The Financial Services Commission of Ontario (FSCO) issued a policy on the management and retention of pension plan records on July 9, 2010. The FSCO policy strongly recommends that all administrators make it a priority to establish a formal and comprehensive written pension plan records management and retention policy.
This FSCO policy explains the rationale for having prudent pension plan records management and retention practices and provides guidance for establishing such practices. The FSCO policy applies to all sizes and types of pension plans (including multi-employer pension plans) but it states very clearly that the level of detail and the appropriate retention periods may vary from plan to plan and may change over time.
The FSCO policy emphasizes that appropriate records management and retention practices and complete and accurate records are essential for meeting a pension plan administrator's obligations under the pension legislation. In light of this new FSCO policy, the administrator of an Ontario registered plan should consider establishing such a policy, or reviewing its existing policy to consider whether changes are required, to reflect the requirements in the FSCO policy. Although the FSCO policy only applies to pension plans registered in Ontario, it can serve as useful guidance to administrators of pension plans registered in other provinces in establishing records retention and management practices.
The FSCO policy deals with different aspects of records management and retention practices:
- responsibilities of the administrator for record management and retention;
- pension plan records and retention periods;
- transferring the administrator's record keeping responsibilities; and
- responsibilities of other pension stakeholders.
The FSCO policy recommends that, in setting up an appropriate records management and retention policy, the plan administrator first classify the pension plan records into different categories and then determine the appropriate retention periods. Generally, pension plan records can be classified into:
- plan records that pertain to legislative requirements;
- plan records that pertain to individual plan beneficiaries; and
- all other plan records that pertain to the day-to-day operation of the pension plan and pension fund.
Legislation applicable to retention of records (e.g., the Income Tax Act (Canada)) also needs to be reviewed in fixing the retention period.
The FSCO policy also provides guidance on the minimum contents of the records management and retention policy. One of the components that needs to be covered is the form in which the documents will be stored. The FSCO policy confirms that records may be stored and retained electronically provided that the requirements in applicable legislation relating to electronic records are complied with. In addition, the plan administrator must ensure that adequate back up systems exist and that records will always be accessible upon request.
Sometimes an administrator's records keeping responsibilities may be transferred to third parties (e.g., when an employer's business is sold or when responsibilities are delegated to third party service providers). The responsibilities of such third parties need to be properly documented.
The FSCO policy indicates that other stakeholders also have certain records retention responsibilities. For example, plan beneficiaries are responsible for keeping plan records that they receive from the administrator and reviewing the pension statements that they receive from the administrator and notifying the administrator if any information appears incorrect on their statements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.