FSCO Policy Outlines New Requirements Regarding Pension Plan Records
Earlier this year, we did a post on the Financial Services Commission of Ontario’s (FSCO) consultation policy on pension record-keeping . FSCO has recently released the final version of this policy, “Management and Retention of Pension Plan Records by the Administrator” (the Policy).
The Policy is important reading for pension plan administrators as it imposes a new requirement to create a document management and retention policy. It also contains requirements impacting other documents such as pension plan services agreements and even purchase and sale agreements. The Policy applies to all plans, big and small, defined benefit and defined contribution, single employer and multi-employer, etc.
Notably, record-keeping will also shortly become subject to statutory requirements. When Bill 236 comes into effect, the administrator will be required to “retain the prescribed records about the pension plan and the pension fund for the prescribed period of time.” The accompanying regulations have not yet been enacted. Presumably they will not be inconsistent with the Policy, which also identifies records to be retained and suggests retention periods (or the Policy will be revised to comply with the new regulatory requirements).
The importance of prudent document management and retention practices is not new. As the Policy notes, prudent record keeping practices are crucial to fulfilling the plan administrator’s fiduciary duty and meeting its primary obligation to pay benefits in accordance with the terms of the pension plan. As well, as the Policy notes, the Canadian Association of Pension Supervisory Authorities recommends in its Guideline No. 3 (Guidelines for Capital Accumulation Plans) and Guideline No. 4 (Pension Plan Governance Guidelines and Self-Assessment Questionnaire) that pension plan administrators adopt a document retention policy.
That said, the “recommendations” incorporated into the Policy achieve new levels of importance from a compliance perspective since they reflect FSCO’s view of prudent practices and, though not legally binding, are effectively mandatory requirements for Ontario administrators. As well, the Policy goes into a level of detail beyond what’s contained in these other publications. (Of course, the Bill 236-related regulatory requirements will be legally binding once enacted.)
While good pension plan governance arguably dictates that all pension plans should have a document management and retention policy, it’s now essentially a requirement of the regulator. Given FSCO’s position, I recommend that any plans without a document management and retention policy make it a priority to establish one. Plans that already have a policy in place should review them to ensure that they meet the requirements of the Policy and, when enacted, the new regulatory requirements.
