Recent News for Ontario Pension Plans and 2024 Recap

In recent months, we have monitored various activities concerning Ontario pension plans initiated by either the Financial Services Regulatory Authority of Ontario (FSRA) or Ontario’s Ministry of Finance. This bulletin summarizes publications on the following recent topics and provides a summary of FSRA’s activities in 2024:

• Variable Life Benefits
• Permanent Target Benefit Framework
• Leading Practices Benchmarking Summary Report for Defined Benefit Multi-Employer Pension Plans (DB MEPPs)

The Ministry of Finance published a consultation paper on November 12, 2024, on Variable Life Benefits (VLB). A VLB, also often referred to as a variable payment life annuity (VPLA), can be paid out from pooled registered pension plans, defined contribution pension plans and pension plans that allow for additional voluntary contributions.

Retirees opting for a VLB would receive a lifetime pension with payments being adjusted periodically based on investment performance and the mortality experience of the fund’s members.

Interested stakeholders have until January 10, 2025, to provide comments.

In October 2024, the Ontario government announced amendments to the legislation effective January 1, 2025, establishing a permanent target benefit framework in Ontario for Specified Ontario DB MEPPs. FSRA is expected to publish related guidance in the upcoming months.

Administrators of existing eligible DB MEPPs will have until the end of 2029 to apply to convert defined benefits to target benefits. Conversions will not be possible after that date. However, this deadline does not apply to new MEPPs or an MEPP whose registration has been transferred to FSRA from another Canadian jurisdiction.

In August 2024, following surveys conducted between 2022 and 2024, FSRA published a summary report covering 67 Defined Benefit Multi-Employer Pension Plans (DB MEPPs). This summary report benchmarks the extent to which these plans adhere to eight leading practices previously identified in the 2021 guidance for DB MEPPs. DB MEPP trustees can therefore benchmark their respective practices against their peers in terms of plan governance, risk management and communication strategies.

Throughout 2024, FSRA has published several communications aimed at enhancing employer and plan member knowledge of pension benefits (the importance of keeping track of pension entitlements, consideration with regard to contribution suspension, marriage breakdown, annual filing reminders, etc.).

As mentioned in our June bulletin, FSRA has issued final guidance on the following topics:

• Information Technology (IT) risk management guidance, which includes how to send documents securely and notifying FSRA of IT risk-related incidents
• Pension plan amendments guidance on the interpretation of certain Pension Benefits Act (PBA) provisions related to retroactive adverse amendments
• Pension plan administrator roles and responsibilities guidance

Several webinars have also been held in 2024, including some on the above topics in addition to the following:

• A webinar was held in May 2024 on the new examination program for Single and Multi-Employer Pension Plans. FSRA explained what to expect during such a process and outlined the steps followed in detail, including the multiple criteria used to select specific pension plans following environmental scanning and plan-specific risk analysis on a quarterly basis.
• A webinar was held in October 2024 on FSRA’s principles-based regulation approach guidance.

FSRA has also published the following reports and other guidance in 2024:

• Its first Ontario Pensions Sector Overview and Activities Report, containing statistics on the various types of pension plans for 2023
• The Pension Benefits Guarantee Fund (PBGF) Report, which includes the new PBGF asset allocation following the transfer of assets to Investment Management Corporation of Ontario (IMCO)
• 2023 Report on the Funding of Defined Benefit Pension Plans in Ontario, including information on assumptions used, PfAD levels, use of margins, nature of pension plans (closed or open), and other elements
• General Administrative Monetary Penalties guidance on financial penalties following a contravention or failure to comply with legislation

FSRA also published its Proposed Fiscal Year Statement of Priorities 2025-2026, with objectives focusing on the prudential supervision of the pension sector, regulatory excellence and improvement in plan member outcomes, such as further education for pension plan sponsors and administrators.

Normandin Beaudry consultants will continue to monitor Ontario pension sector news and developments involving FSRA activities and will keep you informed. Feel free to contact us if you have any questions.