Bill 132 – entitled An Act to reduce burdens on people and business by enacting, amending and repealing various Acts and revoking various Regulations (“Bill 132”) – was tabled in the Ontario Legislature on October 28, 2019, proceeded to second reading on October 31, 2019, and received Royal Assent on December 10, 2019. It includes a number of changes to the Pension Benefits Act, RSO 1990, c. P.8 (the “PBA”) which pension plan administrators should familiarize themselves with, most significantly in respect of the following matters:
- who can administer Ontario registered pension plans;
- electronic communications with members;
- unlocateable members;
- pension division on marriage breakdown; and
- asset transfers between single-employer pension plans (“SEPPs”) and jointly sponsored pension plans (“JSPPs”).
Administrators of Pension Plans
Bill 132 amends sections 8(1)(b) and (c) of the PBA, which address the administration of a pension plan by a pension committee. Prior to the passage of Bill 132, a pension plan could be administered by a pension committee comprised of joint representatives of members and employers of a pension plan, or a pension committee comprised solely of plan member representatives. Bill 132 adds new provisions in respect of the administration of a single-employer JSPP, providing that a single employer JSPP may be administered by a pension committee, a board of trustees comprised of representatives of plan members and the employer (on a 50/50 basis), a corporation, board, agency or commission made responsible by an Act of the Legislature for the administration of the pension plan, or such other person or entity as may be prescribed by legislation.
Electronic Communications with Active, Former and Retired Members
Currently, section 30.1 of the PBA permits pension plan administrators to communicate electronically with active, former and retired members, provided the electronic communications comply with the requirements of the Electronic Commerce Act, 2000 and the member has provided the administrator with consent to communicate with him or her electronically.
Bill 132 proposes to amend the current electronic communication rules under the PBA in a number of important respects:
- it clarifies that the applicable provisions only apply to communications (i.e. member statements, notices) that the administrator is required to provide active, former and retired members under the PBA, the regulations, or as mandated by FSRA (other communications from the administrator need not meet these requirements);
- it specifies that communications containing personal information or information prescribed under the PBA cannot be sent electronically unless the are sent through a secure information system that requires the recipient to identify themselves prior to accessing the document, and that otherwise complies with applicable prescribed requirements;
- it permits the administrator to send a notice to active, former and retired members by regular mail advising that the administrator will begin sending information electronically to members, and these members are deemed to consent to such transmission of information unless the member has instructed the administrator to send a hard copy of such information; and
- it requires the administrator to send a reminder notice to active and former members when they retire, advising that they may elect to receive documents in hard copy, rather than in electronic format.
Bill 132 also includes proposed amendments to the PBA to address missing former and retired members. Currently, the PBA permits the CEO of FSRA to waive the requirement for a plan administrator to send a biennial statement to former and retired members where the CEO is satisfied that there are reasonable and probable grounds to believe that the former or retired member is missing. Under the proposed amendments:
- the CEO may waive the statement requirement where the CEO is satisfied that the administrator is unable to locate the former or retired member after making reasonable efforts to locate him or her;
- factors which the CEO is required to consider in deciding whether or not to grant a waiver are specified (the amount of the commuted value of the members’ benefit, the search methods undertaken by the administrator, and the costs and anticipated costs required for additional searches);
- the CEO’s waiver is revoked when the former or retired member is located; and
- the administrator is required to promptly advise the CEO when a missing former or retired member is located.
Pension Division on Marriage Breakdown
Bill 132 amends certain provisions of the PBA that relate to pension division on marriage breakdown, including the following:
- the rules applicable to marriage breakdown and pension division are to be interpreted to take into account any changes in a member’s status under the plan that occurs after the marriage breakdown date. For example, if a member retires after the date of separation, the rules are required to be interpreted in a way to account for this change in the member’s status;
- new provisions have been introduced which provide FSRA with the ability to make rules that alter the provisions applicable to the valuation of pensions for family law purposes that will apply in circumstances where the assets attributable to a member’s pension benefits have been transferred out of the plan, or otherwise cease to be available in prescribed circumstances; and
- additional changes have been made to the marriage breakdown provisions to permit the settlement of spousal claims from a successor plan where the assets in respect of a member’s pension have been transferred to a successor pension plan.
Asset Transfers involving SEPPs and Public Sector Pension Plan Conversions
Section 80.4 of the PBA, which governs transfers form single employer pension plans to JSPPs, and section 81.0.1, which governs the conversion of public sector pension plans to JSPPs, have been amended to grant the CEO of FSRA the authority to waive or vary the application of certain regulations made governing the provision of notice in the case of asset transfers and public sector plan conversions.
In addition, section 80.4 of the PBA has been amended to provide that the CEO may consent to a transfer of assets from a SEPP to a JSPP before the JSPP has been registered under the PBA, provided the application for registration of the JSPP has been received by the CEO within 90 days of the application for consent to the transfer of assets.