We are pleased to send you FSRA’s Q2 Pension Eblast. Over the past six months, we’ve moved to a quarterly newsletter to give you predictable communications with relevant information about the work FSRA is doing to promote good administration of pension plans, and to protect and safeguard the pension benefits and rights of pension plan beneficiaries.

We want to hear from you! Tell us what you think about FSRA’s quarterly pension eBlast.

In this Pension eBlast

What’s new

FSRA reports

New and refreshed Guidance

Reminders

What's new

Recent regulatory amendments and what they mean for you

Data collection for Pension Benefits Guarantee Fund (PBGF) exposure

The Ontario government announced in the 2021 Ontario Budget that Regulation 909 under the Pension Benefits Act would be amended to require pension plan administrators to calculate and report their plan’s PBGF claim exposure.

Following this announcement, the Ministry of Finance consulted on the proposed regulatory amendments through Ontario’s Regulatory Registry from April 15 to May 31, 2021. The proposal was revised based on feedback from stakeholders.

The government has now approved the regulatory amendments for PBGF data collection. The amendments require administrators of plans with PBGF liabilities of $10 million or greater to report:

  1. data related to the plan’s PBGF’s claim exposure; and
  2. information regarding the distribution of its pension benefits.

Note: This requirement only applies to Defined Benefit (DB) plans that are PBGF eligible. The new data is to be submitted through the Pension Services Portal (PSP) as part of the existing valuation report that a plan administrator is required to file routinely with FSRA and will apply to valuations filed on or after September 1, 2021.

You can view the regulatory amendments here. If you have questions please reach out to us at pensioninquiries@fsrao.ca.

Revoking spent temporary funding relief provisions

The Ontario government has approved regulatory amendments to Regulation 909 to revoke spent provisions that allowed employers to elect temporary funding relief, primarily from solvency funding requirements, for certain defined DB pension plans. The period during which administrators of DB plans could elect to use this relief has expired, and these provisions are now obsolete.

In particular, revocation of the regulations means administrators will no longer be required to provide members, retirees and former members with progress reports regarding the relief. Consequential amendments, which remove references to the revoked provisions, were also made to the following regulations under the Pension Benefits Act:

  1. Regulation 321/09 (General Motors Pension Plans)
  2. Regulation 178/11 (Solvency Funding Relief for Certain Public Sector Pension Plans)
  3. Regulation 156/13 (General Synod Pension Plan of The Anglican Church of Canada)
  4. Regulation. 311/15 (Conversions and Transfers of Assets under Section 80.4 of the Act and Conversions under Section 81.0.1 of the Act)
  5. Regulation 365/17 (Administrative Penalties)

These changes come into effect on September 1, 2021.

FSRA changes requirements for refunds and exemptions under Reg s. 47(11) – (16)

Sections 47(13) to (16) of Regulation 909 made under the Pension Benefits Act provide a simple way to correct certain over-contributions made by employers or plan members to pension plans. These sections allow the refund of an over-contribution without FSRA approval if the refund is needed to avoid the plan being revocable under the federal Income Tax Act. These sections require that FSRA is notified at least 60 days before carrying out the refund.

Policy A400-500 sets out what FSRA expects plan administrators to include in the notice to FSRA. The Policy indicates that we expect to receive a copy of a letter from CRA confirming that the plan will be revocable if the refund is not made.

The description of information that should be set out in the notice to FSRA remains the same, except as follows:

  • FSRA no longer requires a letter from CRA confirming the plan will be revocable if the refund is not made.
  • We will accept confirmation in writing from the plan administrator or their advisor that the plan would be revocable under the ITA if the refund is not made.

A similar change applies for plan amendments where an exemption from the void amendment rule in section 14 of the PBA is needed pursuant to section 47(11) and (12) of Regulation 909.

Specialized Wind Up Team - update

Building on the success of our Asset Transfer Team, FSRA created a specialized Wind Up Team to streamline our processes and ensure timely and effective reviews.

FSRA’s service standard is to complete 90% of wind up application reviews in 120 business days for DB plans, and 90 business days for DC plans. FSRA reports results through our quarterly Service Standards Scorecard.

The Wind Up Team began its work with 119 applications in the system. We are pleased to report that the review of all except 16 of those 119 have now been completed. As well, for the quarter ending March 31, 2021, the team met its service standard for new DB wind ups 87.5% of the time and 84.6% of the time for new DC wind ups. The team is well positioned to meet its service standard going forward.

How can you get a faster review? By including all relevant documentation:

  • a complete wind up report;
  • necessary plan amendment(s);
  • individual member data list (for DB wind ups); and
  • sample copies of notices to members and their unions, if any.

Our service standard is measured from the date when we have a complete application.

New! On March 22, 2021, FSRA launched an online DC wind up application tool on the Pension Services Portal. By leveraging technology, this online tool enables a more efficient and effective regulatory process. Administrators and service providers are encouraged to use this online application tool; its use will be mandatory in the future.

If you have questions or issues with your wind up application, please reach out to us at pensioninquiries@fsrao.ca. Let’s work together to ensure your application is complete and reviewed efficiently!

Filing requirements for full asset transfers and concurrent asset transfer / wind ups

Following FSRA’s approval of an application for a full asset transfer under sections 80, 81 or 80.4 of the Pension Benefits Act, if substantially all assets are transferred to the Successor plan prior to the end of the Original plan’s fiscal year, FSRA will not require an AIR, PBGF Assessment Certificate, Financial Statement or Investment Information Summary to be filed for the Original plan for that fiscal year.

If assets are substantially transferred only after a fiscal year end of the Original plan, all mandatory filings must be submitted to FSRA for that completed fiscal year of the Original plan which has now passed.

There may be instances where one benefit component of a pension plan (e.g., a plan with defined benefit and defined contribution provisions) is transferred to a Successor plan, and the other benefit component remains in the Original plan and is wound up on the same or following day. In such cases, FSRA requires that only filings up to the effective date of the Original plan’s wind up must be submitted for the Original plan. No subsequent filings are required for the Original plan for any period beyond the effective wind up date.

For pension assessments, if the Original plan files its wind up AIR (under section 29.1 of Regulation 909) on or before December 31 of a year, then the Original plan will not receive a pension assessment invoice in the new year, which is usually issued in February of each year.

FSRA reports

FSRA releases Q2 2021 Solvency Report  

This Report finds the funded positions of pension plans have improved steadily for five consecutive quarters and are at their highest levels since monitoring began. Almost 70% of plans have a solvency funded ratio exceeding 100%.

  • The median projected solvency ratio was 106% as at June 30, 2021, steadily increasing from a low of 85% as at March 31, 2020, when the COVID-19 pandemic began.
  • 3% of pension plans were projected to have a solvency ratio below 85%.

FSRA releases 2020 Report on the Funding of Defined Benefit Pension Plans in Ontario

This Report provides pension stakeholders with funding, investment and actuarial information on the registered DB pension plans we regulate. Highlights of this year’s Report include (with comparisons to 2019):

Funded Status

2020

2019

Estimated going-concern funded ratio

114%

115%

Estimated median solvency ratio

96%

98%

  • For plans that are required to use a Provision for Adverse Deviations under the 2018 funding regime, almost all have eliminated the margin previously included in the going-concern interest rate.
  • The average gross investment return was 11.4% for plans with assets of over $1Bn (other than the Listed Jointly Sponsored Pension Plans), representing a lower investment return compared to smaller plans. For example, the average gross investment return was 13.7% for plans with less than $10MM in assets.
  • The number of pension plans continues to decrease, with 1,149 plans included in this Report compared to 1,230 plans in the 2019 Report, primarily as a results of wind up and asset transfer transactions.

New and refreshed Guidance

Interpretation Guidance: Pension Plan Administrator Roles and Responsibilities

Following its consultation with sector standing committees, FSRA has released final Interpretation Guidance to support the role and responsibilities of pension plan administrators.

This Guidance is a refresh and consolidation of four inherited guidance documents to improve regulatory efficiency and effectiveness on the pension sector and reflect FSRA’s transition to a principles-based regulatory approach.

Reminders

Missing members mandatory data collection begins Sept. 1

Effective September 1, 2021, FSRA will require plans to provide a best estimate of their missing members data when filing their Annual Information Return. The data collection will:

Pension Benefits Guarantee Fund – e-payment

Effective May 2021 plans can remit PBGF assessments electronically, using the same electronic payment program used for paying FSRA assessments. Please contact finance@fsrao.ca if you require assistance using the e-payment option. 

As a reminder, PBGF assessment certificates must be filed 9 months after the fiscal year of a pension plan. The payment due date for PBGF assessments is the same as the due date for filing the PBGF assessment certificate. Late payments will be subject to the legislated 20% penalty and interest charges. Unpaid balances may also be pursued by a third-party collection agency on behalf of FSRA. 

14 more applications moved to Pension Services Portal

FSRA is pleased to announce that as of June 1, 2021, 14 more applications have moved to the PSP. All advisors and service providers who file applications or who submit required filings with FSRA should have an account on the PSP. If you have any questions, please review the PSP page or contact us at pensioninquiries@fsrao.ca.

Pension Services Portal sub-delegation to multiple people by service providers

The PSP was upgraded in 2019 to allow service providers who have been given portal access by their clients (the plan administrator) to subdelegate authority to one or more persons in their firm. If you need assistance on how to use this feature, please contact us at pensioninquiries@fsrao.ca.

New approach and transition for Form 7

As previously announced, following targeted consultations as well as discussions with our Standing Technical Advisory Committees last fall, FSRA is updating its Form 7 and related processes. These changes include releasing updates of all relevant forms.

Although FSRA previously announced the changes would be effective January 1, 2022, we recognize the sector requires time to transition. We are currently working with those affected by the changes to determine whether a longer transition period is required. FSRA will provide full details of the effective date of the changes in our next quarterly eblast.

Under the revised process:

  • Annual Form 7 - Plan administrators will continue to complete and submit their annual Summary of Contributions / Revised Summary of Contributions (Form 7) with the trustee(s) of the pension fund in accordance with the legislative framework.
  • Non-remittance Reporting - Trustee(s) will continue to report failures to remit any contribution(s) to FSRA. This reporting remains on a monthly basis. In line with legislative requirements, reporting will include any amounts which are required to be remitted but have not been remitted within 60 days following the contribution due date. In addition, any variance in special payments shall be included in this monthly reporting.
  • Variance Reporting - The threshold for reporting variances in expected contributions will be increased from 10% to 25%. The exception is special payments to DB plans – these are treated as non-remittances as per the paragraph above. Similar to Alberta and British Columbia, the reporting period for informing FSRA of variances will change from monthly to quarterly. Trustees will be required to report any variances of 25% or more to FSRA within 60 days after the end of each quarter. There continues to be no requirement to report variances that are “over-contributions”.

As previously committed, updated forms will be made available later this summer.

Quebec members: rule changes for payment of CV amounts

Multi-jurisdictional pension plans registered with FSRA that have Quebec members should be aware that as of January 2016, the rules for payment of commuted value amounts to terminated Quebec members changed. This included changes to the application of the pension plan’s “degree of solvency” to commuted value payments.

Information about the Quebec requirements can be found on the Retraite Québec website (French only), in the second Question and Answer related to the 2020 Agreement Respecting Multi-jurisdictional Pension Plans) and here (discussing negotiated cost multi-employer pension plans).

If a pension plan registered with FSRA pays commuted value amounts to Quebec members based on the plan’s “degree of solvency”, that “degree of solvency” must be calculated using Quebec requirements. The pension plan must use all of the plan’s assets and liabilities, including those not related to the Quebec members, when calculating the plan’s “degree of solvency”. The plan’s “degree of solvency” must be included in the actuarial funding valuation reports filed with FSRA for the plan.

Where the terms of the pension plan provide that Quebec members continue to be entitled to payment of full commuted values (without the application of the plan’s “degree of solvency”), the plan’s “degree of solvency” is not required for the actuarial funding valuation reports filed with FSRA.

These requirements are consistent with the requirements of the 2020 Agreement Respecting Multi-jurisdictional Pension Plans.

FSRA’s New Website: We’ve updated the FSRA website to give you a more user-friendly experience.

Recent meeting summaries: 

Pension Sector Calendar: Stay tuned for upcoming fall meetings.

On the horizon

  • Final Family Law Guidance and webinar
  • Products from the Joint FSRA/OSFI special purpose technical advisory committee for defined contribution plans
  • Q3 Estimated Solvency Report for Ontario's Defined Benefit Pension Plans
  • Consultation on FY2022-2023 DRAFT Statement of Priorities