This quarter has seen several important amendments to the Ontario Pension Benefits Act (PBA) and the regulations, including those affecting electronic communications, annuity discharge, JSPPs, MEPPs, and audited financial statements. The Financial Services Regulatory Authority of Ontario (FSRA) has also released several communications, including revisions to the funding position papers of its predecessor (the Financial Services Committee of Ontario (FSCO)), the introduction of a new framework for FSRA guidance, and the release of several such new guidance documents.
1. PENSION LEGISLATION
Bill 132 Amendments Passed: JSPPs, Member Communications, Marriage Breakdown, And Commuted Values
The PBA has been amended by Bill 132, Better for People, Smarter for Business Act (see Schedule 9). Several amendments are effective on December 10, 2019, including:
- Setting out who can be the administrator of a single employer jointly-sponsored pension plan (JSPP);
- Allowing applications to transfer assets and liabilities of a single employer plan to a JSPP to be made before the JSPP is registered;
- Clarifying what FSRA can consider when determining whether to waive the requirement to send biennial statements to missing former or retired members;
- Expanding rules on electronic communications, by deeming members and former members of a pension plan to consent to the receipt of certain documents sent by the administrator in an electronic form, provided certain conditions are met; and
- Enabling the regulations to allow a reference to a code, formula, standard, or procedure to include any future changes to them (regulations have already been amended to enable this with respect the standards adopted by the Actuarial Standards Board with respect to commuted values).
As well, new family law provisions have been passed but will not be effective until proclaimed.
Expanded Discharge For Annuity Purchases: PBA and Regulation Amendments Now In Force
The annuity purchase provisions under section 43.1 of the PBA and related regulations were amended as of October 15, 2019 to expand the discharge provisions to cover annuities purchased for surviving spouses of deceased retirees and, where a discharge is not obtained at the time of purchase, to enable an administrator to obtain that discharge later.
DC Plans Can Provide Variable Benefits, Effective January 1, 2020
As of January 1, 2020, the PBA is amended and new regulations are introduced that enable (but do not require) Ontario registered pension plans to allow retired members to receive defined contribution benefits as variable benefits. Such benefit payments are similar to payments from a LIF, with a minimum payment based on the retired member’s age and the balance in his or her account. The minimum payment is the minimum required under the ITA, and the maximum payment is the amount that would be paid if the variable benefit account were a LIF.
Bill 138 Amendments Passed: DC Benefits on JSPP Transfers, and Regulation of Financial Professionals
Bill 138, Plan to Build Ontario Together Act, 2019, an omnibus budget implementation bill, received Royal Assent on December 10, 2019. Several amendments to the PBA are set out under Schedule 29. The one substantive amendment is in section 80.4(3), which has been amended to allow an employer who sponsors a single employer pension plan that is transferring its assets and liabilities to a JSPP to elect to transfer DC assets, if any, as part of a transfer of its assets and liabilities to a JSPP, subject to requirements in the regulations.
Threshold for Preparing Audited Pension Fund Financial Statements Increased to $10 Million
Effective December 11, 2019, the General Regulation under the PBA has been amended to raise the threshold that determines whether pension fund financial statements for an Ontario-registered plan must be audited. The limit increases from $3 million to $10 million, meaning that audited statements will not be required for a plan where the market value of assets is less than $10 million at a plan year-end on or after December 11, 2019. As was the case previously, (unaudited) pension fund statements must still be filed for plans below this threshold.
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