If you are involved with the administration of an Ontario registered pension plan, you should familiarize yourself with new Ontario rules regarding pension advisory committees. The new rules will be effective January 1, 2017. They give significant additional rights to plan members, and could impose extra costs and administrative burdens on plan administrators. You can find the new rules here: Ontario Pension Advisory Committee Rules
I wrote about these new rules a few weeks ago, when draft regulations were released by the Ontario government. The regulations are now final and are described in my article here: Pension Article
It is possible that these new rules will have no impact on your plan. If unions and plan members take no action, plan administrators are under no obligation to take any action. There will be no pension advisory committee in that case. But if a request is made by a union, or by at least ten members of a plan (including retirees), the new rules will be triggered. The rules set out a clear and detailed process to communicate the request with all plan members, distribute materials and conduct a vote.
If a vote to establish an advisory committee is successful, the plan administrator is then required to do several things, including:
- hold the initial meeting,
- give the committee or its representative “such information as is under the administrator’s control and is required by the committee or its representative for the purposes of the committee”,
- make the plan actuary available to meet with the committee at least annually if the plan provides defined benefits,
- ensure that the committee has access to an individual who can report on the investments of the pension fund at least annually, and
- provide administrative assistance to the committee.
The pension advisory committee will not have any legal authority to dictate how the plan should be administered. The new legislation says simply that “[T]he purposes of an advisory committee are (a) to monitor the administration of the pension plan; (b) to make recommendations to the administrator respecting the administration of the pension plan; and (c) to promote awareness and understanding of the pension plan.”
Reasonable costs related to the establishment and operation of the committee are payable out of the pension fund.
Please contact a member of the Pension, Benefits and Executive Compensation group at Dentons Canada LLP for more information about this potentially significant change to the governance of Ontario registered pension plans.