Office of the Superintendent of Financial Institutions
The Office of the Superintendent of Financial Institutions (OSFI) is responsible for administering the federal Pooled Registered Pension Plans Act (PRPP Act), which came into force on December 14, 2012. The PRPP Act provides that the Superintendent may issue a licence authorizing a corporation to be an administrator of a pooled registered pension plan (PRPP) if the prescribed conditions set out in section 7 of the Pooled Registered Pension Plans Regulations (PRPP Regulations) are satisfied.
Only a corporation can apply for a licence. Before entering into a contract with any person (including an employer) with respect to a PRPP, the administrator must provide proof to the person that it has a valid PRPP licence and that the plan is registered with OSFI. In addition, the plan must be registered with the Canada Revenue Agency. Information concerning the legal and regulatory obligations of a PRPP administrator can be found in the PRPP Actand the PRPP Regulations.
This Guide provides information on the process for applying for a federal PRPP licence, including the conditions that a corporation must satisfy in order to be issued a licence and the information that should be submitted to OSFI in order to demonstrate that the corporation satisfies these conditions.
Federal and Provincial PRPP Multilateral Agreement
Federal and provincial PRPP legislation, as well as legislation covering voluntary retirement savings plans in Quebec, authorize governments to enter into an agreement with respect to the regulation and supervision of PRPPs across the country. In June 2016, the Governments of Canada, British Columbia, Saskatchewan, Québec and Nova Scotia entered into the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Saving Plans (Multilateral Agreement), which reduces the regulatory burden on PRPPs that operate in more than one jurisdiction. Other provincial governments may sign the Multilateral Agreement in the future once they have PRPP legislation in place.
The Multilateral Agreement provides that, except in Quebec, a federally-licensed administrator that registers a PRPP under the federal PRPP Act is exempt from the requirement to register that PRPP under the applicable provincial PRPP legislation.
The Multilateral Agreement also provides that a corporation that holds an authorization granted by the Autorité des Marchés Financiers (AMF) to act as administrator of a voluntary retirement savings plan (VRSP) is exempt from the requirement to obtain a licence under the federal PRPP Act. This means that authorized VRSP administrators may apply to register a federal PRPP without obtaining a PRPP administrator licence. In addition, an administrator that holds a federal PRPP licence or an authorization to act as a VRSP administrator issued by the AMF is also exempt from the requirement to obtain a licence under the applicable provincial PRPP legislation. Finally, under the PRPP MLA the holder of a federal PRPP licence may apply to the AMF for an authorization to act as a VRSP administrator under a simplified approval process.
Section 7 of the PRPP Regulations sets out, for the purposes of subsection 11(1) of the PRPP Act, the conditions that must be satisfied prior to the Superintendent issuing a licence authorizing a corporation to be an administrator of a PRPP. These conditions are described more fully below and relate to the corporation’s business plan, financial resources, risk management procedures, operational capability, and the suitability of its officers and directors.
In addition to the information related to the conditions for licensing, OSFI expects the applicant’s submission to include the following:
The corporation must submit a five-year business plan that addresses the plan’s sustainability and cost structure. The PRPP Regulations also require that the business plan include the number of plans that the corporation intends to have registered as PRPPs.
The business plan should explain the reasons why the corporation believes that the PRPP(s) that it intends to administer will be sustainable over the course of the business plan. OSFI expects the following information to be included to assist OSFI in determining whether the applicant meets this condition:
The PRPP Act requires an administrator to provide the PRPP to its members at a “low cost”. Costs are defined in the PRPP Regulations as “all fees, levies and other charges that reduce a member’s return on investment other than those that are triggered by the member’s actions”. Such costs would generally include a fund’s investment management fee, its fund operating expenses, and any other such fund-specific fees or charges.
The PRPP Regulations provide that these costs must be at or below the costs incurred by the members of defined contribution pension plans that provide investment options to groups of 500 or more members. The PRPP Regulations also require that costs be the same for all members of the PRPP and be disclosed to the members of the PRPP. Cost information (as defined in the PRPP Regulations) will be shared with the Financial Consumer Agency of Canada and posted on their website.
The PRPP Act requires that the business plan include a description of how the corporation intends to meet the requirement to provide the PRPP to its members at a low cost.
The following information should be included to assist OSFI in determining whether the applicant meets the low cost requirement:
The business plan is to also include an estimate and description of the fees, levies or other charges that would be triggered by the actions of a member. Fees, levies or other charges could include the following:
The corporation must submit a description of its financial resources required for the administration of a PRPP. The following information would assist OSFI in determining whether the applicant corporation has the financial resources required for the administration of a PRPP:
An overview of the following information, together with supporting documents, would assist OSFI in determining whether the applicant corporation has sufficient procedures in place to identify, manage and control operational risks associated with a PRPP:
The following information would assist OSFI in determining whether the applicant corporation has the operational capability to administer a PRPP:
The PRPP Act provides that a PRPP may permit a member to make investment choices from among the investment options offered by the administrator. Sections 16 and 17 of the PRPP Regulations sets out some specific requirements concerning investment options offered and the default option for members, including the following:
In assessing the corporation’s operational capability to administer a PRPP, OSFI will review the proposed investment approach and investment options that may be offered. The submission should therefore also include the following:
Section 7 of the PRPP Regulations requires that “the officers and directors of the corporation are of good character, having demonstrated honesty, integrity and ethical behavior in all of their professional activities”. The following information would assist OSFI in reviewing the application with respect to this requirement:
Please note that a security background check on officers and directors with direct and indirect authority or responsibility over the PRPP may be requested by OSFI. OSFI will advise applicants whether the OSFI Security Information Form, available on OSFI’s website at: http://www.osfi-bsif.gc.ca/eng/docs/security_form.xls, is required.
Once OSFI has received an application, OSFI will send a letter to acknowledge receipt of the application to the individual identified as the contact for the applicant corporation. OSFI will review the application to determine whether the application includes all of the required information as set out in the PRPP Act, the PRPP Regulations and this Guide.
For an application to be considered by OSFI, it must be complete and be accompanied by the required documentation as detailed in this Guide. If the application is not complete, OSFI will inform the applicant of any outstanding information that must be submitted. OSFI may also request additional information throughout the course of the application review process.
Applications are not to be submitted using the Regulatory Reporting System (RRS). Please mail your application to:
Private Pension Plans Division
Office of the Superintendent of Financial Institutions
255 Albert St., Ottawa ON
Alternatively scanned copies of original documents may be submitted to Pensions@osfi-bsif.gc.ca
For further information, visit our web site at http://www.osfi-bsif.gc.ca or contact us at: information @osfi-bsif.gc.ca
Senior officers and individuals responsible for the affairs of the corporation in respect of the PRPP, including those involved with direct oversight of the PRPP.
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