
June 2024
Recent Guidance for Ontario Registered Pension Plans
The Financial Services Regulatory Authority of Ontario (FSRA) has recently issued guidance on the following topics, which directly affect Ontario pension plans and their management:
- Information Technology (“IT”) risk management
- Pension Plan Amendments
- Pension Plan Administrator Roles and Responsibilities
This bulletin summarizes the content and outlines of these guidelines.
IT risk, as defined by FSRA, includes the risk of financial loss, operational disruption or damage, reputational loss resulting from inadequacy, disruption, destruction, failure or damage in IT systems, infrastructure, or data. It is a significant and growing threat to business, operations and stability of FSRA’s regulated sectors.
This guidance is applicable to all entities and individuals regulated by FSRA. It outlines, for all sectors:
- Interpretation on existing regulatory requirements
- Refers mainly to the requirements of the Personal Information Protection and Electronic Documents Act.
- Information on practices for effective IT risk management
- Mentions seven good practices and their desired outcomes.
- Approach on notification of material IT risk incidents to FSRA
- Introduces FSRA’s Protocol for IT risk incidents.
- Mentions material IT risk incidents of which they expect to be informed.
The guidance also outlines guidance applicable to specific sectors. More specifically, for pension plans, it refers to the Pension Benefits Act (“PBA”), and to the administrator’s fiduciary duties. Administrators must ensure that any personal information sent in a document in an electronic form must use a secure information system that requires the intended recipient to identify themselves prior to accessing the document.
The purpose of this guidance is to protect plan beneficiaries, promote the timely filing of amendments, and foster effective plan administration.
This guidance includes:
- Information regarding interpretation of certain PBA provisions related to Retroactive Adverse Amendments (as defined in the guidance)
- Details regarding FSRA’s approach to:
- Retroactive Adverse Amendments (including those to rectify drafting errors in the plan terms)
- Amendments that purport to replace a variable indexation formula with a fixed indexation rate for benefits already accrued
- Notice requirement for certain adverse amendments
Retroactive Adverse Amendments are described as amendments that:
- May negatively impact members’ or beneficiaries’ rights and/or benefits
- Purport to be effective on a date before the amendment is filed with FSRA
FSRA generally prohibits such amendments under the PBA. However, exceptions may apply if the amendment is not genuinely considered to have an adverse impact. The guidance delineates the specific criteria under which FSRA can use its discretion when registering such an amendment where the administrator can demonstrate that:
- The negative retroactive impacts on the rights and benefits of plan members and beneficiaries are non-material and
- These impacts are offset by considerations of transparency, reasonableness and equity.
The guidance also incorporates specifics on potential penalties for non-compliance.
The purpose of this guidance is to provide a comprehensive outline of FSRA’s interpretation concerning the roles and responsibilities of pension plan administrators.
In this guidance, the following elements are addressed:
- Role of the administrator
- Who can be an administrator
- Responsibilities
- Fiduciary duties
- Service providers
- Administration expenses
- Providing information to beneficiaries
- Governance policy
The following sections have also been added from the previous version of this guidance.
- Records retention
- Complaints and inquiries
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.