've had replies come in six months, nine months after we've asked for something. If that happens, we obviously can't meet our 150-day goal of completing our review. We're also committing to work with you during this whole process of an asset transfer to the extent as needed, it won't always be needed. But if you have issues or questions or there's something that's not understood what is needed, contact the officer for your file, and we will work with you to help you come to an answer to your question or a resolution to the issue.

Copy, slide 20: FSRA’s role. Asset Transfer applications require FSRA’s consent under the PBA. The PBA prescribes many requirements that plan administrators must follow. It is FSRA’s role is to determine whether the PBA and Regulations have been complied with. FSRA will strive to process complete applications within 150 days of receipt, unless it has advised the applicant that more information is required. Initial 10-day completeness review. Incomplete applications may result in delays. 30-day response due date for FSRA requests. FSRA is also committed to working with applicants before and during the review process to clarify what applicants need to do to ensure their application is complete and compliant. Reach out to us (email is best) if you have any questions or potential issues. Let’s work together to ensure your application is complete and compliant.

Visual, slide 20: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. More text inside a FSRA Pale Teal coloured box placed across the slide [bottom position]. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 21: Now, our normal approach going forward is this sort of streamlined review process where we're focusing on certain things, not every single thing. However, we can change that for any given asset transfer if we thought it was appropriate. So just depending on the nature of the transfer, the number of plans, the complexity, maybe something's a brand-new type of situation hasn't been seen before, we may want to take a deeper dive into that application, and we will if we think that. Our detailed review, if we do take that deeper dive into the application may focus on communications, if we thought there was an issue around members understanding what was happening, it may focus on changes to members' benefits, if accrued benefits in the past are being altered, which is permissible, but we have to ensure that the value of those benefits is maintained. We may look at the consents that are given especially if you know maybe the number of consents is right on the edge of meeting the necessary percentage that's in Section 80.4 Transactions. And we may consider the financial position of the plans and sustainability of the plan sponsor. These are all things that we could look at in more detail than our normal process would speak to. And as well, from time to time, we're going to spot check certain things. If there's an aspect of member communication that we are not typically going to review every word on every time, we might, though, spot check that to see that it is being addressed properly from time to time. And finally, if we are doing a more detailed review of any aspect of the transaction, in most cases that won't affect our timelines. They are still going to aim to complete a review in 150 days. However, in those cases where it does affect the timeline, we'll let the applicant know that.

Copy, slide 21: FSRA’s Role. FSRA can decide to conduct a more detailed review and ask questions depending on: The application’s nature, size, complexity and impact on beneficiaries. If there are concerns that the requirements of our Approach Guidance or the PBA are not satisfied. Our detailed review or questions may focus on: Communications (especially if unclear of misleading). Changes to member benefits earned before the asset transfer effective date (if applicable). Consents (SEPP to JSPP applications) or objections. Complexity: if more than two plans are involved or multi-jurisdictional membership. Impact on financial position of the plans. Sustainability of the plan and sponsor. The fiduciary responsibility of plan administrators and sponsors in relation to the application. FSRA will do targeted spot checks on aspects of applications from time to time. FSRA will notify the applicant if it anticipates that the review might be delayed.

Visual, slide 21: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 22: Protecting members is really the key to all of this. Most of the protections are really built into the legislation for defined benefit transfers. First of all, there's a requirement that there's essentially a pro rata transfer of assets, including any surplus if there was surplus. So that means that the members who are leaving a plan are moving over with the same ratio of assets that the that they had in the plan they're coming from. There is also the 5% rule tests that Tim mentioned, I won't go into those in detail. There's several of them, depending if it's a section 80 transfer or 81, then there's slightly different tests. But again, those are there to protect members, so that the plans that they're moving into are funded in a certain way. Finally, there's the community value test, which we've mentioned, which is simply that the value in the receiving plan for any given member has to be at least as great as it was in the transferring plan the day before it left. The other big piece is communication, making sure that the member is informed and understands that they can contact FSRA if they have concerns about the transfer that they're affected by. Notices must be given to members and unions within certain prescribed timeframes, they have to contain certain information. Hopefully that's written in a way that's it's more easily understandable. The notice must contain our contact information, to advise them that they can contact us with any concerns about the application. Finally, the notice that goes out to members and the benefit calculation rules of the applicable jurisdiction, are going to apply for those members who are not Ontario members.

Copy, slide 22: How are Members Protected? The rules and requirements applicants must adhere to under the PBA and Regulations are written to protect member benefits by: Protecting accrued benefits. Pro rata transfer of assets (including any surplus) 5% rule tests. Commuted value test. Making sure the member is well informed and can voice concerns with FSRA. Notices must be given to members and collective bargaining agents (if any), within prescribed time. Notices must contain required information but be written in a way that is easy to understand. Notices must contain FSRA’s contact information and advise members that they can contact FSRA with any legitimate concerns with the application. Applicants must follow the asset transfer notice and benefit calculation rules of the applicable jurisdiction for members who are not Ontario members.

Visual, slide 22: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 23: This slide is just sort of depicting our new team approach to looking at asset transfers. The old approach was any transfer that came in was reviewed initially by the officer or analysts whose plan that was, each officer analysis was allocated a set of plans and if it occurred and their plan, they would be the ones reviewing it, which meant that all of our officers and analysts would from time-to-time review asset transfers, along with dozens of other things, so their focus wasn't on transfers. That's what we're trying to change here is to have a dedicated team of a handful of officers, analysts and technical consultants, that will look at every one of the transfers coming in. As a result, there they already are, and they will be even more knowledgeable about asset transfers and about the issues that can arise and so on. And we think that's going to make a noticeable difference. And that's one of the big reasons why we're going to be able to meet our 150-day standard.

Copy, slide 23: FSRA’s Team Approach. Asset Transfers Team. Advisory Services. Operations. Actuarial Consulting and Legal Services. Pension Officers & Analysts, Technical Consultants, Management Team (support from Actuarial Consulting and Legal Services). The Team. In Fall 2020, FSRA established an Asset Transfer Team. This collaboration approach allows FSRA to develop an in-depth understanding of potentially diverse and complex transactions. This results in a more focused and meaningful review that better protects member rights while demonstrating FSRA’s commitment to be an outcomes focused, principles-based regulator. Our internal review processes are being changed to align with our new Guidance and recent discretionary powers for notices.

Visual, slide 23: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the right] with Deep Orange round bulleted list. Illustration [positioned left] with three FSRA Pale Teal text boxes with arrows directed towards a FSRA Teal circular blurb. Additional grey text highlighted in a grey rectangle box. FSRA coloured logo [positioned top-right corner] on a white background [positioned left]. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 24: A couple slides here, just on special considerations, variants of the notice and timing content, we now have authority under the Act to allow for variations or waive certain requirements. We're asking you to let us know if you want us to waive a requirement. Our guidance mentioned some of the maybe more typical requests that we expect to see, but it by no means is meant to be exhaustive and you can come to us with anything doesn't mean we necessarily agree but for sure, come to us and let us know what you're thinking. And we can talk that through. Because in many cases, the requirements that are set out in the regulations may not, not all of them anyways, be applicable or understandable in the context of a given pension plan. As well, when you file the application with us, you should note in there if you have taken advantage of that waiver or variants. I've listed here a few of those more common things, which is things like a lot of the requirements for the notice really are similar and, in some cases, identical to the information that's required to be in the members annual statement. So instead of repeating all the information that was in the statement that might have just been given to the members in the last few months, you can reference the annual statement and not repeat it all in the asset transfer notice. So that would be an example of where you can make the notice be not so lengthy, be more understandable, and hopefully, easier to produce. Similarly, for the employer booklet, you might want to refer members, maybe there's an online booklet. Again, instead of repeating all that information that's in the booklet just for them to the online booklet, we can give timing extensions for the notice if there's some need for that as well. And from time to time there, they'll we will notice certain things that maybe that aren't quite compliant to a tee, but which have no meaning and no effect on anything. We can simply accept those as being not material to anything.

Copy, slide 24: Special Considerations - Variance of Notice Timing and Content. The PBA now allows FSRA to vary or waive content and timing requirements for asset transfer notices. Applicants should inform FSRA of any request for waiver or variance before notices are issued. FSRA will review and will communicate if it accepts the requests. When filed, the Application and/or Information Disclosure should disclose the waiver or variance request. Some examples of what FSRA might accept include: Using the most recently distributed annual pension statements and employee booklets where appropriate. Referring members to where they can access more detailed information (e.g., administrator’s website). Providing a timing extension for the notice if there are logistical challenges. Accepting immaterial variances to the notice content that is technically non-compliant.

Visual, slide 24: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 25: The second special consideration multi-jurisdictional plans and asset transfers. First of all, if you have a multi-jurisdictional plan, so a plan with members in more than one province and/or federal members, and there's a transfer going on, then that the transfer application gets filed with the regulator where that the original plan is registered. That will be registered wherever the plurality of members is. That regulator then essentially applies the legislation of all the other jurisdictions that are applicable for that plan. So only the benefits and the members benefits accrued in Ontario by members subject to Ontario's PBA only those have to follow the Ontario PBA rules and transfer regulations. If you have for example, Alberta members in that same transfer group, they're going to be subject to the Alberta rules, Quebec members subject to Quebec rules. That's important to keep in mind because although Ontario's rules usually are, if you comply with Ontario's in many cases, you're complying with most of the other jurisdictions, there's often some outliers there, Quebec being one where they have a specific requirement around surplus provisions. The applicant has to be aware of all that and ensure that they're complying with whatever jurisdictions are relevant. A second sort of complicated thing with these plans is if you're dealing with a partial asset transfer where some of the assets are coming from a multi-jurisdictional plan and moving to another plan, then there's an agreement that was revised agreement was signed last summer for multi-jurisdictional pension plans as part of the initiative around that. That agreement basically spells out how the assets get allocated. First, they get allocated by province and then they get allocated by the members who are transferring out of the plan. It is complicated and it has to be adhered to. For dealing with such a transfer, we will look for the actuarial report to identify that allocation of assets process. One final set of special cases, if you're dealing with a section 80.4 transfer, which is generally a single employer plan, transferring into an Ontario jointly sponsored pension plan. In those situations, we ask that you ensure that if there's members that are moving over to the JSPP, we ask that you ensure that the other regulators are on side with such a transfer. The reason being that the Ontario JSPP (Jointly Sponsored Pension Plan) is unique to Ontario. It has certain features that some other provinces may not be aware of and/or may not appreciate or want their members going into those plans. We want you to look into that before we go through all this. Otherwise, we will have to do that at the back end, and that could delay things.

Copy, slide 25: Special Considerations – Multi-Jurisdictional Asset Transfers. Applications are filed with the regulator where the original plan is registered, and that regulator will determine whether the requirements of all affected jurisdictions are followed. Only benefits accrued in Ontario are subject to the Ontario PBA and Transfer Regulations. Transfer applications that include members whose benefits are regulated by other jurisdictions must ensure compliance with those jurisdictions’ notice and benefit calculation rules. These applications should clearly identify all the jurisdictions whose laws must be complied with for affected beneficiaries. For partial, multi-jurisdictional transfers, the actuarial report must clearly outline the asset allocation in accordance with the 2020 Agreement Respecting Multi-jurisdictional Pension Plans (if applicable). For asset transfers that involve non-Ontario members transferring into an Ontario-registered JSPP, applicants should ensure that the legislation of the jurisdiction(s) governing non-Ontario members allows for the transfer to the JSPP. If not, FSRA may need to contact the other regulatory agencies to confirm their acceptance. This could delay FSRA’s review.

Visual, slide 25: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 26: Okay, that's it for this segment. Back to Tim. He's going to talk to you about our decision-making process.

Copy, slide 26: The Decision & After.

Visual, slide 26: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. More text inside a FSRA Pale Teal coloured box placed across the slide. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Time: 44:37-50:27
Slides: 27-30
Speaker: Tim Thomson

Spoken words, slides 27: Thanks, Mark. And yes, so it's time to talk about the finish line where we all want to get to. Generally, when an asset transfer is applications compliant, there's no reasons to withhold it, FSRA will give its consent. Generally, we do that consent through a letter addressed to the applicants. Now, this is something that we've done for years with Section 80 and 81 transfers using a letter consent process. For the past few years for Section 80.4 transfers, we were using a notice of intended decision (NOID) for a while, but the decision has now been made to make that a consistent process across all asset transfer applications. And we now do letter of consent for Section 80.4 transfers as well. That said, there are situations where we may issue our consent using a notice of intended decision, and then ultimately followed by an order. In those situations, we will advise applicants that we're going to use that process and where we might use it or where we must use that process is if there are any terms and conditions attached to our consent, which is rare, or even more rare, if we're going to refuse to consent to the transfer. Certainly, FSRA will provide you ample opportunity to address any issues in the application prior to coming to that decision. But ultimately, if it doesn't meet the requirements, then we do have to refuse the application and we will do that in a process of a NOID to refuse. There is another opportunity whereby if we advise the applicant that we are going to move to a NOID refuse the applicant could also withdraw their application.

Copy, slide 27: Consent/Refusal Process. When FSRA determines an asset transfer application is compliant and there are no reasons to withhold its consent – FSRA will give its consent. Generally, FSRA will issue its consent in a letter addressed to the applicant(s). However, FSRA may issue its consent using a Notice of Intended Decision (NOID), followed by an order, in any situation where FSRA determines that its use might be beneficial. Applicants will be advised in advance in those situations. FSRA must issue its consent using the NOID process, if Terms and conditions are attached to FSRA’s consent or FSRA is going to refuse to consent to the transfer. FSRA will provide applicants ample opportunity to address any issues during FSRA’s review process but if those issues cannot be addressed or if the application otherwise does not meet the requirements of the PBA and Regulations and/or the principles outlined in our Guidance, FSRA will not consent to the transfer. In such cases, a NOID to refuse to consent would be issued. Or the application may be withdrawn by the Applicant.

Visual, slide 27: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 28: When we do use a NOID, there is a process that comes out of that. When we issue a NOID, we ask that the administrator of all the plans involved, post that NOID electronically so that members can easily access it. Now for electronic postings not possible, administrators should contact us to discuss alternate options. Applicants can discuss any issues that they might have with posting with us here at FSRA. Then when the NOID is issued, there's a 30-day period where the impacted people or entities may request a hearing before the financial services tribunal the FST if no request is made, within 30 days, then FSRA will be in a position to issue final order to either consent or refuse. But if a hearing request is made within those 30 days, then no final order in respect to the NOID can be issued until a final decision is made by the FST or any court hearing if an appeal is made to the FST decision.

Copy, slide 28: Notice of Intended Decision – Process. When FSRA issues a NOID in order to deliver its consent (or refusal to consent) to an asset transfer, the administrator of all plans involved in the transfer are required to post the NOID electronically so that members can easily access it. Applicants should discuss posting details with FSRA. When a NOID is issued, there is a 30-day period where impacted persons or entities may request a hearing before the Financial Services Tribunal (FST). If no request for an FST hearing is made within the 30-day period, FSRA may issue a final order consenting or refusing to consent to the transfer. If an FST hearing request is made, no final order in respect of the NOID will be issued by FSRA until a final decision is issued by the FST, or any court hearing if an appeal is made of an FST decision.

Visual, slide 28: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 29: There are still a few important steps that occur after consent is given to an asset transfer. Until substantially all of the assets have been transferred to the successor plan, all the plans involved in the asset transfer, if there's more than one original plan, and the successor plan, they have to continue to operate a separate plan, and the liabilities that each of those plan still remains the responsibility of that plan. They still remain responsible for things like planned funding benefit payments, and submission of required filings to FSRA. You might be asking what does that mean substantially? Well, we do note that in the past, in certain situations, the transferring plan might lead behind, for example, a small amount to cover up benefit payments, or maybe expenses for a month or two. Or there could also be a situation where there's a problem with one asset, possibly a liquidity issue with that asset that they can't deal with immediately. In those situations, we would still consider that the asset transfer has substantially occurred and therefore is completed. For a full asset transfer for filings, if the actual transfer of substantially all the assets has not occurred by the end of the transferring plan's fiscal year end, all filings fees, and assessments are required for that completed fiscal year. Let me give an example because this is a point of confusion quite often, that we get questions on. Let's say that the original plan has a fiscal year end of December 31st. There's an asset transfer application made. Everything goes well, if FSRA provides its consent, and we issue that on November 23rd of 2021. But the actual assets were not transferred until March 14th of the following year, 2022. In that case, all filings fees and assessments for the 2021 fiscal year are generally required by the applicable 2022 deadlines. Now, for the stub year, which is Jan 1, 2022 to March 14, 2022, our position is that those stub filings are not required and that includes for the partial PBGF assessment for that period of time.

Copy, slide 29: Filing Documents and Reports After Consent. Until substantially all assets have been transferred to the successor plan, all plans involved in the asset transfer continue to operate as separate plans and the liabilities of each plan remain the responsibility of that plan and each plan remains responsible on a pre-transfer basis for; Plan funding Benefit payments; and Submission of required filings to FSRA. For a full asset transfer, if the actual transfer of substantially all assets has not occurred by the end of the transferring plan’s fiscal year end, all filings, fees and assessments are required for that completed fiscal year. Example. An original plan has a fiscal year end of December 31st. FSRA’s consent for the transfer was issued on November 23, 2021 but the assets were not transferred until March 14, 2022. All filings, fees and assessments for the 2021 fiscal year are generally required by the applicable 2022 deadlines.

Visual, slide 29: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. More text inside a FSRA Pale Teal coloured box placed across the slide. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Spoken words, slide 30: Now I'll just turn it back over to Mark with a few closing remarks, and then we'll open up for some questions and answers.

Copy, slide 30: Closing.

Visual, slide 30: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. More text inside a FSRA Pale Teal coloured box placed across the slide. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Time: 50:27-53:34
Slide: 31
Speaker: Mark Eagles

Spoken words, slide 31: Excellent. Thank you, Tim. Basically, just want to emphasize that the changes that we've been talking about are happening, some of them have happened, others are continuing to happen. Our review process is undergoing those changes as we speak. We did have a backlog we've worked our way through most of that and new applications that are coming in are going through our new process now. One thing that we obviously have not addressed in this webinar is DC (defined contribution) asset transfers. I just want to say we it's not that we've forgotten about them or don't care about them. They are important. We have, in fact probably as many DC transfers as we do DB. But DC of course, is or should be much simpler. You don't have the actuarial issues, the benefit issues and so on. What we're developing for DC is an online application tool so the applicant would go online submit or answer questions that are asked, submit documents like a plan amendment or a copy of the notice and the entire review process will likely then be collapsed into a space of maybe just a week or a couple of weeks. We think this is going to really, really be excellent for DC transfers. We do have problems with DC transfers, surprisingly, usually it's around a lack of documentation, failure to do some of the basic things that the PBA requires, like give notice to members. This portal application will immediately tell the applicant that they've got a problem if for instance, it says please attach a copy of the notice, and there was no notice. They all know that they have a problem to deal with right away. So that's coming hopefully later this year, as well either later this year, or next year, we're hoping to have an online application tool for DB asset transfers as well. It won't be as automated, there's just too many things that can go on with a DB transfer, but it'll just make the whole process of submitting an application easier. So that's it for our prepared words. We do have some Q and A's and questions I should say, set up in on the questions list here, which I think everyone can see. So, I think what we'll do is go to the top of that list.

Copy, slide 31: What’s Next? Continue enhancing internal review process and addressing backlog. FSRA will launch an online application tool on the Pension Services Portal, to guide DC asset transfer applicants through the application process This will help ensure that all required documentation and information is provided to FSRA. It will also cut down the review process time which historically has been delayed  due to incomplete applications. FSRA also intends to develop an online application tool for DB asset transfer applications.

Visual, slide 31: Presentation slide. FSRA Midnight Blue headline text and grey text left-aligned [positioned to the left] with Deep Orange round bulleted list. Illustration of an opened laptop with a checklist window [positioned to the right]. FSRA coloured logo [positioned top-right corner] on a white background. Ontario Coat of Arms [positioned bottom-right corner] on a FSRA Midnight Blue background.

Time: 53:34-1:04:40
Slide: 32
Speakers: Tim Thomson and Mark Eagles

Spoken words, slide 32:  I think the first one came in at 11:03, Mark. Which was, "Some pension plan sponsors denied...". Oh, but it looks like Julina  answered this. First of all, some of the questions were answered by one of our technical consultants. Julina, thank you very much for that, Julina. We're going to pass over the questions that were already answered by Julina and move on to some of the ones that were not answered by Julina. I guess one that came in, Mark, at 11:14. “I would like to know how many pension plans you regulate in the private sector?” I don't have the actual numbers, but I give you sort of ballpark. I think there's a second question after that. I'll do them both together. I think we have somewhere around 1400 defined benefit plans. Then somewhere around 3000 defined contribution plans. Those numbers won't be quite right, but it gives you an idea. Then the second question, I assume from the same person said that all they see is that the numbers of plans are dropping, and the regulatory environment increasing? What's the deal? Why are we making this so difficult? So all good observations, I have the same observations myself, I have been in this industry for 30 years. There's nothing to argue with there. What I would say is that we're not making this difficult. In fact, we're trying to make it more workable. And that's the goal of a lot of our changes is to ensure protection of benefits but take away some of the time and the effort needed in the past to make these transfers work. I'd also point out, you know, we're the regulator, we're not the government, we can't change the PBA ourselves. We take the legislation as given to us. Great, thanks Mark. Looks like Julina did a great job in answering a lot of the other questions after that. Just to let everybody know, yes, there will be a recorded version of the webinar included in our next pension eblast. So that will be available for everybody to see. Just scrolling down here. Okay. Here's one that Julina didn’t get to. “Does one have to assume the plan is closed for the going concern valuation for PFAD on a section 80 transfer?” Sorry, just trying to find that question...Oh, there it is. I see it. It came in at 11:35. I don't have an easy answer for you there. That must be coming from an actuary. If you want to contact Tim or I after this, send us an email and we'll look at that. I haven’t really been thinking of PFAD stuff for the last year and a half. I can’t recall what my answer should be, but if you email we will get back to you about that. Follow up question to that, “where the effective asset transfer date aligns with the last member statement date, is it sufficient to point the members to that statement, if already provided rather than attaching this statement to the notice?” Yes, it is. So that would be one of those variations you could ask for. Because right now the regulations say you have to put all this stuff into the notice. If you would rather not do that, and instead point to the fact that they got a member statement so many months ago. Of course, if a member can't find that statement, they have to be able to ask for it to be given to them again. But yes, you can point to the statement, you don't have to actually attach the statement, although you could do that too, either would work. “Can you please explain the rationale…”. That  was answered as well. Where's one that hasn't been answered? Julina did a great job. “At various times in the webinar it's been noted that FSRA only wants to receive items electronically. Given these statements made, can you confirm whether FSRA will be issuing a formal statement about this for our records?” If by that you mean, will we be telling everyone that that's the case? Then yes, we've done so on a couple occasions and we'll do it again in eblasts, asking people to submit everything electronically, and that there's no need for a hardcopy. Or maybe you're asking whether we would be acknowledging receipt, like a formal acknowledgement of your filing, and that we will be doing that as well. So hopefully that answers that question. So the next one was answered by Julina. Question here, I'm not completely sure what it's about. but “will you have someone reach out to me with the statistical data I requested?” That may be the number of plans data. If what I said isn't detailed enough, or accurate enough, again, just contact one of us and we can get you much better numbers on all of that. There's a question here about transferring IPPs is to a LIF. Oh, yeah. So that's okay. So IPPs individual pension plan with one, sometimes two members are in them, even though it's called individual. This is not what we were talking about today is what I would call for lack of a better word, a group or a bulk transfer. It's where the employer is initiating this, not where the member is. What you're asking about, though, is, it's also a different section of the Act, where an individual wants to move the value of their benefit out to a LIF. And, like all pension plans that we regulate, plan members have that option when they terminate employment, so it's tied to employment intent is set out under the Act. So an IPP member who terminates employment will have transfer options, individual transfer options, one of which would be to transfer it into a LIF if they're at the right age for a LIF. So I hope that answers that one, as well. I'll just mention, because we're talking about IPPs. There has been a recent change just a couple months ago, that anyone who has an IPP, if they are a significant shareholder, they can essentially apply to have their IPP exempt from the PBA entirely. So that's another way around things. Throw that out to you and you can look, take a look at that as well. Great. Thanks, Mark. I noticed that we're at full time but as Mark said at the beginning, we're willing to stay on for a little bit longer to answer, try and get through these questions. If you're willing to stay with us, then we'll do our best to get through them. So, Mark, there's another question here. “In some asset transfers, the number of transferring members is relatively small by comparison to the number of unaffected members. And these cases we recommend the use of extrapolated membership data from the most recent valuation report. This is more efficient, and can significantly lower actuarial fees and has no material impact on member benefits security. We note that OSFI routinely permits this approach, can FSRA provide some explanation as to why they would think this is not appropriate from earlier comment?” Good question. First of all, I'd say that the vast majority of our asset transfers, so we get like 100 of these a year, maybe 50, that are DB, the majority of them are not in material transfers, they are something they 10%, 50% of the plan so they do have an impact. But you're right, there are some, especially when we're talking about transfers into large government pension plans, where the amount coming in is very tiny compared to the huge plan it's going into. I would say, if you're dealing with a situation like that, then talk to us, because there may be a way to deal with that, that makes more sense. We have to address all the transfers that we see. For most of the transfers, we see our comments are applicable. But there may be cases where a different approach is appropriate. We just ask you to talk to us about that. Great, thanks. A question here “is a printable copy of the presentation available?” I mean, we are going to be posting a recording of this webinar, let us take that away as to whether we will make maybe a printable PDF version of the presentation available as well. We'll definitely take that into consideration. “Is the member notice to 60 days or six months after the effective date?” I think that one was answered earlier. It’s six months. It looks like Julina answered this one. One more question, Mark, “in addition to circulating the link to the webinar, can you also circulate the deck as a separate file?” That one is similar to what we said before, we will definitely try to do that as well. So, I think we got through all the questions, Mark. I think so. If you have other questions, send us an email. This has been great. Thank you again for attending. Thank you very much for the interest and for your time. Enjoy the rest of this beautiful sunny day. Bye.

Copy, slide 32: Question & Answer.

Visual, slide 32: Presentation slide. White headline text left-aligned [positioned to the left] on FSRA’s Midnight Blue background colour. FSRA white logo [positioned to the right] on FSRA’s Midnight Blue background colour. White sub-headline text left-aligned [positioned to the left]. Ontario Coat of Arms white logo [positioned to the right] on FSRA’s Deep Orange background colour.

Answer: Currently FSRA regulates 6500 plans of which 4678 are single-employer pension plans, 118 are multi-employer pension plans, 13 are jointly sponsored pension plans and 1691 are individual pensions plans. Amongst all these plan types, approximately 42% are defined benefit (DB), 45% are defined contribution (DC) and 13% are combination DB/DC plans. The vast majority these plans are sponsored by private companies.

Answer: We're trying to make it more workable. The goal of our new approach is to ensure protection of benefits while reducing the time and the effort needed to receive consent for asset transfer applications. FSRA, as the regulator, ensures compliance with the Pension Benefits Act and Regulations which are enacted through Government legislation.

Answer: Yes, that is our current position.

Answer: Notices must be given within 6 months after the effective date of the asset transfer. For PBA section 80.4 asset transfers, notices must be given prior to the application for the asset transfer being filed with FSRA. Further notice must be given when the application under section 80.4 is filed with FSRA. You may approach FSRA to request a variance or waiver with respect to notice requirements.

Answer: Section 80 addresses transfers resulting from a sales/purchase and if there is a change in employer by operation of law, an amendment to cease participation in the original plan may not be required. However, you should discuss the specifics of your transaction with FSRA to be certain.

Answer: In each case, the actuary should determine whether a plan is considered “closed” or not, based on whether it meets the definition of a closed plan in section 11.2 of the Regulation 909. In a situation where all assets and liabilities are being transferred to another plan (i.e., not just a portion of them), then by definition, all accruals would have ceased in that plan and the transferring plan would be seen as a closed plan. If only a portion of a plan’s assets and liabilities are being transferred, then the actuary would need to determine if the test set out in the definition of a closed plan in section 11.2 has been met. If an actuary is not certain about whether a plan is properly classified as closed – or not – then the actuary should obtain expert advice in that regard.

Answer: Yes, it is. This is a good example of an appropriate notice variance request. The regulations require a great deal of member information to be included in the notice that is also in the member statement. However, if a member can't find that statement, they must be able to request it from the plan administrator again.

Answer: This requirement is prescribed under the transfer regulation. Disclosing this information ensures that members are aware of the funded position of the plan they will be transferring to. The Regulations are made through legislation by the Government and FSRA must administer plans in accordance with the applicable legislation/regulations.

Answer: Yes, FSRA has previously advised the sector to submit their applications electronically, and that there's no need for a hardcopy. FSRA then formally acknowledges receipt of said applications via email with the party that made the submission.

Answer: No, if the information included in the notice is accurate and there are no other factors that would prompt a longer review process. However, we suggest that if you wish to vary the notice content requirement (e.g., leave out a required element of the notice content), you should first approach FSRA.

Question: Can you comment on what FSRA expects to see with respect to beneficiary designations that apply to assets transferring over in cases where (1) no beneficiary designated under new plan and (2) beneficiary was designated under original plan?

Answer: We understand that there is more than one way of dealing with this situation. However, it might be safer to advise affected members to complete a new beneficiary designation. Plan administrators should obtain legal advice concerning this matter.