Financial Services Regulatory Authority of Ontario (FSRA) released a couple of Pension Updates in July and in November. Here are the major updates:

Specialized Windup Team

This team will streamline processes and ensure timely and effective reviews. FSRA has also launched an online Defined Contribution (DC) windup application tool. This can be found on the Pension Services Portal (PSP).

Missing members mandatory data collection

Since September 1, 2021, FSRA has and will continue to require plans to provide a best estimate of their missing members data when filing their Annual Information Return (AIR).

New approach and transition for Form 7

What’s changing

  • FSRA is updating its Form 7 and related processes.
  • The changes will be voluntary starting January 1, 2022.
  • The changes become mandatory March 31, 2022. Here’s an Excel form that’s required.
  • The updated Form 7 – Summary of Contributions is now available on FSRA’s website.
  • This means that Sun Life will accept the old version of the form for the submission deadline of March 1, 2022.
  • The threshold for reporting variances in expected contributions will increase from 10% to 25%. The reporting period for Sun Life to inform FSRA of variances will change from monthly to quarterly. Sun Life must report any variances that are at least 25% less than the expected contributions to FSRA within 60 days after the end of each quarter.
  • This means that Sun Life will begin to monitor quarterly instead of monthly as of January 1, 2022. In the event that the contributions are variant, Sun Life will reach out and may request a revised summary of contributions.

What’s not changing

  • There continues to be no requirement for Sun Life to report variances that are over the expected contribution amount.
  • Sun Life continues to require revised planners for variances that are over the expected contribution amount.
  • There is no change to the process on how and when plan administrators submit their form 7.
  • Plan administrators submit their annual Summary of Contributions/Revised Summary of Contributions (Form 7) to Sun Life.

Family law Guidance, guide and new forms

  • FSRA released the final Guidance on the Administration of Pension Benefits Upon Marriage Breakdown. This Guidance provides a principles-based approach. It also includes examples plan administrators can use to interpret and meet their legal obligations.
  • The new Guidance came into effect on November 9, 2021.
  • FSRA also released an updated plain language guide for plan members and their spouses to help with their understanding.
  • New forms have been released. To allow time for transition, the current and updated family law forms will be available for use until April 30, 2022.  Starting May 1, 2022, the updated family law forms must be used.

Filings

  • In response to the pandemic, FSRA had advised plan administrators to contact FSRA before the filing deadlines if they were unable to meet the deadlines.
  • FSRA will resume its processes for following up with plan administrators on outstanding filings in the coming weeks. This includes applying administrative monetary penalties where appropriate.
  • FSRA does not expect applying any penalties before the end of 2021.
  • A further update will be given in the next e-blast released by FSRA, including expected timing of any potential administrative monetary penalties.

To avoid the chance of regulatory action all processes and filings should be up to date.

Interpretation Guidance: Pension plan administrator roles and responsibilities

FSRA has released final Interpretation Guidance to support the roles and responsibilities of pension plan administrators. This is a refresh and consolidation of four inherited guidance documents. It will improve regulatory efficiency and effectiveness on the pension sector. It will also reflect FSRA’s transition to a principles-based regulatory approach.

Pension Services Portal (PSP)

As of June 1, 2021, 14 more applications have moved to the PSP. Not all of these applications will apply to your plan. These are:

  • biennial member waiver
  • windup interim payment
  • plan viewing/photocopy request
  • Pension Benefits Guarantee Fund (PBGF) refund request
  • letters of credit
  • annuity discharge
  • refund of excess contributions – revocation exemption (RCE)
  • commuted value section 19
  • Defined Benefit (DB) refund of overpayment to employer
  • Specified Ontario Multi-Employer Pension Plan (SOMEPP) – Notice
  • SOMEPP – Election
  • DB refund of member contributions
  • DC refund of member contributions
  • undertakings

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

These sections under the Pension Benefits Act (PBA) provide a simple way to correct certain over-contributions. These would be made by employers or plan members to pension plans.

The description of information that should be set out in the notice to FSRA remains the same. Certain exceptions are as follows:

  • FSRA no longer requires a letter from Canada Revenue Agency (CRA) confirming the plan will be revocable if the refund is not made.
  • Sun Life will accept confirmation in writing from the plan administrator or their advisor that the plan would be revocable under the Income Tax Act (ITA) if the refund is not made.
  • FSRA must get 60 days advance notice before issuing a refund. It’s only required when the refund is needed to avoid the plan being revocable under the ITA.

Filing requirements for full asset transfers and concurrent asset transfer/windups

If the majority of assets are transferred to the Successor plan before the end of the Original plan’s fiscal year, FSRA will not require an AIR or Financial Statement to be filed for the Original plan for that fiscal year.

If the majority of assets are 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.

Outcomes of the Joint FSRA/OSFI Defined Contribution (DC) Pension Plans Technical Advisory Committee (TAC)

This committee was formed to review the approaches of both regulators to supervising DC plans and where possible, find opportunities for regulatory improvement and harmonization. FSRA has published three outcomes from the TAC:

Interpretation guidance: Automatic features in DC pension plans

  • Effective November 8, 2021, this guidance document confirms the Ontario Pension Benefits Act and Regulation do not prohibit the use of automatic features (such as auto-enrolment, auto-escalation and default funds). Employers should consider how these features interact with the Employment Standards Act. Employers may also wish to seek legal advice. As explained by FSRA, “automatic” instead of “mandatory” means that members retain the right to select a different option (meaning the members may “opt-out”).
  • Auto-enrolment is when all eligible employees are enrolled in the plan.
  • Auto-escalation is when the plan increases member contributions based on a schedule or formula.
  • The default fund is the plan's starter fund. Unless the member actively selects their fund, they are put into the default fund.

Ministry of Finance Consultation

The consultation closed on November 23, 2021. There are two regulatory amendments being proposed:

  • Remove the requirement for a SIPP to be prepared for member-directed Defined Contribution Pension Plans
  • Remove the requirement to file an auditor’s report on the plans’ annual financial statements for Defined Contribution Pension Plans.  

If you have questions, please reach out to your Group Retirement Services representative.