InfoPensions – Issue 29 – November 2023

Notice of proposed regulatory changes to the Pension Benefits Standards Regulations, 1985 - negotiated contribution plans and unclaimed pension balances

On June 24, 2023, the federal government published a notice in the Canada Gazette, Part I, of proposed regulatory amendments to the Pension Benefits Standards Regulations, 1985. These related to a revised framework for negotiated contribution pension plans and a new framework for transferring unclaimed balances from terminated federally regulated pension plans (FRPPs). It also opened a consultation period on these proposed amendments. The consultation period closed on July 24, 2023. 

As described in the notice, the amendments would:

• exempt negotiated contribution plans from solvency funding requirements
• set out enhanced going concern funding standards for negotiated contribution plans
• set out requirements for the contents of plan governance and funding policies for negotiated contribution plans
• set out the required information that must be provided to and published by the designated entity that will receive and hold unclaimed pension balances
• specify who qualifies as an eligible claimant of unclaimed pension assets
• establish the period for how long the designated entity can hold and administer the unclaimed assets before the funds are transferred to the Crown. The proposed period is 30 years for balances under $1,000 and 100 years for balances over $1,000.

CAPSA’s draft Pension Plan Risk Management Guideline published for consultation

In June 2023, the Canadian Association of Pension Supervisory Authorities (CAPSA) published a draft Pension Plan Risk Management Guideline (Risk Management Guideline) for stakeholder consultation. The draft Risk Management Guideline combines the following documents that were previously published by CAPSA for consultation in June 2022:

• Draft CAPSA Guideline: Cyber Risk for Pension Plans
• Draft CAPSA Guideline: Environmental, Social and Governance Considerations in Pension Plan Management
• Draft CAPSA Guideline: Leverage and the Effective Management of Associated Risks

In addition to the topics listed above, the draft Risk Management Guideline also covers third-party (outsourcing) risk, risk management of target pension arrangements, and investment risk governance.

The consultation period closed on September 30, 2023. We continue to work with CAPSA on this initiative.

CAPSA’s draft Guideline No. 3 – Guidelines for Capital Accumulation Plans published for second consultation

In June 2023, the Canadian Association of Pension Supervisory Authorities (CAPSA) published a revised draft CAPSA Guideline No. 3 - Guidelines for Capital Accumulation Plans (CAP Guideline) for a second stakeholder consultation on their website. This version of the draft CAP Guideline incorporates stakeholder feedback received from a consultation on an earlier draft that closed in September 2022. The consultation period closed on July 21, 2023.

Basic rate for assessment of pension plans

The Assessment of Pension Plans Regulations require the Superintendent to publish annually in the Canada Gazette, Part I, a notice setting out the basic rate that will be applied to the assessment of pension plans in the upcoming fiscal year.

This notice was published on September 23, 2023, and the basic rate is $11 for assessments that are invoiced by us for plan years ending between October 1, 2023, and September 30, 2024. This is the same basic rate that is currently in effect. The basic rate applies to all pension plans registered under the Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act.

Please refer to the Pension Plan Assessment Rate Schedule on our website for more information.

We determine the assessment due for a pension plan and send an invoice after the due date of the plan’s Annual Information Return (AIR) or, where applicable, after having received an application for registration. We typically prepare the invoice approximately 45 days after determining the assessment, for example, approximately 45 days after the due date of the AIR.

Please continue to wait to be invoiced rather than sending payment for the assessment along with an application for registration or after filing the plan’s AIR.

Guideline E-23 on Model Risk Management

In November 2023, we released our draft Guideline E-23 Model Risk Management (Guideline) for federally regulated financial institutions (FRFIs) and federally regulated pension plans (FRPPs), for consultation. The consultation period ends on March 22, 2024. All comments can be sent to consultations@osfi-bsif.gc.ca.

Given the fast-paced development and deployment of increasingly complex models, the revised draft Guideline is broader than its previous version but remains principles based. While we propose making FRPPs subject to the Guideline, the requirements that will apply to FRPPs will vary depending on the models used by each pension plan.

An information session will be held on January 17, 2024, for stakeholders to comment and ask questions on the draft Guideline E-23. We encourage plan administrators and pension industry stakeholders to register for this event, and to provide feedback and ask questions on the proposed draft Guideline.

We are aiming to publish the final Guideline by mid-2024. We expect it to come into effect during the summer of 2025. The final guideline will replace our current Guideline E-23.

Guidance posted on our website

The following documents were posted to our website since the last edition of InfoPensions:

• November 2023 – final Instruction Guide for Preparation of Actuarial Reports for Defined Benefit Pension Plans. Revisions reflect our updated expectations on the maximum going concern discount rate.
• November 2023 – draft Guideline E-23 Model Risk Management for FRFIs and FRPPs, for consultation.
• October 2023 – final Instruction Guide for Asset Transfers related to Defined Contribution Provisions of Pension Plans and its accompanying form. Revisions reflect changes to the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans and include other updates to clarify the instructions.
• June 2023 – draft Advisory on Technology and Cyber Security Incident Reporting and its accompanying incident reporting form. The advisory sets out our expectations for when and how a technology or cyber incident that affects a federally regulated pension plan should be reported to us. The consultation period ended on September 30, 2023.