Employers who administer defined contribution (DC) pension plans registered in Ontario may want to consider telling the Ontario government that they support two proposed changes to pension law that will reduce their costs.
The government wants to hear from stakeholders about its proposal to scrap two pension regulatory burdens. The proposals published by the Ministry of Finance are:
- Eliminate the requirement to file audited financial statements of all DC pension plans:
Administrators would still have to file with the Ontario pension regulator each year unaudited financial statements, but this change would save administrators the cost of hiring an accounting firm to audit the annual financial statements of their pension plans. There is an exception, but it is unlikely to be a concern for most employers: the Ontario pension regulator would have the authority to require audited statements if the regulator believes there is a substantial risk to the security of plan benefits or that there has been a significant change in the circumstances of the pension plan.
- Eliminate the requirement to establish a statement of policies and procedures (SIPP):
This would apply to DC plans where members make decisions about how to invest their DC accounts. The SIPP requirement would continue to apply to plans where members have no decision-making power regarding investments.
Why is the Ontario government proposing to do this? These changes are part of its plan to cut red tape across government. The existing requirements regarding annual audited financial statements and SIPPs “do not appear to contribute to the regulatory oversight of DC plans”, the government has said. Eliminating these two requirements could decrease costs in the sector by approximately CA$8 million a year, according to the government.
Time is short. The deadline for making submissions is November 23, 2021. If you have a view on whether these cost-saving proposals should be implemented, express it before November 23 by emailing the Ontario government at firstname.lastname@example.org.