Written by Jordan Fremont and Jaspreet Kaur
On March 27, 2020, the Office of the Superintendent of Financial Institutions (OSFI) announced a series of regulatory adjustments designed to help reduce some of the operational stress on federally regulated institutions, including federally regulated pension plans.
The key measures announced for federally regulated private pension plans include:
- Freeze on portability transfers and annuity purchases: Effective March 27, administrators of defined benefit (DB) provisions of pension plans are directed to place a full freeze on portability transfers and annuity purchases. Since the current financial market situation has negatively affected the funded status of DB provisions of pension plans, this temporary measure is introduced with a view to protect the benefits of DB members and beneficiaries. The payment of DB pensions to retirees and other beneficiaries is not impacted by this measure. During this temporary freeze, administrators of DB provisions may request the Superintendent's consent to a transfer or annuity purchase based on plan-specific or special circumstances.
- Deadline Extensions for annual filing requirements: OSFI has provided a three-month extension to deadlines for certain actions and annual filing requirements pursuant to the Pension Benefits Standards Act, 1985 and the Pooled Registered Pension Plans Act, to allow plans more flexibility to focus on issues at hand. The actions and filings subject to this three-month extension include the filing of annual information returns, certified financial statements, actuarial reports and annual statements. To help manage member expectations, plan administrators are advised that they should give notice of planned or possible delays in the delivery of annual statements.
- Suspension of consultation initiatives and policy development: OSFI has suspended a number of consultation initiatives and policy development work related to new or revised guidance until conditions stabilize. Specifically, OSFI has suspended consultations on the Instruction Guide for the Preparation of Actuarial Reports for Defined Benefit Pension Plans, and the Instruction Guide for the Termination of a Defined Benefit Pension Plan. OSFI has also delayed posting of the Instruction Guide for Authorization of Amendments Reducing Benefits in Defined Benefit Pension Plans.
In these uncertain times, OSFI has advised that pension plan administrators should be proactive in informing their OSFI Relationship Manager of any financial or operational challenges they encounter.
OSFI's March 27, 2020, update and guidance is in addition to announcements made by other pension regulators across Canada. For a summary of announcements and measures introduced by pension regulators in Ontario, British Columbia, New Brunswick, Québec and Saskatchewan to address issues arising due to the COVID-19 situation, please refer to our earlier blog, What Pension Plan Administrators Need to Know Amidst the COVID-19 Pandemic.
We will continue to monitor and update you on regulatory and other developments of interest to pension plan sponsors and administrators. If your business or organization has questions in respect COVID-19 implications to your pension plan or other employment-related matters, please contact a member of the Bennett Jones Employment Services group. In addition, please visit our COVID-19 Resource Centre for other COVID-19-related materials.