As an initial step, FSCO developed and implemented a risk-based monitoring program in 2000 that focused on the funding of defined benefit pension plans. Besides pension plan contributions, pension fund investment returns can have a significant impact on the funded status of pension plans. Accordingly, FSCO believes it should extend its risk-based approach and complement its existing monitoring of pension plan funding with the monitoring of pension fund investment activity.
Pension Investment Monitoring Model and Investment Information Summary (IIS) Form
The Investment Information Summary (IIS) form
aligns with the information required to be filed in the plan's financial statements under section 76 of Regulation 909. In addition, only the plan administrator will be required to certify the accuracy and completeness of the information contained in the IIS form, and no certification from the plan auditor or any other third party will be required.
Identifying plans which could be subject to review will be determined with predefined risk indicators. These risk indicators were developed from the plan information filed with FSCO through the IIS form and in other filings. For example, plans with solvency concerns (as described under Regulation 909), with a high degree of mismatch between assets and liabilities or that have not complied with specific requirements of the federal investment regulations will be flagged for review.
It should be noted that simply because a plan has been flagged for review, this would not in itself be a judgement on FSCO's part as to whether the plan's assets are being invested prudently or imprudently or how well the pension fund is governed. Flagged plans require review to some extent (and in many cases may result in no action being taken by FSCO).
For further information about FSCO's risk-based pension investment monitoring program, please contact Mr. Mathew Ou of FSCO at:
Mr. Mathew Ou
Financial Services Commission of Ontario
5160 Yonge Street, Box 85
Toronto ON M2N 6L9