InfoPensions – Issue 20 – November 2018

InfoPensions includes announcements and reminders on matters relevant to federally regulated private pension plans and pooled registered pension plans. It includes descriptions of how the Office of the Superintendent of Financial Institutions (OSFI) applies various provisions of the Pension Benefits Standards Act, 1985, Pooled Registered Pension Plans Act, their regulations, directives and OSFI guidance. Plan administrators should obtain appropriate professional advice on how the legislation and guidelines affect their particular pension plan.

We invite you to visit the Pension Plans – Main page of OSFI’s website where additional pension related information is available. To receive email notifications of new items posted to OSFI’s website, including this newsletter and other pension-related documents, please subscribe using Email Notifications.

If you have any questions about the articles you read in InfoPensions or if you have suggestions for future articles, please contact us at pensions@osfi-bsif.gc.ca. The next issue of InfoPensions will be available in May 2019.

Management Team changes in the Private Pension Plans Division

The Private Pension Plans Division (PPPD) of OSFI has recently had some senior staff changes:

• Kim Page is now the Director of Policy, Approvals and Corporate Reporting, replacing John Grace who retired in June 2018. Previously, Kim was a Manager on the Supervision team.
• Krista McAlister moved from Manager of the Approvals team to Manager on the Supervision team at the beginning of October 2018.
• Claire Ezzeddin is now the Manager of the Approvals team. Previously, Claire was a Senior Policy Officer.

Pension Industry Forum 2019

Since 2010, OSFI has hosted Pension Industry Forums as well as a number of web-based outreach events to provide administrators of federally regulated private pension plans, their advisors and related service providers the opportunity to hear from OSFI about current issues and ask questions.

The next Pension Industry Forum will take place in Toronto on May 28, 2019. If you have suggested topics for this upcoming forum, please direct them to pensions@osfi-bsif.gc.ca.

Basic rate for assessments of pension plans

The Assessment of Pension Plans Regulations require the Superintendent of Financial Institutions to publish annually in the Canada Gazette, Part I, a notice setting out the basic rate that will be applied to the assessment of pension plans in the upcoming fiscal year.

A notice was published in Part I of the Canada Gazette on September 29, 2018 setting out that the basic rate in effect for assessments that are due to be paid from April 1, 2019 to March 31, 2020 is $9. This basic rate is an increase of $1 from the basic rate that is currently in effect. This results in an increase of $50 to the minimum assessment amount ($400 to $450) and $20,000 to the maximum amount ($160,000 to $180,000) for the 2019-2020 fiscal year.

Amendments to the Assessment of Pension Plans Regulations

OSFI is proposing amendments to the Assessment of Pension Plans Regulations (the Regulations) made under the OSFI Act that would streamline the assessment process and eliminate assessments for certain terminated pension plans:

OSFI to calculate and invoice assessments: Currently, plan administrators must calculate their annual assessment and submit it to OSFI with the Pension Plan Assessment Remittance Form - PBSA within six months after the end of each plan year for plans subject to the Pension Benefits Standards Act, 1985 and three months after the end of the calendar year for pooled registered pension plans. A proposed amendment would allow OSFI to calculate the assessment due and invoice the plan after the filing due date of the Annual Information Return (AIR) based on the membership data reported in that AIR.

Eliminate assessments five years after plan termination and on termination for certain underfunded plans: Currently, all pension plans, including terminated plans, are subject to annual assessments until the plan is wound-up (i.e. all assets are distributed). A proposed amendment would eliminate annual assessments in the sixth year following a plan termination. The proposed amendment would also eliminate annual assessments on plan termination where the plan is underfunded and either the plan is a negotiated contribution plan or the employer is bankrupt.

Minor amendment to the definition of beneficiary: Currently, the definition of beneficiary in the Regulations inadvertently includes, for plans that have terminated, those who have transferred their pension benefit credit out of the plan as part of the wind-up process. A proposed amendment would correct this.

OSFI emailed plan administrators on July 30 outlining the proposed amendments and requesting feedback by September 21, 2018. We also posted a description of the proposed amendments on our website. No concerns were relayed and we are moving forward with the proposed amendments.

OSFI will keep plan administrators informed of any process-related changes.

Finding previous InfoPensions articles

Website users can find most articles published in previous issues of InfoPensions by topic. On the left-hand side of the Pension Plans – Main page, when website users select either defined benefit, defined contribution or pooled registered pension plans (PRPPs) under Guidance by Topic, they will be brought to a list of topics (or publications for PRPPs) relevant for that type of plan. Links to most of the InfoPensions articles are listed under each topic along with other related OSFI guidance on that topic.

Member information submitted to OSFI

Due to privacy related concerns and the need to limit the collection of unnecessary personal information, we ask that plan administrators, in communicating with OSFI or when preparing a plan’s termination report and accompanying documents, do not provide personal information that could identify a member. The plan administrator can submit, for example, a member’s employee or account number, and exact age, rather than information such as the member’s name, date of birth or social insurance number.

OSFI will make revisions to clarify our expectations in this regard, as required in our guidance material for actuarial and termination reports.

Litigation regarding Wabush Mines pension plans

In January 2015, Wabush Mines and associated companies obtained protection from creditors under the federal Companies’ Creditors Arrangement Act (CCAA). Since then, OSFI has been involved in litigation regarding two pension plans for employees of these companies. In addition to having members and beneficiaries subject to federal pension legislation, these plans have members and beneficiaries subject to Newfoundland & Labrador and Quebec legislation. The purpose of OSFI’s involvement in court proceedings was to protect the pension benefits of federal members and beneficiaries by seeking payment of the unpaid employer contributions required under the Pension Benefits Standards Act, 1985 and the Pension Benefits Standards Regulations, 1985.

In June 2018, a plan of compromise under the CCAA, reflecting settlements of pension plan related matters (as well as other matters), was approved by order of the Quebec Superior Court. The plan of compromise provides for the payment of amounts to the funds of both pension plans. Although these amounts do not cover the entire wind-up deficiencies, they do cover more than the amounts that were owed as normal cost, and special and catch-up payments to the date of termination. All litigations regarding pension plan matters have now been discontinued.

Incorrect jurisdiction of record for locked-in funds

OSFI continues to receive enquiries regarding amounts transferred incorrectly to provincially regulated locked-in retirement savings plans. We would like to remind plan administrators and financial institutions that a federal member’s pension benefit credit must be transferred in accordance with the Pension Benefits Standards Act, 1985 (PBSA) and the Pension Benefits Standards Regulations, 1985 (PBSR), which allow access to the funds only in prescribed circumstances.

When a plan member under federal jurisdiction wishes to transfer their pension benefit credit from a pension plan, that plan member must submit a completed Form 3 of Schedule II of the PBSR (Form 3) to the plan administrator. Form 3 is the application form that indicates the members’ intention to transfer the funds into one of the permitted locked-in savings vehicles under the PBSR along with the financial institution’s signed confirmation of receipt of the member’s request to transfer the funds into a specified vehicle. The financial institution’s signature provides the plan administrator with confirmation that the transfer will be made into an acceptable locked-in savings vehicle. If the financial institution later discovers that the funds were erroneously transferred to a provincially regulated vehicle, then we would expect that financial institution to correct this error and transfer the funds to the appropriate locked-in vehicle.

Recently posted on OSFI’s website

• In August 2018, OSFI issued a revised instruction guide for a Refund of Surplus to the Employer, replacing the September 2011 version. There were no major legislative or policy-related changes and the revisions mainly clarified OSFI’s expectations for the process in making an application for the consent of the Superintendent for a refund of surplus to the employer.
• In June 2018, OSFI published the results from the November 2017 online survey of administrators and professional advisors of pension plans. In the survey, respondents answered questions about their perceptions of OSFI’s performance, including our effectiveness at supervising pension plans. The overall results from the 2017 survey are positive, with most areas improved or comparable to results from the previous study conducted in 2014. Among other areas, high positive ratings pertain to effectiveness in supervising plans, timeliness in responding to enquiries, guidance that provides a clear indication of OSFI’s expectations, and the ability to communicate in the official language of choice. OSFI continues to seek improvements in its service standards and benchmarks for enquiries and approvals.
• In June 2018, OSFI issued five Pooled Registered Pension Plan (PRPP) Member Guides for members of federally registered PRPPs. With the exception of Quebec¹, under the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans (the Agreement), OSFI is responsible for supervising multijurisdictional PRPPs that are federally registered and contain members covered by legislation of the provinces that are party to the Agreement.
• The federal PRPP Act applies to such PRPPs instead of a provincial PRPP act, subject to certain exceptions impacting individual benefits such as locking-in requirements and the types of savings vehicles into which PRPP funds may be transferred. Each new guide describes the general requirements for PRPPs as well the various requirements impacting individual benefits for federal, British Colombia, Saskatchewan, Ontario and Nova Scotia members. A guide for Manitoba members will follow.
• In May 2018, OSFI posted a revised instruction guide for completing Certified Financial Statements (OSFI 60 or CFS) and submitting an Auditor’s Report. The revised instruction guide and accompanying form updated those previously published in February 2013. The revisions followed our regular review of guidance documents and included changes to the guide (and form) to ensure consistency with the Regulatory Reporting System (RRS), clarity regarding filing requirements and formatting changes.

[1] The Agreement does not give OSFI responsibility with respect to the Quebec Voluntary Retirement Savings Plan (VRSP), but permits authorized VRSP administrators to act as PRPP administrators under the federal PRPP Act if they register a PRPP federally.

Important dates

Plan administrators are reminded that required annual filings must be filed using the Regulatory Reporting System (RRS). Documents submitted in support of an application that requires the Superintendent’s authorization should be submitted electronically at pensions@osfi-bsif.gc.ca. One application is sufficient. There is no need to mail a hard copy of the application in addition to the electronic one.

Under the Pension Benefits Standards Act, 1985:

Action or Required Filing	Deadline
All Plans:
Annual Information Return (OSFI 49)	6 months after plan year end
Pension Plan Annual Corporate Certification (PPACC)	6 months after plan year end
Certified Financial Statements (OSFI 60) and, if required, an Auditor’s Report	6 months after plan year end
Plan Assessments The number of members and other beneficiaries for the assessment is the “Grand Total” in the OSFI 49 for the preceding plan year-end.	6 months after plan year end2
Annual Statements to members and former members and spouses or common-law partners	6 months after plan year end
Defined Benefit Plans Only:
Actuarial Report and Actuarial Information Summary and, if required, Replicating Portfolio Information Summary	6 months after plan year end
Solvency Information Return (OSFI 575)	The later of 45 days after the plan year end or February 15

Under the Pooled Registered Pension Plans Act:

Action or Required Filing	Deadline
Pooled Registered Pension Plan Annual Information Return (includes financial statements)	April 30 (4 months after the end of the year to which the document relates)
Pension Plan Annual Corporate Certification (PPACC)	April 30 (4 months after the end of the year)
Plan Assessments OSFI sends assessment invoices to pooled registered pension plans based on the total number of members (including survivors that hold an account) as at the end of the preceding year.	March 31 (3 months after the end of the year)2
Annual statements to members and their spouses or common-law partners	February 14 (45 days after the end of the year)

[2] Until the amendments to the Assessment of Pension Plans Regulations come into force, these deadlines apply. OSFI will keep plan administrators informed of any process-related changes.