In this Pensions Update
- Our Final Asset Transfer Guidance is now posted (Save the date! FSRA is hosting a Teams Live event)
- FSRA’s new asset transfer team and new approach to asset transfer applications
- Key learnings in asset transfer applications
- FSRA is establishing a new special purpose committee! To identify ways within the regulatory framework to foster a vibrant employment-based pension pillar in Ontario
- Pension Service Portal enhancements
- PBA Exemption and Consent Forms for IPPS and DPs now available
- Variable Benefits forms (Family Law)
- FSRA is moving!
- On the horizon
Q. How does the new asset transfer team help FSRA meet the demands of the current regulatory climate?
A. We have decided to create teams to address certain priority transactions that FSRA addresses in the Pensions sector. The Asset Transfer team is made up of FSRA Pension Officers, Pension Analysts and Technical Consultants, as well as staff and management with legal, actuarial and sector expertise.
We believe that a team approach allows FSRA staff to develop a more in-depth understanding of these potentially diverse and complex transactions. This results in a more meaningful review that better protects member rights while demonstrating FSRA’s commitment to be an outcomes-focused, principles-based regulator.
Q. What is the new process for reviewing asset transfer applications?
A. We are overhauling the process for staff to follow, in their review of these applications but some key effective improvements are already in place:
- DB asset transfer transactions are now reviewed by a small group of FSRA staff. These staff will concentrate on asset transfers, helping them to develop their expertise in this area.
- Applicants and their actuaries are now asked to sign certification forms that were published as part of our new DB Asset Transfer Guidance. These certifications allow us to move away from our prior approach of reviewing and analyzing every aspect of every document filed with us. We can focus on the aspects of these transactions that we believe present the most risk for non-compliance and the best way to protect member rights.
- We have been given discretion in the Pension Benefits Act to accept modifications to the content of member notice requirements or delivery deadlines. This will help to allow more understandable communications to members and more flexibility to address the many case specific scenarios that arise for these transactions.
- Finally, we are no longer using a Notice of Intended Decision and Order process to give our consent to transfers under section 80.4. Instead, we will give our consent by means of a letter – just as we have always done for transfers under s.80 and 81.
Q. What were the top considerations in re-designing FSRA’s asset transfer review process?
A. These were:
- Protecting member rights
- Improving regulatory efficiency and effectiveness
- Highlighting our expectations for those who prepare and submit these applications
- Where appropriate, harmonizing our regulatory approach to transfers under sections 80, 81 and 80.4
- Formulating how we will exercise our newly granted discretion over asset transfer notice content and timing issues.
Q. How many asset transfer applications does FSRA receive annually? What is the average length of time for FSRA to provide a decision?
A. The number of asset transfer applications that we receive varies from month to month and year to year – but a directional estimate would be that on average we receive around 80 - 100 asset transfer applications a year. These are split evenly between defined contribution and defined benefit transfers. Since section 80.4 came in to place in 2016, we have received a total of approximately 30 applications under that section.
The timeframe from receipt of an application to our granting consent to a compliant application has also ranged greatly – anywhere from around 6 months to 3 years – with a more typical DC transfer being in the 6 – 9 month range and a more typical DB transfer being in the 9 – 15 month range.
Q. What are the key issues addressed by the new Guidance?
A. The new Guidance aims to improve regulatory processes and efficiencies by using a principles-based and outcome-focused approach. Effectively, it streamlines the regulatory process to focus on the key aspects of asset transfer applications that ensure member protection. At the same time, the new Guidance aims to improve regulatory efficiency and member communication.
Q. How does the new Guidance align with current FSRA priorities?
A. The new Guidance is rooted in FSRA’s priority to protect plan members’ interest, while at the same time, transitioning to principles-based regulation, modernizing processes, and establishing meaningful service standards.
Speaking specifically to the Pensions’ targeted high-impact priorities, this new Guidance supports plan flexibility, evolution and principles-based applications within the existing regulatory framework by setting a clear framework for how plan sponsors can amalgamate pension plans in order to best protect plan members and ensure a more stable future for their pension plans.
Q. What future changes is FSRA contemplating (team, process, Guidance etc.)?
A. As FSRA continues down the path of digital transformation, there are opportunities to explore how we can leverage technology to help further streamline the submission and review of asset transfer applications.
FSRA will be developing and launching an on-line application tool on the Pension Services Portal that will guide DC asset transfer applicants through the application process and requirements to ensure that all required documentation and information is provided to FSRA when the application is submitted. This will significantly cut down the review process time which has historically shown that many delays occur due to incomplete applications.
Technology improvements should help us reduce the amount of time FSRA takes to review transactions, establish new service standards and develop practices that promote good plan administration and protection of member benefits.