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Pension Benefit Statements: New Rules

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Recent Ontario pension reforms have created additional disclosure statement obligations that administrators should consider when they work with their third-party service providers to create annual, termination and death benefit statements.

Regulations that came into force in May 2011 require that annual member statements include the transfer ratio of the pension plan as calculated in the most recent two valuations reports and an explanation of what the transfer ratio means. Basically, the transfer ratio describes the funded status of the plan on a solvency basis. For example, if the transfer ratio is 0.85, then the plan is 85% funded. The Financial Services Commission of Ontario has indicated to some plan administrators that this requirement will not be applied to annual statements covering periods ending on or before December 31, 2011.

The reforms also indicate that retired members will be entitled to receive periodic benefit statements. The Ontario government has not yet released details specifying the frequency and content of what must be communicated to retirees.

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