Ontario is on the verge of implementing new rights for members of registered pension plans. Members will have the right to form committees that will have broad rights to review information about all aspects of plan administration including investments. Employers who sponsor or administer a registered pension plan should familiarize themselves with these new Ontario legal requirements. They are not yet law, but likely will be in a matter of months.
Last week the Ontario government released revised draft regulations about these new legal requirements, seeking comments by September 12th, 2016. The new requirements have been kicking around in draft for the past six years and will replace current Ontario legislation regarding member advisory committees. Most employers probably haven’t heard of the current requirements regarding such committees, because the current rules have no teeth. The new ones will. You can find the new requirements here.
The new requirements will apply to pension plans that have at least 50 members (including retirees). For those plans, if 10 members (or their union) notify their plan administrator of their desire to form a member advisory committee, a process must be launched to inform all plan members and conduct a vote. If a majority of members vote in favour of establishing an advisory committee, it should be established in a matter of months. The plan administrator will have no right to representation on the committee. Reasonable expenses of the committee are payable from the pension fund.
Once a new committee is formed, the plan administrator must:
- arrange for the plan actuary (for defined benefit plans) to meet with the committee at least annually;
- give the committee access, at least annually, to an individual who can report on the plan’s investments; and
- give information to the committee, and allow it to examine the plan records.
These new legal requirements will not give plan members a say on how their plan should be administered, but they certainly will change the landscape of members’ access to information about their pension plan. The new requirements will come into play only where there is sufficient interest among members, or unions, in forming a member advisory committee.
These new Ontario rules will create an entirely new type of scrutiny of pension plan administration. Prepare now.