COVID-19 Response for Ontario Registered Pension Plans
On March 20, 2020, the Financial Services Regulatory Authority of Ontario (“FSRA”) published a brief Q&A in response to the crisis caused by the COVID-19 pandemic, reminding administrators of various elements relating to the Pension Benefits Act (“PBA”) and informing them that processing delays should be expected for any filed pending transactions (e.g. pension asset transfers or wind-up applications).
Plan administrators or their authorized agents may request filing extensions of up to 60 days through the online Pension Services Portal. FSRA will be understanding regarding these requests, given the fact that plan administrators will likely face challenges in meeting the upcoming deadlines given the current crisis.
Any extension request beyond 60 days must, however, be submitted to the pension plan’s assigned Pension Officer.
Plan administrators who are expecting to miss membership disclosure deadlines as set out in the PBA are encouraged to notify their assigned Pension Officer by email as soon as possible with a proposed plan of action. Annual or biennial pension benefit statements as well as termination or retirement statements are examples of these disclosures.
While FSRA does not have the power to extend the prescribed timelines of member disclosures, provided that the above has been done, any monetary penalties associated with non-compliance will not be charged until further notice.
If a plan administrator knows or ought to know that the transfer ratio has dropped by more than 10% (or below 0.9 for plans with a transfer ratio greater than 1) since the most recently determined transfer ratio, the administrator shall not undertake transfers of any part of the transfer value of pension benefits to which a member or former member is entitled without the prior approval of FSRA. This approval can be requested by the means of Form 10.
While pension plans showing a transfer ratio below 1 are allowed to transfer 100% of transfer values until a certain threshold is met (aggregate of all transfer deficiencies since the last review of the transfer ratio does not exceed 5% of assets), transfer values may be settled according to the transfer ratio, provided the balance is paid within five years of the initial payment.
Settling transfer values according to the transfer ratio may be considered by plan sponsors that currently pay these at 100%. This could help to protect plan liquidity in the short term, sparing pension funds from having to sell depreciated assets to provide full transfer value payments. In choosing this option, plan sponsors should consider the anticipated volume of requests and ensuing additional administrative burdens.
Normandin Beaudry consultants will continue to monitor Ontario pension sector news and developments with FSRA’s activities and will keep you informed. Feel free to contact us if you have any questions.