Issue 14 – November 2015

InfoPensions is the Office of the Superintendent of Financial Institutions' (OSFI) electronic newsletter on pension issues. InfoPensions includes announcements and reminders on issues relevant to federally regulated private pension plans as well as descriptions of how OSFI applies selected provisions of the Pension Benefits Standards Act, 1985, Pooled Registered Pension Plans Act, their regulations, directives and OSFI guidance. Plan administrators should obtain appropriate legal and actuarial advice on how the legislation and guidelines affect their particular pension plan.

InfoPensions is available under the Pension Plans link of OSFI's website. Plan administrators can also find information on various topics on OSFI's website under Defined Benefit Plans, Defined Contribution Plans and Pooled Registered Pension Plans. To automatically receive new issues of this newsletter and other OSFI pension-related documents by email, please subscribe under the Email Notifications link of OSFI's website.

If you have any questions about the articles you read in InfoPensions or if you have suggestions for future articles, please contact OSFI at information@osfi-bsif.gc.ca. The next issue of InfoPensions will be posted in May 2016.

 

Update on OSFI’s Study of Defined Contribution Plans

In May 2015, OSFI invited 42 federally registered pension plans with defined contribution provisions to participate in a study of defined contribution plans by providing requested information about their plan demographics and investments.

We have received responses from the participants and are continuing to review and analyze the results in order to determine if the annual information filed with OSFI by these types of plans is still appropriate. Thank you to everyone who participated in the study.

 

Filing in the Regulatory Reporting System

2015 is the second year that plan administrators are using the Regulatory Reporting System (RRS) to submit their regulatory returns. OSFI recognizes that RRS involves new processes for filing plan information and we appreciate everyone’s continued efforts and support.   

One of the options for plan administrators to manage their regulatory filings with OSFI is to have their third party administrator, such as an insurance or trust company, prepare their draft required regulatory filings in RRS. The plan administrator could then log into RRS, review the filings and submit them. Plan administrators may want to consider this process as an efficient way to manage the submission of their regulatory filings.

RRS users can find the following links on OSFI’s website on the Pension Plans main page:

1. RRS login: This link will direct you to the Bank of Canada Secure Site Login page.
2. Annual Filing Process for Pension Plan Returns: This link will direct you to a table that summarizes the filing process for each required regulatory filing.
3. Training and Support: This link will direct you to RRS training and support material including user guides, quick reference guides, videos and other references that you may find helpful.

All pension plan regulatory returns must be filed using RRS except if they relate to transactions subject to the authorization of the Superintendent (e.g. plan termination or asset transfer). All documents accompanying a request for the Superintendent’s approval should continue to be submitted directly to OSFI either by email or in paper form.

Returns are not considered received at OSFI until they have been successfully submitted and accepted in RRS. RRS will prevent a return from being submitted if there are errors that need to be corrected.

For general assistance with RRS and regulatory filings, please contact our Regulatory Data Management Team by telephone at (613) 991-0609, or by email at ReturnsAdmin@osfi-bsif.gc.ca.

 

Pension Plan Stakeholder Survey

As mentioned in InfoPensions 13, in November 2014, OSFI conducted a survey of plan administrators and professional advisors of federally regulated private pension plans through an independent research firm.

The results showed positive ratings for OSFI in areas such as plan supervision, clear guidance, and satisfaction with the processing of approval applications. Some noted areas for improvement relate to the timeliness in responding to enquiries and the effectiveness of the Regulatory Reporting System training materials. OSFI continues to seek and implement solutions to improve performance in these areas. An overview, an executive summary, and a link to the full results of this survey are available on OSFI’s website.

 

Guide to Completing the Actuarial Information Summary

In June 2015, OSFI posted the Guide to Completing the Actuarial Information Summary. The Actuarial Information Summary contains information set out in the actuarial report of a defined benefit plan and is to be submitted through the Regulatory Reporting System except if it relates to a transaction subject to the approval of the Superintendent (see article above titled “Filing in the Regulatory Reporting System”). 

 

Guide to Completing the Pension Plan Annual Corporate Certification

In June 2015, OSFI posted the Guide to Completing the Pension Plan Annual Corporate Certification. This Guide will assist administrators in completing the Pension Plan Annual Corporate Certification and updating the plan’s Organization Profile (i.e. role and contact information). The Organization Profile update and the certification are completed using the Regulatory Reporting System.

 

Proposed Multilateral Agreement for Pooled Registered Pension Plans

On July 15, 2015, the Government of Canada published the proposed Multilateral Agreement Respecting Pooled Registered Pension Plans for a 45-day public comment period. The proposed agreement is between the federal government and those provinces that have implemented legislation for pooled registered pension plans or similar plans.

The agreement is intended to streamline the regulation and supervision of pooled registered pension plans (PRPPs) that are subject to the federal Pooled Registered Pension Plans Act (PRPP Act) and the pooled registered pension plan legislation of at least one participating province. The agreement would delegate to OSFI most licensing, registration and supervisory responsibilities of PRPPs that are subject to the agreement. The agreement would also permit licensed administrators of Voluntary Retirement Savings Plans in Quebec to act as PRPP administrators under the federal PRPP Act.

The comment period expired on September 1, 2015.

 

Asset Transfers

Funding after the Effective Date of an Asset Transfer

In accordance with section 10.2 of the Pension Benefits Standards Act, 1985, a transfer to another pension plan of any part of the assets of a pension plan that relate to defined benefit provisions can only proceed with the Superintendent’s permission.

One asset transfer approval request scenario is where an employer with more than one pension plan wishes to consolidate these plans. In these cases, benefits accruing, if any, after the effective date of the asset transfer (as specified in the application) must accrue in the receiving amalgamated plan. OSFI has noted some instances where, pending the decision of the Superintendent, the plan administrator continues to remit the normal cost and special payments for the affected members to the transferring plan (i.e. the original plan) instead of to the receiving plan where the benefits are accruing. 

This will effectively result in two asset transfers: one covering assets related to the period up to the effective date of the asset transfer and a second involving the assets related to benefits accrued after the effective date of the asset transfer.

In this scenario, if the employer wishes to avoid the need for two asset transfer applications, after the effective date of an asset transfer the normal cost and any special payments that are required should be remitted to the receiving plan where the benefits are accruing.

Individual and Small Group Asset Transfers

Assets related to defined benefit provisions for individuals and small groups of federal members (generally less than 10) may be transferred with no submission to OSFI under certain circumstances. As set out in OSFI’s Instruction Guide for Asset Transfers related to Defined Benefit Provisions of Pension Plans, no submission is required if the following four conditions have been met:

1. There is no reduction in the accrued benefit of the transferring member(s).
2. The combined transfer amount for all individual or small group transfers occurring in the same plan year does not exceed 5% of the transferring plan’s assets as at the most recent plan year end.
3. The receiving plan is not materially less well funded than the transferring plan. Generally a receiving plan is considered materially less well funded if that plan has a solvency ratio less than one and lower than the solvency ratio of the transferring plan by 0.10 or more.

   or

   If the receiving plan is materially less well funded than the transferring plan, the member(s) has been given the appropriate information and the option to retain his/her benefit entitlement in the transferring plan.

4. The amount transferred from the plan does not exceed the transfer value of the pension benefit credit(s) as calculated in accordance with paragraph 8(b) of the Directives of the Superintendent pursuant to the Pension Benefit Standards Act, 1985. The full transfer amount may be transferred where the transfer deficit is remitted to the transferring plan.

 

Preparing for the Amendments to the Pension Benefits Standards Regulations, 1985 that Come into Force on July 1, 2016

As specified in the Key PBSA/PBSR Amendments and In Force Dates chart, although most of the recent Pension Benefits Standards Regulations, 1985 (PBSR) amendments came into force on April 1, 2015, some will come into force on July 1, 2016. The delayed in-force date is intended to provide time for plan administrators to make any necessary system and procedural changes in advance.

The recent PBSR amendments that will come into force on July 1, 2016 include enhanced disclosure requirements, revised investment rules, electronic communications, and spousal consent on portability where a member is eligible for early retirement. For details, please refer to the chart mentioned above.

In order to comply with the new rules on July 1, 2016, plan administrators need to prepare for the new requirements and ensure that pension administration staff are aware of these changes.

If not already completed, plan administrators should amend their plan documents to ensure that all relevant Pension Benefits Standards Act, 1985 and in force PBSR amendments are now incorporated.

 

Multi-jurisdictional Plans Regulated by OSFI

In accordance with various federal-provincial agreements, OSFI regulates many multi-jurisdictional pension plans on behalf of provinces where the plan includes both federal members and members whose employment is subject to provincial pension legislation.

Administrators of multi-jurisdictional plans are reminded that they are required to comply with the relevant provincial pension legislation as it affects any benefits for those provincial members. Administrators of such plans must also amend their plan documents to reflect any applicable amendments made to provincial pension legislation. Any required amendments to bring plan documents into compliance should be filed with OSFI.

A plan’s Annual Information Return (OSFI 49) must properly reflect whether the members in any given province are subject to federal pension legislation or provincial pension legislation.

 

2016 Industry Forum

In the past, OSFI has held annual in-person pension industry forums for plan administrators and pension plan professionals as well as web-based information sessions. These forums and information sessions have covered such topics as the current pension environment, recent legislative and regulatory reforms and their impact on plan administration, as well as OSFI’s supervisory activities and expectations related to private pension plans.

In 2014 and 2015, the Private Pension Plans Division of OSFI presented webinars on selected pension topics in place of an in-person forum. However, we are considering hosting an in-person pension industry forum again in 2016 and are inviting external stakeholders to provide any topics that they would like discussed. Suggested topics may be directed to information@osfi-bsif.gc.ca.

 

Important Dates

Under the Pension Benefits Standards Act, 1985:

Action or Required Filing[1]	Deadline
Actuarial Report and Actuarial Information Summary	6 months after plan year end
Annual Information Returns (OSFI 49) and Plan Assessments	6 months after plan year end
Certified Financial Statements (OSFI 60) and Auditor’s Report (if required)	6 months after plan year end
Solvency Information Return (OSFI 575)	The later of 45 days after the plan year end or February 15
Annual Member Statements to members and spouses	6 months after plan year end

[1] Plan administrators are reminded that they must be registered for the Regulatory Reporting System (RRS) in order to be able to file all required regulatory filings. For more information on RRS, please visit the RRS page on OSFI’s website.

Under the Pooled Registered Pension Plans Act:

Action or Required Filing	Deadline
Pooled Registered Pension Plan Annual Information Return (includes financial statements)	3 months after the end of the plan year
Annual Member Statements to members and spouses	45 days after the end of the plan year