1. Regulatory amendments – SOR/2017-145
Effective June 23, 2017, the Pension Benefits Standards Regulations, 1985 was amended to change the letter of credit limit from 15 per cent of a plan’s assets to 15 per cent of a plan’s solvency liabilities, and to change the solvency reduction limit applicable to pension plans of Crown corporations from 15 per cent of a plan’s assets to 15 per cent of a plan’s solvency liabilities.
Technical amendments were also made to the PBSR and Pooled Registered Pension Plans Regulations to (i) clarify provisions relating to the unlocking of pension benefit credits for non-residents; (ii) amend unlocking provisions relating to shortened life expectancy; (iii) allow funds previously held in a pension plan and now held in a retirement savings plan to be transferred to provincially-regulated pension plans, pooled registered pension plans and “excepted plans;”and (iv) amend the French version of the PBSR for consistency with the English version.
Read the full text of the amendments.
2. Draft guidelines for derivatives
The Office of the Superintendent of Financial Institutions has released revised draft derivative guidelines titled “Derivatives Sound Practices for Federally Regulated Private Pension Plans.” When finalized, these guidelines will replace the 1997 guideline “Derivatives Best Practices.” Questions and comments on the draft guidelines may be submitted to OSFI by September 29, 2017.
Read the draft guidelines.
3. PRPP Update
On March 31, 2017, the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans was amended by the 2017 Agreement Amending the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans to add the government of Ontario as a party to the Multilateral Agreement and to also make some administrative changes and clarifications. Currently the following jurisdictions are parties to the Multilateral Agreement: Canada, British Columbia, Nova Scotia, Ontario, Quebec, and Saskatchewan.
On July 17, 2017, OSFI released a guidance note regarding the eligible default investment options for PRPPs. The PRPP Regulations provide that the default investment option must be a balanced fund or a target date fund that takes into account a member’s age. Read the guidance note.
To assist PRPP administrators in completing the joint PRPP Annual Information Return, OSFI recently issued a guide to the PRPP along with a revised version of the PRPP AIR. The PRPP AIR must be filed with OSFI and the Canada Revenue Agency.
4. Risk assessment framework for federally regulated private pension plans
In April 2017, OSFI released an updated risk assessment framework for federally regulated private pension plans which sets out OSFI’s monitoring and review process for private pension plans under its risk assessment framework. At the same time, OSFI also released the related Asset Management Significant Activity - Risk Assessment Framework Pension Supervisory Guidance Note RAF4. The purpose of the guidance note is to provide the relationship manager with information to assist in the risk assessment process.
Read the updated Risk Assessment Framework and the related Guidance Note RAF4.
5. Upcoming pension industry forum
As stated in Issue 17 of the InfoPensions newsletter issued in May 2017, OSFI is planning to host its next Pension Industry Forum in Toronto in late October 2017. Suggestions for topics of discussion for the upcoming forum may be directed to OSFI.
6. Reminder to file plan amendments
Over the last several years, the Pension Benefits Standards Act, 1985 and PBSR have been subject to various amendments affecting federally-registered pension plans. A table with the key amendments and in-force dates can be accessed here. In Issue 17 of the InfoPensions newsletter issued in May 2017, OSFI issued a reminder to plan administrators to prepare and file any amendments to take into account the changes to the PBSA and PBSR, if it has not already done so.
7. CAPSA consultation on proposed changes to the funding and asset allocation rules under the Agreement Respecting Multi-Jurisdictional Pension Plans
On July 13, 2017, the Canadian Association of Pension Supervisory Authorities released for comment a consultation paper on proposed changes to funding and asset allocation rules under a future agreement respecting multi-jurisdictional pension plans. CAPSA is currently developing the agreement intended to replace the 2016 Agreement Respecting Multi-Jurisdictional Pension Plans. Two areas being considered are funding rules that apply to multi-jurisdictional defined-benefit pension plans while they are ongoing and rules for allocating assets of such a plan between jurisdictions when certain major events occur (such as plan windup). The consultation paper set out two options to approach these issues and is seeking feedback. Submissions were requested by August 31, 2017.
The letter to stakeholders and consultation paper are available on CAPSA’s website.
Heather Di Dio is a partner with Dentons Canada LLP