The Ontario government has introduced a bill that, if passed, will enact several changes to the Pension Benefits Act.
“This is a significant step,” says Stephanie Kalinowski, a partner at Hicks Morley Hamilton Stewart Storie LLP, of Bill 177. “Some of these items we’ve been waiting on for a number of years.”
First, the Financial Services Regulatory Authority of Ontario and cabinet would have rule-making authority over certain affairs.
The new rule-making powers will be an interesting one to watch, says Kalinowski. “There are two sides to this,” she notes. New rules could help shed some of the gaps and ambiguities in the guidance plans follow that often cause them to err on the side of caution. “This way, they can simply follow the rule,” says Kalinowski. On the other hand, the new regulator won’t necessarily interpret the legislation in ways the pension industry likes, so it will be a process to watch carefully, she adds.
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“If you take a policy that some don’t agree with and you turn it into a rule that can be enforced, what does that mean for regulation? But I think the idea is that it’s supposed to be helpful.”
As well, plans will need to include a funding and governance policy, even if they’re already a registered plan.
The bill also addresses the issue of missing beneficiaries, for whom the superintendent will need to establish and operate an electronic registry. Plan administrators will have to inform the superintendent when they can’t locate a beneficiary, and people will be able to ask whether they, or someone they act on behalf of, are in the registry. At the same time, if the plan administrator does locate a missing member, it must inform the superintendent so it can remove that person.
In addition, the bill includes an amendment to provide for a discharge if the administrator of a single-employer pension plan has followed through with the requirements regarding the purchase of a pension, deferred pension or ancillary benefit from an insurance company. “I think this is something the industry has been waiting for a long time and is going to welcome with open arms: that knowledge, that you’re fully off the hook, you don’t have to keep reporting it in a valuation report,” says Kalinowski.
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Currently, for their benefits to be subject to a guarantee by the Pension Benefits Guarantee Fund, plan members must meet requirements regarding their ages, years of employment or membership. An amendment in the bill removes those requirements, if the windup date of the plan is on or after the first day the change comes into effect.
At present, the fund doesn’t guarantee any amount of pension benefit in excess of $1,000 per month. The bill amends that to $1,500 as long as the windup date is on or after the first day the change comes into effect.
A further amendment entitles a retired member with a variable benefit account to statements about the pension plan and the account and to transfer funds out of it. Further, the beneficiary can denote who will receive the death benefit.
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