Is your pension plan compliant with B.C.’s new PBSA?

To be honest, there was some fanfare at a pension geek-filled Association of Canadian Pension Management gathering in Vancouver—delegates greeted one another with a catchy “Happy PBSA Day.” There were even speeches by JEPPS co-chair Scott Sweatman, as well as Abraham Koomson of B.C.’s Financial Institutions Commission (FICOM).

Fanfare aside, Sept. 30. 2015, is relevant if you’re responsible for one or more affected plans. Like it or not, from that date on, some of the new PBSA provisions became part of your pension promise to affected plan members, including the new immediate vesting and locking-in rules.

There are also a slew of other compliance issues and dates that you need to consider.

• As of Sept. 30, spouses of plan members must now use the new prescribed Spousal Waiver forms.
• As of Oct. 30, 2015, most B.C. registered plans must submit a Contribution Schedule to their pension fund holder so the holder, in turn, can monitor the timely receipt of monthly contributions that the PBSA now requires.
• By Dec. 31, 2015, affected plans must file PBSA compliance amendments, or a restated plan text, with FICOM or the applicable pension regulator.
• By Jan. 1, 2016, most B.C. registered plans must have a written Governance Policy.
• By Jan. 1, 2016, most DB and target benefit (TB) B.C. registered plans must have a written Funding Policy and provide a copy to the plan actuary.
• By Jan. 1, 2016, most B.C. registered non-collectively bargained multi-employer plans must have Participation Agreements with prescribed provisions in place.
• By Jan. 1, 2016, most B.C. registered plans need to have a Records Retention Policy in place. (Hint: Ensure the policy requires that a copy of the plan records remains in Canada, including on Canadian servers.)
• By June 28, 2016, most B.C. registered member-directed DC plans must have a prescribed default investment option in place. (Hint: Think balanced funds or target-date funds.)
• By Dec. 31, 2016, most B.C. registered plans must have completed their first Triennial Administrative Assessment. As the name implies, this assessment must be completed for every three-year period thereafter and be available for inspection by the Superintendent upon request.
• Beginning in 2016, for most affected plans, there will be new plan member communications and statement requirements, including annual retiree statements.

Read: B.C. pension bill receives royal assent

There are also a few noteworthy changes that might reduce the administrative burden for some plan administrators.

• Audited financial statements are no longer required for B.C. registered DC plans, or a DC provision within a plan, and DC assets need not be considered when assessing whether plan assets exceed the $10 million threshold that triggers the need for audited financial statements.
• Solvency Reserve Accounts can be established to reduce the risk of “trapped capital” for B.C. registered DB plans.
• Statements of Investment Policy and Procedures (SIPPs) are no longer required for member-directed DC plans and DC provisions within a plan.
• Partial plan terminations for B.C. registered plans have been generally eliminated.
• Small benefit rules have been “harmonized” in a manner consistent with other jurisdictions, including the ability for a plan administrator to “force out” small benefits.
• The 50% rule for post-1992 service will now apply only to periods in which the member was actually required to contribute to the plan.
• The administrator, employer and former employer of an ongoing DB plan will be discharged from liability for benefits through the purchase of a group annuity by the plan administrator for the benefit of deferred members and retirees, provided the purchase is done in accordance with the PBSA. (Hint: A discharge will generally be available if the annuity provides the same amount and form of benefit entitlement as under the DB plan.)

Finally, there are a few new PBSA provisions or changes with respect to compliance and material changes.

• The Superintendent is now authorized to impose administrative penalties on companies and individuals for material non-compliance with the PBSA. Penalties cannot be paid from the pension fund. (I’m not sure yet how this will be imposed but think late fines at the library, only bigger.)
• Regulatory penalties for offences under the PBSA have increased to between $100K (for individuals) and $500K (for corporations or administrators). Again, these cannot be paid from the pension fund.
• Prosecution of an offence under the PBSA or the levying of an administrative penalty by the Superintendent cannot take place later than three years after the Superintendent had knowledge of the relevant event. (In other words, there’s a three-year limitation period.)
• New actuarial reports will be necessary where events materially affect the cost of benefits or create an unfunded liability or solvency deficiency. New reports may be necessary where there is a material change in plan membership or where contribution rates change for a TB plan.

Read: Why Canada needs just one pension regulator

Consistent with the JEPPS recommendations, the PBSA is closely aligned with the corresponding Alberta pension standards legislation. There’s apparently an understanding between B.C. and Alberta that calls for pension acts, regulations and administrative practices to be harmonized. The two governments are said to be aiming for co-development of pension bulletins, guidelines and interpretations while legislative amendments are supposed to be jointly discussed in advance. However, it’s too early to say just how far the co-development and co-operation will extend.

The adoption of the PBSA—closely aligned to the “harmonized” Alberta pension legislation and the pledge of B.C. and Alberta to work together to keep their acts, regulations and administrative practices harmonized—brings us a step closer to the day when all Canadian jurisdictions “get their acts together.”

Happy belated PBSA Day!