This edition contains further updates concerning Ontario's COVID statutory leave, new policy guidance and updates from FSRA, OSFI, and CAPSA and finally a recent CCAA order regarding the Laurentian Unversity's pension plan.
ONTARIO INTRODUCES TEMPORARY PAID COVID-19 LEAVE
The Ontario government amended, retroactive to April 19, 2021 to until September 25, 2021, the infectious disease emergency leave (IDEL) provisions of the Employment Standards Act, 2000 (ESA) to allow employees to take three paid days for reasons relating to COVID-19 (including for vaccinations), provided they are not otherwise entitled to an equal or greater paid leave under an employment contract. The Paid IDEL is in addition to the entitlement to unpaid infectious disease leave currently provided for under the ESA.
An employer can apply to the Workplace Safety and Insurance Board (WSIB) to be reimbursed for the payments it makes to an employee for Paid IDEL.
Further explanation is set out in a government communication.
ONTARIO EXTENDS INFECTIOUS DECLARED EMERGENCY LEAVE
Ontario has again extended, this time to September 25, 2021, the infectious disease emergency leave (IDEL) provision that is prescribed under subclause 50.1(1.1)(b) of the Ontario Employment Standards Act. This is the deemed leave set out under the Infectious Disease Emergency Leave Regulation that deems an employee on leave if their employer temporarily reduces or eliminates their work hours because of COVID-19.
The 2021 federal budget was tabled on April 19, 2021 and included several items with respect to pension and retirement plans.
- Beginning in the 2021 taxation year, the Income Tax Act will be amended to enable defined contribution plan administrators to accept retroactive contributions to employee accounts (from the participating employer or the plan member) to correct prior undercontribution errors, and to simplify the rules for correcting overcontribution errors.
- The Pension Benefits Standards Act, 1985 (PBSA) will be amended so that unclaimed balances from terminated federally regulated pension plans can be remitted to the Bank of Canada.
- The PBSA will also be amended to strengthen plan governance, transparency, and benefit sustainability for multi-employer negotiated contribution pension plans
- As of July 2022, Old Age Security payments will increase by 10% for those age 75 and older, with a one-time $500 payment in August 2021
Bill C-30, Budget Implementation Act, 2021, No. 1 will make the amendments related to several of the above Budget measures including for unclaimed pension balances, multi-employer negotiated contribution pension plans, and Old Age Security Benefits but not with respect to the tax rules for contribution errors in defined contribution plans. In addition, the Income Tax Act will be amended to set out the provisions needed to create advanced life deferred annuities and variable payment life annuities, which had been announced in the 2019 budget.
PROPOSED PBGF CHANGES
Following the announcement in the 2021 Ontario budget, Ontario released draft amendments to regulations under the Pension Benefits Act that will require administrators of Pension Benefits Guarantee Fund (PBGF) eligible plans to include additional information on their valuation with respect to their plan’s PBGF exposure. These requirements are intended to provide the data necessary to estimate the extent to which Ontario plan members are protected by the PBGF.
The Ministry of Finance accepted submissions on the draft amendments up to May 31, 2021. There is no proposed date for when the amendments to the regulations would take effect.
FINAL REVISIONS TO CAPSA FUNDING POLICY GUIDELINE
CAPSA has released the final version of its revised Pension Plan Funding Policy Guideline (No. 7) which sets out guidance on the development and adoption of funding policies for defined benefit and target benefit pension plans. There are extensive revisions and considerably more detail from the previous Guideline, including an expanded and renamed section that addresses target pension arrangements. Changes in the final version from the draft mainly addressed this section.
FEDERAL DB AND DC TERMINATION GUIDES
The Office of the Superintendent of Financial Institutions (OSFI) has issued the final versions of its instruction guides for the termination of defined benefit and defined contribution pension plans, replacing the respective guides from 2016.
FSRA UPDATES PROPOSED FRAMEWORK FOR TITLE PROTECTION OF FINANCIAL PLANNERS AND FINANCIAL ADVISORS
The Financial Services Regulatory Authority of Ontario (FSRA) has launched a second consultation on its proposed title protection framework for Financial Planners and Financial Advisors. Feedback is requested by June 21, 2021 on revisions to Proposed Rule 2020-001 – Financial Professionals Title Protection and Proposed Approach Guidance – Financial Professionals Title Protection – Administration of Applications. FSRA is also seeking comments on a new Proposed Approach Guidance – Financial Professionals Title Protection – Supervisory Framework which will set out FSRA’s supervision approach to monitoring and enforcing the rules under the new framework.
FSRA’s goal for implementing the Financial Planners and Financial Advisors title protection framework is to mitigate consumer confusion and provide confidence to consumers and investors that the individual with whom they are dealing is qualified to provide financial planning or advisory services.
The Financial Services Regulatory Authority of Ontario has released its April Pension Update which includes the following items of interest:
Beginning January 1, 2022, there will be a new Form 7 and process. The administrator’s requirement to file a Form 7 with the trustee will remain the same, and trustees will continue to report failures to remit any contributions to FSRA on a monthly basis.
The rules around variance reporting, however, have changed. The threshold at which a trustee must report that contributions made are less than expected will increase to 25% (up from 10%); except for any variance in special payments, which will be treated as a non-remittance. The period for reporting variances above the threshold will also change, from monthly to 60 days after the end of each quarter. Updated forms and full details will be released this summer.
FSRA has stated its position on the timing for filing amendments, particularly adverse ones. Although the PBA permits the filing of retroactive amendments, this does not apply to adverse amendments which must be filed prior to the effective date. Plans cannot administer adverse amendments before the amendment is filed with FSRA. The update also notes that, where an adverse amendment has been collectively bargained, there is no automatic right to a waiver of the notice requirements and the administrator needs to apply for it.
CV TRANSFERS AND PBGF ASSESSMENTS IN LAURENTIAN UNIVERSITY’S CCAA APPLICATION
In Laurentian University of Sudbury, the university, as part of insolvency proceedings, sought an order, with respect to its pension plan, permitting it to apply the transfer ratio of 65.8% when calculating the commuted value transfer of 27 individuals (with the balance payable over five years), despite the fact that they had already received a retirement or termination statement and election form that stated they could elect to receive a 100% commuted value.
The Court granted the order because it would help mitigate any deterioration to the plan’s financial position and would treat all plan members equitably. It noted that payments of the interim CV applicants had not commenced. As well, the calculation was in accordance with the Pension Benefits Act’s regulations. The affected individuals would, instead, be given an updated pension statement and options package reflecting the application of the plan’s transfer ratio and permitted to revise any earlier election.
The Court also confirmed that Laurentian’s 2020 PBGF and incremental PBGF assessments due on March 31, 2021 are stayed as part of the initial CCAA order because they were prefiling obligations relating to a period before the CCAA proceedings began.
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