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
Our final guidance on asset transfers is now posted
The public consultation on our DB Asset Transfer Approach Guidance closed on November 30, 2020. Thank you to our Asset Transfer Technical Advisory Committee who worked with FSRA to develop this Guidance and to everyone that provided their feedback.
The DB Asset Transfer Approach Guidance sets out how we will exercise discretion in relation to specified asset transfers and related transactions under the Pension Benefits Act (PBA). It is now published on our website at: PE0205APP: Supervisory Approach to Defined Benefit Asset Transfers under the PBA.
FRSA has also published a companion Interpretation Guidance, “FSRA’s Consent to SEPP-to-JSPP Transfer Transactions”, that indicates why FSRA has changed its process for approving transfers under section 80.4 and conversions under section 81.0.1 of the PBA. Effective immediately, FSRA will generally provide its consent to compliant applications under these sections by means of a letter. This new Interpretation Guidance can be found in: PE0223INF: FSRA’s Consent to SEPP-to-JSPP Transactions Under Sections 80.4 and 81.0.1 of the Pension Benefits Act.
Save the date! FSRA will be hosting a one-hour Teams Live on its new DB Asset Transfer Guidance and related processes on February 17, 2021 starting at 11:00am. We will issue an invite with the necessary information in the coming weeks.
FSRA’s new asset transfer team and new approach to asset transfer applications
Last September, FSRA launched a new asset transfer team, dedicating specific FSRA staff to focus on these transactions. We have already seen success in our review and approval timelines, and we expect improvement to continue in 2021.
Mark Eagles, FSRA’s Director of Advisory Services talks about the new team and the improvements underway to review and approve applications in a timely manner.
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.
Key learnings in asset transfer applications
A complete and compliant application package is critical to a timely review process. Our asset transfer team has identified opportunities when submitting applications. These can help you ensure a smoother asset transfer approval process for you and your clients:
Tips on completing your asset transfer application
- Be clear which section of the Pension Benefits Act applies to the transfer (e.g. s. 80 vs. s. 81)
- Be sure to file all necessary documents and follow all timelines prescribed in Ontario Regulation 310/13 including amendments and copy of notices to all involved plans
- If you would like us to exercise our authority to allow a variation from the member notice content (or timing) requirements, let us know, describing the proposed approach and why it is being suggested
- All reporting in the application should consistently identify the amount being transferred – or explain why a transfer amount has been changed
- If the original plan assets are being transferred to a new plan, be sure to also file a complete new plan registration package. Don’t forget to pay the registration fee!
- If,“active” members are ceasing accruals in the original plan and commencing accruals in the receiving plan, the original plan should be amended to cease accruals and that amendment must be filed with FSRA before its effective date This would not be required if the accruals in the original plan cease by operation of law or via existing plan provisions.
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.
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
As communicated in our Annual Business Plan, we are now moving forward with the creation of a new advisory committee to identify ways within the regulatory framework to foster a vibrant employment-based pension pillar in Ontario. The new committee will be established in May 2021.
The committee will work together with the sector to examine the reasons employers are moving away from providing registered pension plans.
FSRA is interested in promoting good administration of pension plans and considering solutions that are facilitative for employers, cost efficient and can leverage innovative practices. It is also important that Ontario workers are well informed regarding their retirement benefits and how those benefits are protected.
To help us prepare for the work of this committee and augment our own research, we are inviting submissions from stakeholders on possible priorities and foci for this work. Please send submissions (10 pages or less) to Arielle Brenman at [email protected] by February 18, 2021. For more information visit FSRA Seeks Applications to New Committee Focused on Ontario’s Employment-Based Pension Pillar.
Pension Service Portal enhancements
FSRA is working hard to streamline processes and better leverage the use of technology where appropriate.
In the coming months, FSRA will be moving Wind-up applications involving DC pension plans to the Pension Service Portal (PSP). Through this system enhancement, plan administrators or service providers will be required to complete the application on the PSP as well as upload the relevant documentation. The system will be leveraged to identify issues with an application which will be followed-up on by a Pension Officer. Complete and compliant applications will be referred to a Pension Officer for final review and approval. Leveraging the PSP will ensure that completed and compliant applications can be approved faster.
In addition to DC Wind-up Applications, FSRA is diligently working to move as many transactions as possible to the PSP. FSRA is in the process of identifying the first tranche of applications that will be moved to the PSP, eliminating the need to mail in or email these applications to FSRA.
Stay turned for updates on this exciting transformational initiative!
PBA Exemption and Consent Forms for IPPS and DPs are now available
Employers of certain individual pension plans (IPPs) and designated plans (DPs) can now elect to exempt their plans from the application of the PBA, its regulations and FSRA’s rules.
Employers who wish to exempt their IPPs or DPs from the PBA must complete and submit a PBA Exemption Election Form and the applicable consent forms.
FSRA has already received a number of election and consent forms. To ensure timely processing of elections, the following are the most common errors:
- Missing a Commissioner of Oaths signature;
- Incorrect effective date of the exemption – usually too early, either before the election form is filed or less than 14 days thereafter;
- Misidentifying the plan administrator as either a third party consultancy firm OR putting an individual’s name where most often it should be the name of the employer/company;
- Incorrectly completing Form 15 by not completing Parts 4 AND 5.
- Incorrectly completing Form 15.2 - the member’s name should be inserted in Part 2 and not the spouse’s name who is consenting.
IPPs with outstanding FSRA pension assessments are expected to remit payment. FSRA intends to pursue all collections regardless of whether the pension plan is now exempt from the PBA.
Variable Benefits forms (Family Law)
The new Family Law Forms for variable benefit accounts are now available on FSRA’s website: Variable Benefit Forms. These forms are required to be used in the event of a marriage breakdown where the family property to be valued includes a variable benefit account.
The variable benefit regime permits a defined contribution (DC) pension plan to offer variable benefits to its retired members. The variable benefit provisions of the Ontario Pension Benefits Act (PBA), together with the Variable Benefit Regulations, came into force on January 1, 2020.
The Variable Benefit Regulations consist of three Regulations:
FSRA is moving!
Please note as of February 1, 2021, FSRA will be located at:
25 Sheppard Avenue West
Suite 100
Toronto, ON M2N 6S6
Please direct all correspondence to this address. If you have any questions, please contact FSRA at:
Tel: 416-250-7250 | 1-800-668-0128
Email at: [email protected]