PIAC comments on FSRA’s plan for missing plan members
The Pension Investment Association of Canada is expressing its support for the Financial Services Regulatory Authority of Ontario’s draft guidelines for pension plan sponsors dealing with missing members.
In a letter, the PIAC said the draft guidelines would be helpful on a go-forward basis, but also noted plan administrators need more options regarding current missing member situations.
The FSRA’s draft guidelines included specifications on plan member responsibilities, such as promptly informing plan administrators of pertinent changes to their contact information, and best practices for plan communications and administration where the potential for missing members is concerned.
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The PIAC also expressed its support for the work of the FSRA’s missing members technical advisory committee — established earlier this year — in suggesting unlocatable members be found using an optional missing member registry, as well as the committee’s exploration of partnerships with other government entities in Ontario and Canada more broadly to discover information-sharing arrangements that could aid administrators.
It also agreed with the committee’s recommendations that the FSRA “provide for asset transfers related to missing members on plan windup or consider automatic small benefit unlocking where FSRA has appointed an administrator; increase the small benefit threshold and; provide a discharge for benefits of missing members at a certain age.”
The letter also noted Ontario pension plan administrators require somewhere to send money on behalf of missing members and suggested these funds could become the responsibility of a government entity instead. “The Bank of Canada does this for unclaimed bank balances and some other provinces have unclaimed property regimes which accept pension benefits. We would encourage pursuit of this approach in Ontario as an option for pension plan sponsors.”
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In response to the FSRA’s proposal to establish a system where a plan administrator, having sufficiently established their inability to contact a plan member in accordance with the Pension Benefits Act, could apply for a waiver of the requirement to send biennial statements to the missing member, the PIAC suggested this isn’t necessary.
“While we appreciate that the intent behind this waiver is to alleviate an administrative requirement to send out statements, we would question the need for a waiver, since sending confidential pension information to an address that is not correct may contravene the administrator’s duty of care. We understand that FSRA does not require a plan administrator to apply for the waiver, so we assume the onus is on the administrator to conduct appropriate search activity and thus avoid any fiduciary risk with or without utilizing the waiver.”
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