I. LEGISLATION
FEDERAL DRAFT PBSR AMENDMENTS: PLAN INVESTMENT INFORMATION
On November 2, 2024, the federal government released draft regulations setting out pension plan investment information that the Office of the Superintendent of Financial Institutions (OSFI) must publish. Administrators will be required to request additional information from the plan’s actuaries and/or investment managers, and submit it through new fields in OSFI’s existing data collection process, or on a separate form. OSFI would then report investment information on plans whose assets have a market value of $500 million or more, starting with the 2022, 2023 and 2024 plan years.
Information must include the market value of assets invested in eight specified asset classes, set out in dollars and as a percentage of total assets, for seven specified geographic locations. It would be presented by DB plan assets and DC plan assets, for all plans in aggregate, as well as by employer name for single employer pension plans or by plan name for multi-employer pension plans.
OSFI has been sending letters to administrators of Federal plans with a market value of $500 million or more requesting the disclosure of information by January 31, 2025 with the understanding that they will not publicly disclose any information until the regulations are in force.
ONTARIO CONSULTATION ON VARIABLE LIFE BENEFITS
On November 12, 2024, Ontario released a regulatory proposal on amendments the Pension Benefits Act and the Pooled Registered Pension Plans Act to allow certain plans to include variable life benefits (VLBs) as a benefit option. For tax purposes, VLBs are already allowed, as variable payment life annuities, under federal the Income Tax Act. Ontario’s proposed framework would allow members to purchase a VLB through a separate fund in the plan. It would be a monthly retirement benefit, which could vary based on the fund’s earnings and the mortality rate of members and beneficiaries. Issues addressed include:
- Responsibilities and obligations of plan sponsors and administrators
- How benefits could be determined and adjusted, and whether adjustments should be set out in a certified actuarial report
- Whether a mortality table should be prescribed
- Whether a partial return of capital should be required or permitted when a member dies, and options for the surviving spouse
- How VLB fees and costs related to investments and administration should be regulated
- Required disclosures
- How to calculate VLB commuted values and portability options on plan wind up
Feedback on consultation questions may be made by January 10, 2025.
ONTARIO TARGET BENEFIT FRAMEWORK EFFECTIVE JANUARY 1, 2025
Amendments to the Pension Benefits Act first, introduced in the 2017 Budget Bill, and the following regulations setting out Ontario’s target benefit framework will take effect on January 1, 2025:
- Ontario Regulation 386/24 – Target Benefits
- Ontario Regulation 387/24 – Written Policies under Section 10 of the Act
- Ontario Regulation 388/24 – Conversions to Target Benefits under Section 81.0.2 of the Act
- Ontario Regulation 389/24 – Amending O. Reg. 909 of R.R.O. 1990 (General)
- Ontario Regulation 390/24 – Amending O. Reg. 287/11 (Family Law Matters)
- Ontario Regulation 391/24 – Amending O. Reg. 310/13 (Asset Transfers under Sections 80 and 81 of the Act
- Ontario Regulation 392/24 – Amending O. Reg. 365/17 (Administrative Penalties)
- Ontario Regulation 393/24 – Amending O. Reg. 368/19 (Variable Benefits)
- Ontario Regulation 394/24 – Amending O. Reg. 286/01 (Benefit Plans) (made under the Employment Standards Act, 2000)
The Financial Services Regulatory Authority of Ontario (FSRA) has updated its Form 1 – Application for Registration of a Pension Plan, also effective January 1, 2025, mainly to add references to target benefits, and has provided additional information on how it will implement the new target benefit framework:
- Except for those transferred to FSRA from another designated Canadian jurisdiction, eligible multi-employer pension plans (MEPPs) have a five-year window (until December 31, 2029) to apply to convert their plan’s defined benefits to target benefits
- Pension plans established on or after January 1, 2025, whose benefits are target benefits at the time of registration, will not have to convert benefits to target benefits
- New MEPPs established on or after January 1, 2030 can register as a target benefit MEPP
- The plan administrator must apply for consent, with a copy of the proposed conversion amendment(s), via the Pension Services Portal (PSP)
- Certification must be provided by someone with signing authority on behalf of the administrator
- FSRA will notify the administrator via the PSP if it consents to the conversion
- Amendment(s) must take effect no later than 12 months after the date that FSRA consents, and be filed within 60 days of the conversion’s effective date
- FSRA will review and provide feedback on draft amendments