Questions & Answers for Plan Administrators

General

 

Q1. What asset transfer applications do the new rules apply to?

 

A1. The new asset transfer rules apply to asset transfer applications filed with the Financial Services Commission of Ontario (FSCO) on and after January 1, 2014. - 12/2013
 
Q2. What about asset transfer applications with an effective date prior to January 1, 2014 which have already been filed with FSCO, or are filed prior to January 1, 2014?
 
A2. Asset transfer applications already filed with FSCO, or filed prior to January 1, 2014, will be reviewed in accordance with the legislation applicable prior to January 1, 2014. - 12/2013
 
Q3. Which rules apply to asset transfers with an effective date prior to January 1, 2014, but a filing date after January 1, 2014?
 
A3. Asset transfers with an effective date prior to January 1, 2014, but which are submitted to the Superintendent after that date, will be reviewed in accordance with the new asset transfer rules.  The new rules set out in O. Reg. 310/13, prescribe time periods for asset transfer applications.   The mandatory notice to members must be provided within 6 months (section 16(2)) of the effective date of the asset transfer.  The asset transfer application must be submitted to the Superintendent within 9 months (section 5(3)) of the effective date of the asset transfer.  For applications with an effective date prior to January 1, 2014, the Superintendent will apply the time periods in sections 16 and 5 as of January 1, 2014, instead of the effective date of the asset transfer.  If these deadlines are not met, the application will be refused. - 12/2013
 
RevisedQ4. Do the new rules permit asset transfers from single-employer pension plans (SEPPs) to multi-employer pension plans (MEPPs), or a transfer from a SEPP to a jointly sponsored pension plan (JSPP)?
 
A4. Transfers from SEPPs to MEPPs are not permitted because of the inherent ability of MEPPs to reduce accrued benefits in certain circumstances.  Section 13 of O. Reg. 310/13 does not permit the transfer if the successor plan is permitted to reduce accrued pension benefits in circumstances that were not allowed in the original plan.  The transfer from a SEPP to a JSPP is permitted pursuant to section 80.4 of the Pension Benefits Act, and O. Reg. 311/15. – 07/2018
 
Q5. Is it permissible to use the new rules to transfer pension assets from a defined benefit plan to a defined contribution plan based on the calculation of each member’s commuted value?
 
A5. No.  Section 79.2(4) of the Pension Benefits Act provides that assets related to a defined benefit under the original plan must be used to provide defined benefits under the successor plan.  However, a defined benefit pension plan may be amended to convert defined benefits to defined contributions (see FSCO Pension Policy Conversion of a Plan from Defined Benefit to Defined Contribution), then the assets related to the defined contribution benefits may be transferred to the successor defined contribution plan. –05/2014
 
Q6. Can a defined benefit component be added to a defined contribution plan in order to transfer assets under the new rules?
 
A6. Yes.  However, adding a defined benefit component will make the defined contribution plan a combination defined benefit and defined contribution plan for purposes of the Pension Benefits Act and Regulation 909.  This means that the administrator of the combination plan will be required to provide the filings appropriate to a combination defined benefit and defined contribution plan, including actuarial valuation reports and Pension Benefits Guarantee Fund assessments. –05/2014
 
 

The Employer’s Agreement

 

Q7. What is the “employers’ agreement”?
 
A7. The “employer’s agreement” is the agreement between the original employer and the successor employer to transfer assets and liabilities from the original pension plan to the successor pension plan. If member consent to the transfer is required, this must be reflected in the employer’s agreement. –05/2014
 
Q8. Can a purchase and sale agreement include the employer’s agreement?
 
A8. Yes, the employer’s agreement can be part of the purchase and sale agreement. –05/2014
 
 

Notices

 

Q9. What is to be included in the prescribed notices to members.

 
A9. The content of the prescribed notices is outlined in Schedule 3 through Schedule 11 of O. Reg. 310/13. -12/2013
 
Q10.The notice to be provided by the original employer as required in Schedule 3 of Regulation 310/13 must include the information required by section 40 of the Regulation 909 (annual statement), with modifications. What are the modifications?/strong>
 
A10. The notice required by Schedule 3 is a snapshot of the pension benefit before it is transferred. The information normally provided under section 40 must be modified to reflect the information at the effective date of the asset transfer, rather than the plan’s year end. –05/2014
 
Q11. When must the notices in Schedules 3 to 11 be given to the transferred plan members?
 
A11. The notices required in Schedules 3 to 11 must be given to the transferred plan members within six months after the effective date of the transfer. –05/2014
 
Q12.Can the administrator apply under section 105 of the Pension Benefits Act for an extension of the time period applicable to the distribution of the mandatory notices to members?
 
A12. No. The deadline extension provisions of section 105 of the Pension Benefits Act are applicable to documents to be filed with the Superintendent.  The Superintendent does not have the authority to extend the deadline for documents to be given to plan members. –05/2014
 
Q13. What method can the plan administrator use to deliver the required notices?
 
A13. Transmittal must be by personal delivery, regular mail or electronic delivery. See FSCO Policy on Electronic Communications Between Plan Administrators and Plan Beneficiaries for details on electronic communications. –05/2014
 
Q14. Can the required notice be delivered by public advertisement or other means?
 
A14. The plan administrator may make a submission to the Superintendent for authorization to deliver the required notices by public advertisement or other means in accordance with subsection 112(3) of the Pension Benefits Act. Such an application must provide support justifying the delivery of the notices by a different means. –05/2014
 
Q15. If members are being asked to consent to the transfer of their benefit, can the union representing the members consent to the transfer on their behalf.
 
A15. No. Each member, former member, retired member or other entitled person must give his or her own consent. –05/2014
 
 

Commuted Value

 

Q16. Under the new rules, do the pension benefits and other benefits of transferred members in the original pension plan need to be replicated in the successor pension plan?
 
A16. No.  The commuted value of the benefits from the original plan must be equivalent to the commuted value of the benefits from the successor plan, but the benefits themselves do not have to be replicated.  However, section 14 of O. Reg.310/13 requires that the amount of the accrued pension benefits under the successor pension plan must be at least 85% of the amount of the accrued pension benefits under the original pension plan. -12/2013
 
Q17. As of what date is the commuted value of the benefits from the original plan to be calculated?
 
A17. The commuted value is calculated as of the effective date of the asset transfer. –05/2014
 
Q18. What is the basis for the calculation of the commuted value?
 
A18. The commuted value must be determined in accordance with actuarial methods and assumptions that are consistent with section 3500 of the Canadian Institute of Actuaries’ Standards of Practice as that section read on June 3, 2010. The commuted value is calculated as though the member’s employment was terminated by the employer on the effective date of the asset transfer. Therefore, the value of any applicable grow-in benefits must be included, but a salary projection is not required. –05/2014
 
Q19. Is interest payable on the commuted value between the effective date of the asset transfer and the actual date that the assets are transferred?
 
A19. No. The commuted value is a calculation done in order to confirm that the value of the benefits in both plans is equal. This is done by comparing the value of the members’ benefits in the original plan with the value of the benefits in the successor plan at the effective date of the transfer. There is no interest payable on it. –05/2014
 
 

The Application

 
Q20. How is an asset transfer application to be made?
 
A20. Schedule 1 of O. Reg. 310/13 outlines what must be included in the asset transfer application under section 80 of the PBA. Schedule 2 of the Regulation outlines what must be included in the asset transfer application under section 81 of the PBA. - 12/2013
 
Q21. Can the administrator apply under section 105(2) of the Pension Benefits Act for an extension of the time period applicable to the filing of the asset transfer application?
 
A21. Yes, the administrator can apply under section 105(2)1 for an extension of the time period for the filing of the asset transfer application. The Superintendent of Financial Services (Superintendent) may extend the time limit for filing the asset transfer application for a maximum of 60 days if the administrator demonstrates that there are reasonable grounds for the extension. The time limit may be extended for further periods if the Superintendent is satisfied that extraordinary grounds exist and that no person will be unduly prejudiced. An application must include support for the extension. –05/2014
 
Q22. Is the Transamerica (Trust Issues on Pension Plan Asset Transfer) checklist and/or a trust analysis still required to be filed with the application?
 
A22. No. The Transamerica checklist is not required to be filed.  Schedules 1 and 2, which contain a description of what is to be included in an asset transfer application, do not require a trust analysis to be included. –05/2014
 
 

Multi-Jurisdictional Pension Plan Asset Transfers

 
The Canadian Association of Pension Supervisory Authorities (CAPSA) Agreement Respecting Multi-Jurisdictional Pension Plans was signed by the governments of Ontario and Quebec and brought into force in those jurisdictions as of July 1, 2011.  In these FAQs that agreement is referred to as the 'MJPPA'.
 
Q23. Do the new rules apply to asset transfers affecting Ontario members of plans registered in other jurisdictions?
 
A23. Yes. The new rules apply to Ontario members of pension plans registered in other jurisdictions. –05/2014
 

Q24. Where either the original pension plan and/or the successor pension plan are registered with FSCO, but the asset transfer does not include Ontario members, which jurisdiction’s rules apply to the notice to members and the calculation of benefits?

 

A24. If there are no Ontario members or Ontario assets in the transferring group, then O. Reg. 310/13 does not apply, regardless of whether assets are transferred to or from a FSCO-registered pension plan. Members in the transferring group will be subject to the notice and benefit calculation rules of the jurisdiction(s) associated with those members. –04/2015

 

Q25. If an asset transfer for a multi-jurisdictional pension plan includes Ontario members, which jurisdiction’s notice requirements are applicable to the Ontario members?

 

A25. The transferred Ontario members must receive the notices described in O. Reg. 310/13, regardless of where the plan is registered. In addition, the notices to the Ontario members must be sent within the deadlines specified in O. Reg. 310/13. – 04/2015

 

Q26. If Ontario members of a multi-jurisdictional pension plan are being given the opportunity to consent to the transfer, must all Ontario members consent in order for the transfer of Ontario members to take place?

 

A26. No. All Ontario members are not required to consent in order to transfer the assets for the Ontario members. The asset transfer would occur for those Ontario members who consent but not for those who do not consent. – 04/2015

 

Q27. If an asset transfer for a multi-jurisdictional pension plan includes Ontario members, and the plan is not registered with FSCO, does O. Reg. 310/13 apply to the Ontario members’ benefits?

 

A27. Yes. The treatment of the transferred Ontario members’ benefits and related plan assets must satisfy the requirements of the PBA and O. Reg. 310/13. – 04/2015

 

Q28. If an asset transfer for a multi-jurisdictional pension plan includes Ontario members, and the pension plan is not registered in Ontario, which jurisdiction’s application filing requirements are applicable?

 

A28. The asset transfer application is to be filed with the applicable regulator (generally the regulator of the original pension plan) in accordance with that regulator’s filing requirements. However, the rules in O. Reg. 310/13 will apply to the Ontario members who are part of the asset transfer. This means, to satisfy Ontario’s asset transfer rules as they apply to the Ontario members, the asset transfer application must be filed with the applicable regulator within the deadlines set out in O. Reg. 310/13. In addition, after approval of the application is given by the applicable regulator, the transfer of assets must be completed within the deadlines set out in O. Reg. 310/13. This process applies whenever Ontario members are a part of an asset transfer. – 04/2015

 

Q29. Section 6 of O. Reg. 310/13 provides that within 60 days following the completion of the asset transfer, the administrators of both the original pension plan and the successor pension plan must file:

 

  1. a certification that the transfer of assets was made in accordance with the PBA and regulations,
  2. a cost certificate (transfer of defined benefits) indicating the amount transferred,
  3. a statement (transfer of defined contributions) indicating the amount transferred.

How would these requirements apply to a multi-jurisdictional pension plan?

 

A29. The requirements under section 6 of O. Reg. 310/13 apply to all pension plans registered with FSCO where Ontario members and Ontario assets are part of the asset transfer. If a pension plan is not registered with FSCO and Ontario members are part of the asset transfer, then item 1 of section 6 (certification that transfer was in accordance with PBA and regulations) is applicable and must be provided to the applicable regulator (the regulator who gave consent to the application), but items 2 (cost certificate) and 3 (statement) are not. However, if items 2 and 3 are not applicable then the certification under item 1 should indicate the amount transferred in relation to the Ontario members that are part of the asset transfer. – 04/2015

 

Q30. How does section 9 of O. Reg. 310/13 (amount to be transferred) apply to a partial asset transfer that includes Ontario members for a multi-jurisdictional pension plan?

 

A30. After the Ontario assets of the original pension plan are determined in accordance with the MJPPA, the Ontario assets to be transferred must be calculated in accordance with section 9 of O. Reg. 310/13. – 04/2015

 

Q31. Do the conditions in section 10 of O. Reg. 310/13 (transfer ratio) apply to only the Ontario portion of an asset transfer for a multi-jurisdictional pension plan?

 

A31. The conditions in section 10 of O. Reg. 310/13 must be satisfied in reference to the entirety of the original pension plan and the entirety of the successor pension plan, not just the Ontario portions of those plans. If Ontario members of the original pension plan are part of the asset transfer and the conditions in section 10 of O. Reg. 310/13 cannot be satisfied, then the asset transfer cannot be approved by the applicable regulator. – 04/2015

 

Q32. Can the Superintendent waive the Ontario requirements if there are only a small number of Ontario members in the transferred group?

 

A32. No. Even if there is only one Ontario member in the transferred group, Ontario’s rules are applicable. – 04/2015

 

 

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