Custodial Agreements—What are they?

The Pension Benefits Standards Regulations, 1985 (Regulations) require that a pension plan’s investments are held in a name that clearly indicates that the investment is held in trust for the plan or held for the plan pursuant to a custodial agreement.

When applying to OSFI for plan registration, plan administrators must include, as part of their registration package, a copy of either the custodial agreement or trust agreement pursuant to which plan investments are held.

OSFI has received questions regarding the meaning of “custodial agreement”.

Pursuant to subsection 6(2) of the Regulations, a custodial agreement is an agreement that:

• States that an investment made or held on behalf of a plan is part of the plan’s pension fund;
• States that the assets will not at any time constitute an asset of the custodian; and
• Provides that the custodian is responsible for maintaining records that are sufficient to allow the ownership of any investment to be traced to the plan at any time.

An agreement between the custodian and the plan may also include other non-custodial responsibilities.

There may also be a trust agreement that exists between the trustees and the employer or administrator of the plan that outlines the responsibilities of the trustees. If such an agreement exists, then it must also be filed with OSFI.

When applying to OSFI for plan registration, please refer to OSFI’s Instruction Guides for Registration for more information.