On July 17, 2024, FSRA hosted an important webinar for pension plan administrators and service providers. Attendees had the opportunity to learn more about two recently released pieces of final Guidance – Pension Plan Amendments and Pension Plan Administrator Roles and Responsibilities.
The webinar helped attendees to:
- gain a better understanding of the three new sections added to the existing Pension Plan Administrator Roles and Responsibilities Guidance on complaints and inquiries, records retention, and providing information to beneficiaries
- get information on how FSRA interprets and administers certain provisions of the Pension Benefits Act relating to pension plan amendments that have retroactive effects
- get information on FSRA's approach to certain types of pension plan amendments
902 attendees participated in the webinar and had the opportunity to ask questions directly to the FSRA team.
Pension Plan Administrator Roles and Responsibilities Guidance and Pension Plan Amendments Guidance presentation deck
Date: July 17, 2024
Presenter: Victoria Lesau
You can view this video with closed captioning by selecting the “CC” button in the video menu. Note: the closed captioning text is automatically generated and has not been reviewed for accuracy.
0:04
Hello everyone, and welcome to today's webinar, FESRA's Pension Plan Administrator Roles and Responsibilities Guidance and Pension Plan Amendments Guidance.
0:15
Before we get started, I would like to go over a few items so you know how to participate in today's event.
0:23
You have the opportunity to submit text questions to today's presenters by typing your questions into the questions pane of the control panel.
0:32
You may send in your questions at any time during the presentation.
0:36
We will collect these and address them during the Q &A session at the end of today's presentation.
0:42
I would now like to introduce Victoria Lassault, Director, Credit Union, Insurance Prudential and Pensions Policy.
0:50
Victoria?
0:51
Great.
0:52
Thanks very much, Wendy, and hello everyone.
0:56
So welcome to FISBRA's information webinar on our recently released guidance on the pension Plan Administrator of Roles and Responsibilities Guidance and the Pension Plan Amendments Guidance.
1:06
So thank you for joining us today.
1:08
My name is Victoria Lassault and I'll be the moderator of today's webinar.
1:12
And I'll be joined by a few colleagues from the Policy, the Pension Operations and the Legal Teams here at FISRA.
1:19
So today on the agenda, we'll start with some introductions, provide a bit of background information about our guidance framework, an overview of the two pieces of guidance followed by a question period at the end.
1:33
And if we don't get into all the questions, we will post responses on our website.
1:37
And you can always reach out to us if you have any follow up questions as well.
1:41
I hope you'll find today's webinar informative and I'll move to introduce today's speakers.
1:49
So joining me today is David Bartucci, Head of Pension Plan Operations and Regulatory Effectiveness, as well as Fern Karsh and Cindy Kwok, who are both senior policy and technical leads from of Israel's pension policy team.
2:03
And then for our question period at the end, I'll be joined by two more colleagues, Tim Thompson, the Director of Pension Plan Operations, and Matthew, our legal counsel here at FISRA.
2:13
Next slide.
2:16
So before we begin, it's important to acknowledge the land we're on is the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabe, the Chippewa, the Haudenosaunee, and the Wendat peoples, and is now home to many diverse First Nations, Inuit and Métis peoples.
2:34
We acknowledge that Toronto is covered by Treaty 13 with the Mississaugas of the Credit and the Williams Treaty signed with multiple Mississaugas and Chippewa bands.
2:44
Next slide.
2:46
So before we dive into the two guidance documents, I'll provide a bit of background information specifically about how The guidance aligns with FSRA's objects and understanding the guidance of FSRA's principles-based regulatory approach and our guidance framework.
3:02
On the next slide, just a bit about our statutory objects.
3:07
There are two objects that are specific to the pension sector under the FSRA Act to promote good plan administration and to protect and safeguard pension benefits and the rights of beneficiaries.
3:19
The Roles and Responsibilities Guidance supports these statutory objects by setting out FISRA's interpretation of the existing legislative requirements relating to the duties of a plant administrator and by providing additional information on elements that FISRA views as being prudent for an administrator to consider in order to demonstrate that they're satisfying the standard of care.
3:44
And then similarly, the Plan Amendments Guidance is intended to protect beneficiaries from certain adverse amendments and promote good plan administration by encouraging timely filing of plan amendments with FISRA.
3:58
And on the next slide, I wanted to spend some time discussing our principle-based regulation approach or PBR, as we affectionately call it.
4:09
So PBR involves an approach that fosters collaboration between FISRA and the pension sector so that there's a shared understanding of the regulatory issues and desired outcomes.
4:20
Under this approach, FISRA doesn't act unilaterally, but attempts to build consensus and understanding.
4:26
There's an emphasis on communication, collaboration, and transparency on both sides of the regulatory relationship.
4:32
So as a principles-based regulator, FISRA uses guidance as a tool to communicate its thinking to the sector.
4:39
And the guidance is intended to first allow the sector to understand how FSRA supervises the sector or exercises its discretion.
4:48
And secondly, guidance is intended to allow the regulated entities to determine applicable compliance obligations.
4:58
You'll see there's some benefits on the slide list in terms of some benefits of PBR, such as giving both the regulator and stakeholders the flexibility to respond to market changes, to innovations and the ability to apply requirements in a proportional basis where it's possible for reserve to do so.
5:19
PBR makes use of qualitative terms, like fair, reasonable, prudent, to facilitate compliance in a manner that's best suited to the characteristics of the regulated entity.
5:31
And I should note that PBR does not replace or displace requirements that are set out in the Pension Benefits Act.
5:37
Bezra ensures compliance with these requirements, in certain situations, we'll also consider them through the lens of our statutory objects in terms of the best outcomes for beneficiaries and the plan administration.
5:49
So the two guidance documents that we'll discuss today don't take a detailed prescriptive checklist approach, instead they set out some high-level expectations of what should be articulated.
5:59
So for example, for the roles and responsibilities guidance, it sets out best practices in terms of having written complaints handling policies.
6:08
However, the policy or process in of itself does not necessarily lead to the desired outcome of complaints being handled fairly and in a timely manner.
6:18
So we acknowledge that the desired outcome can be achieved in another manner depending on the circumstances of the situation.
6:24
And that's what we explain in the guidance.
6:30
And I'll know lastly that we expect plan administrators and consultants to spend time understanding and using their judgment as to how to comply with the guidance and with FISRA's objects in mind, appreciating that it takes time to adjust to this PBR approach and that use of judgment.
6:48
So on the next slide, I'll cover our guidance framework that we use here at FISRA as you'll see references to these concepts throughout the presentation.
6:58
So FISRA regulates a number of financial services sectors and we use four distinct types of that you see here on the screen to support requirements that are set on the legislation and regulation or FISRA rules.
7:11
We standardize our guidance approach to be more transparent for stakeholders so that you can better understand our interpretation of the law and our supervisory approach.
7:20
So the four different types of guidance are interpretation, decision, information, and approach guidance.
7:26
And one piece of guidance can be a mix of these categories.
7:29
So interpretation guidance generally sets out FISRA's views of requirements under the legislation, regulations or rules and interpretation of those requirements.
7:38
Approach guidance describes FISRA's internal processes and practices for supervisory action and application of FISRA's CEO discretion.
7:50
And approach guidance does not create compliance obligations, but can be considered indicative of FISRA's position.
7:55
And it's important to note that approach guidance does not alter requirements to comply with existing legal or regulatory frameworks.
8:04
Decision guidance sets out FISR's determination on a regulatory decision that involves a specific set of facts that we believe would provide value to other parties not involved in the specific matter.
8:15
And information guidance provides FISR's views on certain topics such as leading practices or emerging issues.
8:23
So we'll speak about how each of the two pieces of guidance we're talking about today falls under this framework.
8:31
And with the next slide, I'd like to invite Cindy Kwok, our Senior Policy and Technical Lead in our Pension Policy team to provide an overview of our roles and responsibilities guidance.
8:47
Great, thank you, Victoria.
8:50
Next slide, please.
8:56
So starting off with some context and rationale for this guidance, pension plan administrators have an important role.
9:03
They manage their plans.
9:05
They make decisions in the best interests of beneficiaries, they administer the plan as per the plan documents, and comply with their legal obligations.
9:15
Ultimately, administrators are subject to fiduciary duty under the PBA and common law, and this fiduciary duty is the highest standard of care in law.
9:25
And because of this significant role, it is important that administrators inform themselves so that they are aware of their responsibilities.
9:33
and FISRA as the regulator with statutory objects to promote good plan administration and protect beneficiary rights and benefits.
9:42
We had issued guidance in July 2021 to highlight some key roles and responsibilities to support plan administrators.
9:50
Since 2021, FISRA has observed several relevant and topical issues in the sector that could benefit from further guidance and so this latest update to the guidance added three new sections and updated some of the previously released content where it was appropriate.
10:09
The updated guidance was released on June 5th after a public consultation period that ran from August to September 2023 and replaces the previous July 2021 version.
10:25
So to summarize, FISRA's Pension Plan Administrator Roles and Responsibilities Guidance, sets out FISRA's interpretation of legislative requirements and provides information on good practices.
10:37
So something to keep in mind when reading this guidance and how it will be referred to for this webinar.
10:44
Specifically for this guidance, the use of the word must signals an explicit legislative requirement and or FISRA's interpretation of a legislative requirement.
10:54
While the use of the word should are good practices for administrators to consider incorporating.
11:02
Next slide, please.
11:06
This slide here provides a list of the headings that are in the guidance.
11:09
I'm not going to read through the whole list.
11:11
I just want to point out at the bottom of the slide where three new sections are added and these are records retention, complaints and inquiries, and providing information to beneficiaries.
11:22
And I'll go on to provide a few more highlights of these three sections in the following slides.
11:27
Next slide, please.
11:34
So Section 8, Records Retention.
11:37
This section of the guidance covers business interpretation of the PBA with respect to records, retention, roles, and responsibilities, as well as providing some good practices to consider.
11:49
Administrators must manage and maintain records relating to the pension plan and the pension fund in a manner that complies with the fiduciary duty, the PBA, and applicable law.
12:00
And to demonstrate compliance with the standard of care, BISBRA's interpretation is that administrators must retain and make relevant records available.
12:10
And this is for as long as needed for good plan administration and to be able to demonstrate that the plan has fulfilled its legal obligations to beneficiaries and others.
12:20
So that in the event of a dispute, for example, you will have the records to demonstrate that you've already paid a benefit entitlement.
12:27
We have also noted that specific records must be kept indefinitely and made available upon inspection requests to meet the requirements of Section 29 of the PBA.
12:40
So as general good practice, administrators should put in place records management and retention policies to demonstrate satisfying the standard of care.
12:51
FSRA recognizes that plans differ in size and complexity, so we're expecting a policy that is appropriately suited to the characteristics of your plan.
13:02
Some other good practices include integrating your records management and retention policies with data risk management practices.
13:10
This could be considering cybersecurity or in the event of disaster recovery.
13:16
Another good practice is ensuring that any records keeping arrangement with a third party service provider allows you to demonstrate compliance with your record-keeping policies and also that these arrangements fulfills your legal obligation as a plan administrator with respect to maintaining plan records.
13:37
For example, your contract with your service provider should ensure that records are retained for the appropriate amount of time by the service provider.
13:47
As for timelines of retention of different types of records, this isn't currently prescribed in the PEA, and as such, FISRA's interpretation is that administrators must determine appropriate retention timelines for different types of records, noting that there are certain records with prescribed retention periods listed under other statutes, such as Income Tax Act, Employment Standards Act, etc.
14:13
So as good practice, administrators should consider putting in place a schedule that lists different reasonable record retention periods, and ultimately what FISRA is looking for is a decision making process to demonstrate you have fulfilled your standard of care by considering such as the nature of the record and illegal requirements, the average lifespan of a member and their surviving spouses.
14:36
These are all potential considerations with determining the appropriate retention period of a record.
14:44
Moving on to the next section, next slide please, Complaints and Inquiries.
14:52
Section 9 of the guidance covers FISRA's interpretation of the PDA with respect to roles and responsibilities when handling complaints and inquiries, as well as providing some good practices to consider.
15:05
To demonstrate compliance with the standard of care, FISRA's interpretation is that plan administrators must observe high standards of integrity and honesty and act in the good faith and in the best interest of beneficiaries when responding to complaints and inquiries.
15:20
The guidance also further suggests implementing written complaint and inquiry handling policies and procedures.
15:28
These are good practices that can demonstrate that you've fulfilled the required standard of care.
15:34
Again, FSRA recognizes that plans differ in size and complexity, and so having a policy that is once again appropriately suited to the characteristics of your plan.
15:43
For example, the exact content of your policy may vary and even your resources that are available will vary depending on the number, frequency and complexity of the usual complaints and inquiries that you receive.
15:59
So FISRA really what we're looking for is that administrators can demonstrate their striving to achieve certain principles such as accessible, fairness, timely, transparent and effective when they're handling inquiries and complaints that they receive.
16:15
These are principles from FISRA's Complaints Resolution Policy Framework.
16:20
So in practice, ask yourself, are the planned beneficiaries, whether these are active members, former members, retired members, surviving spouses, or other individuals who may be entitled to payment from the plan, are they provided with contact information to direct questions and Do they know of the expected timelines?
16:42
Do they know who is involved in complaints and inquiries process in your organization?
16:47
And other questions and additional other questions to consider, are beneficiaries made aware of issues relevant to their inquiry or complaint?
16:58
Do they receive a timely response?
17:01
And are they provided an opportunity to respond to return?
17:06
Moving on to the last newly added section, next slide please.
17:14
Providing information to plan beneficiaries.
17:17
This is section 10 of the guidance, covers FISWIS interpretation of the PBA with respect to responsibilities when providing information to beneficiaries, as well as providing some good practices to consider.
17:30
And so to demonstrate compliance with the standard of care, FISWIS interpretation is that plan administrators must provide information, appropriate information to plan beneficiaries that one, communicates plan terms and legislative requirements in a clear manner.
17:47
Two, is accurate, up to date and reflects the plan.
17:51
The terms of the plan is applicable to the beneficiaries and three, reflects any changes made to the plan within a reasonable amount of time.
17:59
So really this section is more straightforward.
18:02
It's to highlight that information provided to beneficiaries are clear, accurate, and up-to-date.
18:08
As a way to ensure that your information communicated is clear, administrators should consider communicating benefit changes and statutory notices in plain language.
18:19
Another good practice is putting in place written policies and procedures that ensure information accessed by your beneficiaries are current and correct.
18:28
And once again, when we refer to beneficiaries, this could be active members, past members, retired members, spouses, etc.
18:36
Because we do recognize that reflecting new changes to information that is available takes some time, a reasonable amount of time, so to the extent possible, administrators should ensure that beneficiaries are accessing up-to-date information.
18:51
And lastly, it may be prudent for administrators to consider implementing policies and practices for electronic communications, as this is a more increasingly common practice.
19:02
This will help ensure your compliance with the PBA, applicable laws, and CAPSA guideline number two that covers electronic communication in the pension industry.
19:14
This ends the portion of the webinar on the Administrator roles and responsibilities guidance.
19:19
We will have a joint question and answer period for both guidance at the very end.
19:24
Next slide.
19:26
I will now pass it on to my colleague and fellow senior policy and technical lead Fern Karsh to provide an overview of the plan amendments guidance.
19:35
Over to you.
19:39
Great, thanks Cindy.
19:41
I'm here to talk about pension plan amendments guidance published on June 4.
19:45
Plan amendments guidance represents brand new FSRA guidance.
19:49
The intention is to inform stakeholders as to how FSRA interprets and administers certain provisions of the Pension Benefits Act relating to certain plan amendments, including amendments that have retroactive effect.
20:04
The term retroactive adverse amendment does not appear in the Pension Benefits Act, but we use this term as a reference for retroactive amendments that negatively impact member rights in accordance with FISRA's interpretation of legislation.
20:20
Retroactive in this context means has an effective date prior to the date that the amendment is filed with FISRA.
20:27
The approach outline is meant to improve FISRA's transparency for stakeholders, consistent with the Plan Amendments approach that FISRA has already been taking during FISRA's existence and previously during FISCO's prior administration.
20:44
We published this guidance to clarify FISRA's framework for such amendments.
20:50
This guidance is not intended to address all possible issues or questions that could arise in the context of Planned Amendments.
20:57
It is limited to addressing the issues that are specifically listed.
21:02
There has been significant stakeholder engagement on this guidance over multiple consultations.
21:08
This was first published for consultation August, 2022, followed by target engagements and a second public consultation November, 2023.
21:18
Final guidance was published in June, which contains additional changes in response to stakeholder feedback.
21:24
We thank all stakeholders who have taken the time and effort to engage with us directly and those who provided written submissions.
21:31
Your feedback is valuable and it impacted the final product.
21:36
On the next slide, the interpretation section sets out our view of what the PBA requires in relation to retroactive adverse amendments and FISRA's discretion to register or to refuse to register them.
21:50
The approach section on amendments with retroactive adverse effects sets out that administrators should discuss these with FISRA prior to filing and should be prepared to make submissions on registrability, as well as FISRA's approach to the evaluation and discretion to register such amendments.
22:11
The approach section on replacing a variable indexation formula with a fixed indexation sets out that these types of amendments are generally impermissible because of their potential to reduce accrued benefits entitlements, which would render them void.
22:27
The approach section on notice requirements for certain adverse amendments sets out that administrators must, in all cases, submit to FISRA in writing a request to exercise FISRA's discretion to dispense with notice requirements.
22:44
On the next slide, relevant statutory provisions include FSRA statutory objects under the FSRA Act.
22:56
These inform how FSRA reviews filed amendments and exercises discretion.
23:01
Provisions of the Pension Benefits Act also apply.
23:05
Plan amendments can be made at any time, but are required to be filed with FSRA for registration.
23:11
The timeframe for filing an amendment application is within 60 days after the plan is amended in accordance with subsection 12.1.
23:22
However, the amendment is not effective until it is filed in accordance with subsection 13.1.
23:28
Generally, an amendment is void under section 14 of the PVA if it purports to reduce the amount or value of certain benefits already accrued under the pension plan.
23:40
Any reduction of the amount or commuted value of an ancillary benefit where beneficiary has already met all eligibility requirements under the plan terms is also void.
23:51
There are certain exceptions. Plan administrators should be familiar with PBA requirements relating to plan amendments that they wish to file.
24:00
This includes filing timelines.
24:02
Administrators must also ensure that they satisfy the standard of care under Section 22 of the PBA.
24:09
This means acting prudently and with the required degree of care, diligence and skill when preparing and filing amendments with FISRA.
24:18
Plan administrators are obligated to ensure that plans and amendments are administered in accordance with all statutory requirements.
24:26
Administrators should seek appropriate advice from service providers where necessary or advisable to ensure that they satisfy their obligations.
24:35
In the case of a failure to comply with statutory requirements, FISRA may refuse to register the amendment, and FISRA could also take regulatory action against the administrator for inappropriate plan administration.
24:50
Administrators should be mindful to retain appropriate records relating to amendments.
24:55
Plan amendments, as you've already heard, represent one example of records retention requirements, which are also discussed in rules and responsibilities guidance.
25:03
I will now pass this over to David Bartucci, Head of Pension Plan Operations and Regulatory Effectiveness at FSRA to provide information on the interpretation and approach sections of the Plan Amendment's guidance.
25:23
Great, thanks Fern.
25:24
Before I jump into the approach, I just wanted to spend a bit more time talking about what we're talking about in this guidance and in particular around the definition of a retroactive adverse amendments.
25:38
So I think Fern gave a really good definition before.
25:42
And so I'll just kind of recap that, that we're talking about amendments that are retroactive and I'll come to that again in a moment, but retroactive meaning before they're filed with us and adverse.
25:56
And so adverse is not the same thing as void.
25:59
We recognize that void has a specific meaning and it's defined in the act.
26:03
And so what we're talking about here is amendments that are adverse, meaning that they remove a beneficiary's rights or entitlements, but not necessarily those that are void.
26:15
It's our position that we have the discretion to register or not these amendments.
26:21
And what we've set out in the guidance is hopefully a more transparent process for the sector in understanding how we'll apply that discretion in registering the guidance, the kinds of factors and principles that we'll be looking for in making that determination.
26:38
This slide sets out a couple of examples of ones that we view are not permissible and a handful of exceptions that we think, depending on the fact pattern, might be registrable.
26:51
I think the most important thing that I wanna emphasize here is that in all of these cases, we wanna hear from administrators as much as possible before the amendments are filed so that we can have that discussion upfront.
27:06
And I think more generally, I wanna encourage people to try to the extent possible to file amendments prospectively, meaning that the effective date is after the date that they're filed with us.
27:18
Can I have the next slide?
27:25
So a little bit more on the dates that I just mentioned and that Fern mentioned, hopefully this visual is helpful.
27:34
And so, as I said, retroactive means prior to the date that an amendment is filed.
27:40
And then on the right side of the dotted line, you can see that there's two dates.
27:43
One is the date of filing and then the date of registration.
27:47
And so as we set out in the guidance, it's our view that amendments that are retroactive and adverse may not be registrable by us.
27:57
Amendments that are prospective are registrable by us, even if they're adverse.
28:02
And I guess I also wanna mention that retroactivity in the guidance and more generally in our view is about adverse amendments.
28:13
If you have an amendment that is neutral or positive to members' rights or entitlements, those are always registrable by us.
28:22
Our guidance is really focused on those that are adverse.
28:26
I think Fernswell did a good job at setting out our view of when and how that 60-day period after the date of registration and data filing in our view link together.
28:40
Can I have the next slide, please?
28:45
So in terms of the approach and set out in the guidance and more generally the way that we intend to administer this guidance, the most important things I said is engaging with us and talking about that the amendment does have retroactive adverse effects explaining an administrator's view of why this guidance should be registrable by us and how the amendment complies with the Pension Benefits Act.
29:17
There's a couple of other things on the slide that I think are important as well.
29:20
The first is that this approach, while it's a new guidance, isn't really different from how we've been administering these type of amendments for many years, including the predecessor regulator.
29:31
So our hope is that this guidance is more transparent and sets out some principles so that there's clear and consistent approach in how this part of the act is administered.
29:42
The other thing that I want to mention is we get about 100 amendments filed with us in any given month of all types and only a very small percentage of them are retroactive and adverse.
29:56
So we put fewer than 20 per year.
29:58
It's usually even less than that.
30:00
But I think the important thing is that this isn't something that happens frequently, but we recognize that when these amendments are filed, they tend to have significant impacts and can be very complex.
30:17
Next slide, please.
30:23
So this slide sets out some of the things that we're going to consider in reviewing the amendment and deciding whether to register it or not.
30:34
So we ask questions about, has there been prior communication to members on the amendment?
30:42
So at the time, say the amendment was being made, did members understand what was happening?
30:47
We also wanna understand the scope and impact to members' rights and benefits, why it's being filed retroactively, and the time period from when it's filed to when it was effective.
31:00
And then questions about equitability between cohorts of members and across the membership of a plan.
31:10
So our hope and expectation is that we can, either in the dialogue or in the submissions that we get around these applications, hear from administrators about these factors.
31:22
And that'll be, I think, instructive to us in helping to have a common transparent approach.
31:30
The other thing is we recognize certainly that transparency and predictability are important to the sector and so for that reason what we're going to do is publish anonymized fact patterns of these guidance or these amendments excuse me that we've decided to register on our website.
31:50
So anonymized meaning readers won't be able to to determine which plan we're talking about, but we'll provide enough detail on the facts that you will have predictability around what we're talking about.
32:03
So you can think about whether your fact pattern is or isn't similar.
32:08
The other thing that Fern touched on that I'll just mention again, is where we refuse to register an amendment and an administrator doesn't want to withdraw, then we may issue a notice of intent decision or NOID.
32:25
Our preference obviously is in the discussion that we can arrive at a resolution that doesn't require us to produce a NOID or order.
32:36
I have the next slide.
32:42
So the next section of this guidance as Fern touched on relates to replacing a variable indexation formula with a fixed rate.
32:50
And so as Fern set out, these amendments are generally considered to be void by us because they remove a variable indexation formula and have a fixed one.
33:04
There may be some circumstances in which case we may register these types of amendments.
33:11
I think in this case in particular, these are important ones to discuss with us before they're filed so that we can understand all the factors and circumstances that are going into the reason why the amendment is being made.
33:30
And I have the next slide, please.
33:35
So thank you.
33:36
The last section of this guidance relates to notice requirements around prospective adverse amendments.
33:43
And so our act, the Pension Benefits Act, sets out that administrators are to transmit notice to affected persons when adverse amendments are made in certain circumstances.
33:56
Administrators may write to us to request that we exercise their discretion, that they not or that they forego that notice, but we ask that people don't assume that in making that request that it will be granted.
34:17
And so wait until we've had the discussion and we've been able to review and make a determination around that request.
34:26
Our view of what good practices in terms of what that amendment notice should contain are set out on this slide.
34:34
and I think that the most important things to capture here that people have a good understanding of what's happening in the amendment.
34:42
They understand where questions can be addressed and set out that they don't impact the filing timeline and doesn't remedy void amendments or otherwise non-compliant amendments. And I have the next slide.
35:02
So I'm going to pass it back to my colleague, Victoria, to summarize and then moderate the Q &A period.
35:10
Great.
35:11
Thank you, David.
35:13
So just on the next slide, a quick recap of what we heard.
35:18
So on the roles and responsibilities guidance, the key takeaway is that the recent updated guidance that was released added three new sections relating to record management, complaints handling and communication of information to members.
35:33
Administrators are responsible for knowing their roles and responsibilities with respect to these three sections, as well as other parts of the guidance.
35:41
For plan amendments guidance, it's a brand new piece of guidance that sets up visitors interpretation and approach for a new category of amendment called retroactive adverse amendment, certain void amendments and notice requirements.
35:55
As David mentioned, administrators are encouraged to follow their amendments on time to avoid the process related with the review of a retroactive adverse amendments, and FISRA will publish anonymized fact patterns of retroactive adverse amendments that we have decided to register and we'll publish them on our website in an anonymized manner.
36:16
So that concludes the formal portion of the presentation, and we will post both the PowerPoint on our website in mid-August, as well as this webinar, including the Q &A period that we're gonna have shortly.
36:31
So all of that will be available in mid-August, as well as a French translation, in case you want to refresh your memory or share it with others who are not able to attend.
36:42
So I'll just ask our question panelists to come up.
36:46
So David, Tim, and Matthew.
36:50
And here's just a reminder on the screen in terms of how to enter your questions if you haven't had a chance to do so yet.
36:57
I'm already seeing there's quite a few questions come in, so we can start with those.
37:02
And to the extent some questions have a similar theme, I'll group them together and we'll respond once.
37:08
And if we don't get to your question, we will post the responses on our website and we can begin.
37:17
So the first question is relating maybe we can start with some of the roles and responsibilities guidance questions.
37:27
So the first question is on the CAFSA guideline number four.
37:32
Maybe I'll direct this one to Matthew.
37:35
So CAFSA guideline number four speaks to roles and responsibilities, including the role of plan administrators and sponsors.
37:42
are FISRA's updates to the plan administrator roles and responsibilities guidance reflected in CAFSA guideline number four?
37:50
Yeah, so while the CAFSA guideline number four was published quite some time ago, and it does set out various general approaches and suggested approaches to dealing with governance and things like that.
38:02
And so, no, I mean, since our guidance is something that has been published subsequent to that, you know, the guideline number four wouldn't necessarily reflect the things that our guidelines specifies.
38:15
And certainly, you know, I believe CAPSA, you know, CAPSA frequently revises its own guidelines and considers what if they needed updating.
38:26
And so the next time CAPSA gets around to revising its guideline on governance, that's certainly something that we as CAPSA members would, you know, if there's something we wanted to add to that, we would certainly point that out to CAPSA and see if CAPSA would do that but CAPSA's guideline is a separate guideline from our guidance document. Great, thanks Matthew.
38:50
Next question also on the roles and responsibilities guidance relating to records retention and how long records should be retained.
38:57
So the question is what happens with records for companies that have gone out of business and then there's a separate related question as what happens with with records for plans that have been wound up?
39:07
And maybe I'll direct this one to Tim, Tim Thompson.
39:11
Thank you.
39:12
Yeah, very good question.
39:14
I would say that, you know, technically, first of all, when a plan goes bankrupt, it's also going to wind up.
39:21
Technically, once a plan has wound up, there is no requirement per se to retain documents indefinitely.
39:30
However, I would say we would consider it a good practice to look at your retention schedule and build some buffer into that time.
39:38
The reason being is that we do actually receive a lot of member inquiries in relations to pension plans that have wound up and are subsequently closed.
39:48
Perhaps they were missing members, perhaps they had some sort of concern with how their benefit was calculated under the windup, what might it be, something along those lines.
39:57
And at that point in time, we do try to see if there's still a contact either at the administration of the plan or the third party service provider and try to get those members some answers so at that time it would be certainly prudent to have some documentation available that you would be able to answer those types of questions.
40:18
Great thank you Tim.
40:19
Another question on roles and responsibilities guidance and this time on the new section relating to relating to providing information to beneficiaries.
40:28
So maybe I'll direct this one at Matthew.
40:31
So section 10 notes that FISRA must provide appropriate info to fisheries that reflects changes within a reasonable time period?
40:39
So the question is what is a reasonable time period?
40:42
Yeah well the I guess the reasonable time period will often depend on what the document is doing and the time frame for the document that contains the information.
40:52
So for example you know when amendments are made there are various notice requirements as far as those amendments go and you know information about amendments has to be given, for example, in annual statements and that kind of thing.
41:09
So where there is like a legislative deadline to provide certain types of information, certainly we would expect that, you know, when that member statement or when that notice document that's required to be sent out is sent out, we would want that notice document to reflect the information and the terms of the plan as they exist.
41:28
So certainly when there's a legislative deadline, we expect that notice that satisfies that deadline to contain the accurate and up-to-date information for the plan.
41:40
And otherwise, if the plan administrator is providing additional information, such as for example, a member booklet that is being given out to plan members when they join, once again, we'd expect that information be updated pretty accurately to the members who join the plan, for example, know what the plan terms are and what they're going to get, you know, if there's errors and that kind of thing that can cause problems later on.
42:09
You know, we understand that sometimes these documents take a while to get updated, but certainly there should be at least some sort of process in place to, you know, notify members in that kind of situation that information they're being given may not be totally accurate, here's the other supplementary information that you know provides that kind of accurate information so it really does depend on the situation what documents being given that kind of thing but you know as long as the plans are acting reasonably to satisfy their requirements that's our activity. Great thank you Matthew and another follow-up question for you.
42:50
So how should plan administrators and this is relating to the roles and responsibilities guideline, how should plan administrators conduct themselves when facing a situation where a competing surviving spouses, beneficiaries or other third parties are claiming the same death benefit? Any advice, especially when there is a risk of litigation?
43:10
Yeah, well, I mean, that's that's those kinds of situations are very, very fact specific, right?
43:17
When you have competing beneficiaries, trying to get the same information, same benefit, You know, those are difficult situations we understand.
43:26
And I think the plan administrator as a fiduciary has to assess the situation.
43:31
It has to assess all those competing claims, try to figure out who is entitled to it.
43:36
If the plan administrator requires, you know, external help or other help in order to make that determination and help them reach that decision, then absolutely they should be going out and getting that help.
43:50
But, you know, these situations, like I say, are very, very fact-specific.
43:55
You know, the situations which arise to these are usually quite difficult.
43:59
And the plan administrator as fiduciary will just have to make its best efforts to make sure that the right people get paid.
44:08
Great. Thank you, Matthew.
44:10
And maybe just to give you a break, I'll direct the next question at Tim.
44:16
So now we're moving on to the plan amendments guidance.
44:20
And the question is relating to adverse amendments and wind-ups.
44:26
So adverse amendments include pension plan wind-ups as well as pension plan mergers and divisions.
44:31
Members, unions must be notified prior to the effective date of this plan event as well as filing the plan text amendment must be filed prior to the effective date.
44:40
Please confirm.
44:43
Right.
44:44
Yes.
44:44
So, I mean, as a lot of you probably know, there are very specific requirements regarding notice for wind-ups and asset transfers.
44:53
But certainly, yes, for example, with an original plan and an asset transfer, the amendment to cease accruals in that plan on the effective date of the merger, that is considered an adverse amendment.
45:07
Similarly, a wind-up amendment is also considered to be an adverse amendment, so I am confirming your understanding that those would have to follow those notice requirements.
45:17
But there's also very specific notice requirements built in for wind-ups and asset transfers in the Act and recs as well.
45:25
Great.
45:26
Thanks, Tim.
45:26
And now back to Matthew.
45:28
Plan amendments guidance.
45:29
Will FISRA exercise its discretion and register a retroactive plan amendment to rectify errors in a plan text if FISRA considers that the amendment does not truly have an adverse effect?
45:43
So no, as the guidance says, you know, FISRA as a regulatory body, we do not have the authority to rectify plan terms, the terms of that contract.
45:56
Rectification is something that a court has the power to do.
46:00
We don't have the power to do that.
46:02
So if changing the plan terms retroactively in order to rectify what it says and the impact of it, if that's something that the administrator is seeking or the employer is seeking, then that's something for the courts.
46:16
That's not something for FISRA to do.
46:20
Thanks Matthew. Back to Tim.
46:24
The amendment plan amendment guidance recommends checking with FSRA and I think David alluded to this during his portion of the presentation.
46:32
So recommend checking with FSRA before submitting a retroactive adverse amendment.
46:36
Who should we contact and how and what sort of timing should we expect for this? Tim.
46:44
Yep. Thank you.
46:47
I think for all types of things that come into us, we recommend and we actually ask and require that you send them in by the pension inquiries email, which is pensioninquiries at fsrao.ca. It's on our website as well.
47:01
That ensures that it's going to get to the right person and get to the right person very quickly.
47:06
And I would say that if it's an inquiry in relation to a retroactive adverse amendment.
47:13
We do have a business goal of 45 business days for answering inquiries, but I would say that, we make very, very big efforts to have that relationship with pension plans these days.
47:24
We have a lot of meetings with pension plans when they are proposing to do something like a retroactive adverse amendment or in advance of a windup or an asset transfer, for example.
47:33
So I would say that you would probably expect to hear back from us much sooner than that 45 business day goal.
47:41
Great. Thank you.
47:43
So the next question is relating to the timing of notice to members and some of the requirements under the PBA. So maybe I'll direct this one to Matthew.
47:53
So is the notice of a prospective adverse amendment given under the PBA valid if the actual adverse amendment is not filed until it's not filed at the same time of the notice and is not drafted until subsequent to the notice to plan members being provided.
48:12
And if so, how can plan members respond to the invitation to submit comments to FISRA if the prospect of an amendment on which they can comment on has not yet been filed or prepared?
48:22
So just if you could speak a little bit to the timing, considering.
48:24
Yeah, okay.
48:25
So I think the question here is about a situation where there's going to be a plan amendment, but it hasn't even been made yet, but I guess the employer knows what it's going to do.
48:37
It's going to do something adverse.
48:39
And so the employer or administrator wants to send out the adverse notice that would be required of that amendment under section 26 of the Pension Benefits Act.
48:49
So, and the issue is then, you know, if that notice is sent out, does it actually work in the sense that there actually is no amendment yet?
48:58
And so how can it be that members could comment on that and that kind of thing if there's no actual amendment yet.
49:04
And so I think that's what the question is and whether that kind of notice would be satisfactory in the situation.
49:11
I guess I would say that section 26 doesn't really, I don't believe it says that the notice, or I'd have to, I don't have it in front of me, but I think the issue would be that if the notice that is sent out in relation to the amendment, whether it's coming or exists, if the notice doesn't accurately describe what that amendment does, then there will be an issue with that, because then the notice wouldn't have been satisfactory, right?
49:41
So there's certainly a danger for plans to try to send out these kind of preemptive type notices ahead of the time when they actually, you know, have an amendment drafted or even filed.
49:57
So, because if it doesn't reflect what the amendment actually says, then that notice really hasn't satisfied the requirements of section 26.
50:06
Certainly it would be much safer for the employer administrator to actually have an amendment, even if it hasn't been filed yet before they send out that notice in order to make sure that it does actually reflect what that amendment says.
50:23
Thank you.
50:24
Yeah, and somewhat of a related notice question, and maybe this one's more for Tim.
50:32
So, so the guidance suggests writing to FSRA to determine to determine whether notice whether notice should not be sent in certain circumstances.
50:44
So who should we ask how quickly can we get feedback and this individual knows the longer we wait for an answer the further we may need to push out the effective date of the of the amendment.
50:57
Yeah, so it's it's it's not dissimilar from the question I answered earlier when it comes of timelines, send it in through the pensionenquiries.fsrao.ca email.
51:08
It'll get assigned and looked at very quickly.
51:11
I would say though you should build in some appropriate timelines into your process, like get in touch with us earlier than later.
51:19
Please don't put it into a situation where maybe you're thinking of hoping to get an answer within a couple of days from us.
51:26
That's not something I can necessarily guarantee we're able to do, but certainly we look at inquiries and we try to prioritize them based on timing and so forth but we would ask that you you know give us an ample amount of time to get back to you on that you know I would say for example like a month a month would be more appropriate for for an answer like that.
51:48
Great thank you and maybe pivoting a little bit a bit of a different question and I'll direct this one at Matthew so who is actually the plan administrator in this case of the pension company or participating agency?
52:04
So I mean the the Pension Plan Administrator will be defined in the plan terms right as to who it is like for most single employer pension plans the administrator is usually the company itself and of course you know the a company can't act uh as itself it's not it's not an actual human being or something like that so so the administrator will the people who actually do the administration will usually be, you know, directors or officers of the company, which is the official legal plan administrator.
52:35
And so, so but at the end of the day, the yes, the the official plan administrator will be whoever is named in the plan terms, like I say, for a single employer plan that will usually be the company, the company will usually have to act through agents or representatives.
52:49
So that includes its directors and officers, and also its its party service providers and a service provider that acts on behalf of the administrator or the directors or officers who act on behalf of the administrator, they are all subject to the same duties as the administrator itself.
53:08
So when a service provider is doing certain things, sending out notices or making certain actions, they must comply with the same duties that the Some, actually, going back to this, the notice requirements, I think one of, there's a question about some of the exemptions that was noted on one of the slides.
53:36
So on one of our slides, we said that administrators can request in writing to FISRA to exercise its discretion to not require notice in certain circumstances, example, technical changes.
53:47
And so the question is, what are some examples of those technical changes that plan administrative from a request to not issue a notice.
53:56
You back to Matthew?
53:58
Sure, yeah.
53:59
So those technical changes usually relate to legislative changes.
54:03
So for example, if the Income Tax Act is amended to say that you have to do some certain thing in your plan terms or your plan terms must say certain things, or for example, with the Pension Benefits Act as well is amended to say that a plan has to do this thing rather than that thing, those are legislative changes that are required.
54:26
There's no choice not to do what those changes require the plan to do.
54:32
And in those cases, we would say that those are technical changes, that the plan has to, the plan should always be, of course, consistent with the legislation that applies to the plan.
54:44
And so we would expect a plan to be amended whenever it has to be in order to be consistent with those legislative requirements, it can of course take some time to do that.
54:54
But yeah, but we expect those changes to occur.
54:56
And because those changes are legislatively required, those would qualify as technical changes that if you were to ask us for permission to dispense with the notice, we may very well decide that it's okay for you not to send out the immediate adverse amendment notice in relation to that change.
55:17
But of course, as the guidance says, You know, that you can't assume that just because this is a mandatory change that you're going to have to do anyhow, that we will grant you that this this dispense with that notice requirement, you do have to apply to us and ask us for permission to dispense with that, and then we will consider whether or not it's appropriate in the circumstances to grant that dispensation.
55:43
Thank you, Matthew, and I know we have a few minutes left and there's a few questions and just a reminder, we'll post responses. If we haven't gotten your question, we'll post responses in our website.
55:53
I'm seeing a question here relating going back to our roles and responsibilities guidance.
55:58
And maybe I'll give this one to Tim. So what is the plan administrator responsibility related to terminated members with an invalid address on file?
56:10
with an invalid address on file so you know if they're terminated the the I'm assuming that the the money has been potentially ported out of the plan it depends like if the money is still in the plan then I would consider that a missing member and you should take the steps that we do where we also have in our guidance with regards to how we expect you to deal with missing members and to try to find those missing members so it's not clear to me totally what the is about in relation to, you know, what the status of the member is in the plan.
56:43
But I would say that you would have to look at it in that regard, like what is a member's status?
56:47
Do they have funds in the plan still or not?
56:50
And certainly if they do, then they should be treated like any other missing member and there should be efforts made to try to locate that member.
56:59
Great, okay.
57:01
Thank you, Tim.
57:02
I think that concludes our question period.
57:04
We're almost at two o 'clock, But we just wanna say thank you to everybody for taking the time to be with us today for asking the questions.
57:14
We'll go through any questions that we haven't answered and make sure that we do post our response on the website.
57:20
And as always, you can contact FISRA at the email address you see here on the screen, which is our generic mailbox for pension inquiries.
57:29
And of course you can reach out to any one of us individually as well.
57:33
And we hope you found this session helpful and want to wish you a great day.
Questions & Answers
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Question |
Response |
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The two pieces of final guidance can be found on FSRA’s website: FSRA also published member guides on various pension topics on the website. |
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Question |
Response |
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Section 30.1.1 of the Pension Benefits Act (PBA) states that an administrator may permit members, former members and retired members to designate beneficiaries electronically for the purposes of any provision in the PBA permitting the designation of a beneficiary.
As noted in section 10.2 of the Pension Plan Administrator Roles and Responsibilities Guidance, Administrators should put in place policies and practices for electronic communications to ensure compliance with the PBA, the Electronic Commerce Act, 2000 (ECA), and CAPSA Guideline #2 Electronic Communication in the Pension Industry when providing communications electronically.
Also, section 5 of the CAPSA #2 Guideline recognizes electronic signatures as satisfying a signature requirement under pension legislation. |
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There are useful resources on policies and good practices relating to governance available from CAPSA or the Canadian Coalition for Good Governance. |
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Plan Administrators should exercise judgement as fiduciaries to determine the appropriate information required, including proof of marital status, to support good plan administration. There are instances, such as administration of pension benefits upon marriage breakdown, where proof may be required for certain family law processes. |
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There are useful resources on policies and good practices relating to governance available from CAPSA or the Canadian Coalition for Good Governance.
FSRA has also published multi-sector guidance on Complaints Resolution that provides a policy framework and best practices. |
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FSRA does not collect nor maintain plan member specific information. For information about a member entitlement including contribution amounts made and its investment allocation, members, former members, and retired members should contact their plan administrator. FSRA’s pension plan information access search tool can be used to locate the name of the plan administrator by searching plan registration number, plan name, or sponsor name.
If there is a complaint that is not satisfactorily resolved by the administrator, members may contact FSRA.
Similarly, to obtain information on a plan level, including how funds are invested, members, former members and retired members should contact their plan administrator. |
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FSRA recognizes there is a practical limit to any search process and that plan administrators, in accordance with the standard of care, have to balance the obligation to provide members’ entitlements, with the costs of locating missing members. They must manage the plan in a way that considers the interests of all members. FSRA’s Missing Members Guidance and CAPSA’s Guideline on Searching for Un-locatable Members of a Pension Plan outline what administrators should consider when searching for missing members, including the administrator establishing, where feasible, a database/registry of missing members on the sponsoring employer or the administrator’s website so that a potential past member could search for their name. |
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The plan administrator must administer the pension plan in accordance with the filed plan documents and all applicable laws. The PBA is a minimum standards legislation and does not prohibit a plan from providing benefits and rights above and beyond those minimum standards. This applies to all pension related matters whether addressed in the plan documents or not. It should be noted that, if there is ambiguity between what the plan text requires (or is silent on) and how the plan is administered, it increases the risk of member confusion and potential complaints. |
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Question |
Response |
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All amendments are registered as soon as practicable. FSRA receives a high volume of plan amendments. Registration timelines of filed amendments depend on whether FSRA’s review uncovers any potential compliance issues which will be addressed with the plan administrators. Additionally, if a plan amendment is adverse, the registration process may be delayed because a more detailed review would be necessary. |
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If an amendment to a pension plan would be void or otherwise not permitted under the Pension Benefits Act, then rectification of the plan terms by a court would be a way to change the terms of the plan in the manner intended by the plan amendment. FSRA cannot rectify the terms of a pension plan, but FSRA can register a plan amendment that complies with the requirements of the Pension Benefits Act. |
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In the case of an amendment that would increase required member contributions, this may be considered adverse because the member must pay more into the plan retroactively prior to the effective date of the amendment. In the case of only an employer’s (matching) contribution increasing, rather than an increase in the required member contribution rate, this scenario would not be considered adverse. |
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As described in the guidance, an amendment to a pension plan that negatively impacts individual’s rights or benefits under the plan as of a date before the amendment is filed with FSRA is generally not permitted under the Pension Benefits Act. Where the plan administrator seeks to register such an amendment, registration of the amendment will be subject to the approach set out in the guidance. |
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The Guidance applies to and affects various parties including that of the employer/plan sponsor. However, the fiduciary duty in the Pension Benefits Act is imposed on the plan administrator, not the employer. The role of the employer is to make and adopt a plan amendment, and the employer would be impacted by any potential inability to enforce an amendment if it is not compliant. |
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For an amendment to a pension plan that negatively impacts individual’s rights or benefits under the plan as of an effective date that is before the date that the amendment is filed with FSRA, the point in time at which the potential negative impact must be assessed is the date the amendment is filed with FSRA (not the date the amendment was made by the employer). If the amendment on the date that it is filed with FSRA would negatively impact the rights or benefits that individuals had already obtained under the plan terms before the amendment was filed with FSRA, then such a retroactive adverse amendment would generally not be permitted by the Pension Benefits Act for the reasons set out in the guidance. |
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A plan amendment is a change to the terms of a pension plan made by the employer that sponsors the plan (or for a multi-employer pension plan, the plan administrator). After a plan amendment is made, it is required under the Pension Benefits Act (PBA) to be filed with FSRA for registration.
When a plan administrator files an amendment with FSRA for registration, the administrator must also file a completed FSRA pension Form 1.1 (Application for Registration of a Pension Plan Amendment) with the amendment. The Form 1.1 does not, however, form part of the plan amendment itself. |
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A plan amendment that has negative impacts on the rights and benefits of plan beneficiaries can be filed anytime on or before the effective date of the negative impacts set out in the amendment. As described in the guidance, however, negative impacts on rights or benefits that individuals have already obtained under the plan terms before the amendment is filed with FSRA are generally not permitted by the Pension Benefits Act. |
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An amendment to wind up a pension is not adverse as long as it is filed before the effective date of the wind-up and the required wind-up notices have been provided to the affected members. The determination as to whether an amendment is adverse is determined in reference to the impact to the members in that plan. In a situation where members of plan A (which is winding up) are permitted to then join plan B going forward, if notices have been provided to members and the amendment is filed prior to its effective date, then the amendment to plan B to permit plan A members to join plan B is not adverse. |
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FSRA believes the transparency, impact, reasons and equity of an amendment with retroactive and potentially negative impacts are all important considerations when evaluating and exercising FSRA’s discretion to register such an amendment. As described in the guidance, whether such an amendment is equitable involves considering whether the amendment treats plan members and beneficiaries in a fair and equitable manner generally. This may, but may not always, involve questions of equity between classes of plan beneficiaries. |
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We can only comment on positions taken by FSRA. Each province has a different legislative framework and also potentially different common law as it relates to each provincial statutory framework. There are also differences between common law and civil law jurisdictions. FSRA’s mandate is to administer and interpret the Pension Benefits Act and to do so also in accordance with its principles-based regulation mandate. |