Portability Amendments Now in Force
One of the amendments in Bill 70, the 2016 Budget Bill, clarifies that Ontario members who have reached normal retirement date but who have not yet elected to receive a pension can, if the plan permits, choose a commuted value transfer when they terminate plan membership. These amendments, together with supporting regulations, took effect on March 1, 2017.
FSCO Policy Updates
FSCO has documented the following policy changes on its Pension Policies Review Project webpage under the heading 2016 Policy Reviews:
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New Policy T500-601 – No Obligation for Other Plans to Accept Transfer- replaces T500-600, with a new discussion of DC account balances
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New Policy A700-151 – Change of Custodian – Filing and Amendment Requirements - replaces A700-150, and updates FSCO’s administrative requirements when custodial pension assets are transferred from one contract to another, or between financial institutions
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New Policy A700-154 – Types of Asset Transfers - replaces A700-152 and A700-153, and clarifies the difference between a change of custodian (i.e., an asset transfer involving one plan only) and a transfer of assets involving two or more plans
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Former Policy A400-200 – Amendments has been archived (information outdated)
Separately, FSCO has also released new Policy T500-851 - Transfer Rights. It replaces Policy T500-850, and includes a new comment about the ability to unlock benefits because of non-residency in Canada.
2016-17 Pension Assessments
FSCO has mailed annual pension assessment invoices to all plan administrators. The total on the invoice is the portion of the “preliminary pension assessment” for the current fiscal year attributable to the assessed pension plan, plus the “prior year adjustment”. To avoid late fees, the required invoice payment must be made within 30 days of the invoice date.
Ontario Set to Join PRPP Multilateral Agreement
Ontario has amended its PRPP Regulations to allow the province to join the amended Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans, effective March 31, 2017. Current signatories include the federal government, British Columbia, Saskatchewan, Nova Scotia and Quebec.
The Agreement is designed to streamline the supervision of PRPPs, support the creation of large multi-jurisdictional PRPPs, and generate economies of scale that will result in lower administration fees for PRPP members.
Letters of Credit in the Public Sector
Effective February 17, 2017, Ontario Regulation 909 was amended to add the following plans to the list of single employer pension plans (SEPPs) in the public sector that are authorized to use letters of credit to cover solvency payments under section 55.2 of Pension Benefits Act:
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Retirement Plan for Employees of Youth Services Bureau of Ottawa
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Pension Plan for Professional Staff of University of Guelph
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Retirement Plan of University of Guelph
Since 2014, 10 public sector SEPPs have been authorized to use letters of credit to fund solvency deficits.
Class Action Certified Involving Segregated Funds
On February 23, 2017, the Supreme Court of Canada denied leave to appeal in Fantl v. Transamerica Life Canada, where the Ontario Court of Appeal certified a class proceeding in which investors alleged breach of contract and negligent misrepresentation in the marketing of segregated funds.
Although the Court of Appeal noted the potential complexity in assessing individual damages, it viewed a class action as the only reasonable way to ensure access to justice for contract holders. Individual actions were not “economically viable” in part because for most contract holders the monetary damages would be small.
Also of Note: New CRA Application Forms
CRA has revised Form T510 – Application to Register a Pension Plan, and From T920 – Application to Amend a Registered Pension Plan. Administrators must use the new version (16) of both T510 and T920 for all plan registrations and amendments submitted after April 30, 2017.