Norton Rose OR's pension and benefit plans practice team publishes this bulletin on a quarterly basis. Focusing on topical issues and recent case law developments, the bulletin also includes commentary on various legal questions relating to pension and benefit plans in Quebec, including federally regulated pension plans.
CAPSA has just published the final version of Guideline No. 6 Pension Plan Prudent Investment Practices Guideline, the Self-Assessment Questionnaire on Prudent Investment Practices and Guideline No. 7 Pension Plan Funding Policy. These guidelines supplement the already existing pension plan governance guidelines. CAPSA feels that best practices in investment plan funding and investment are an essential element of good pension plan governance. Although these guidelines do not have the force of law, they cannot be ignored by pension plan administrators because, in the event of a liability claim, the guidelines will be part of the criteria used to assess administrator conduct.
Investment due diligence
Due diligence is a key step in many financial and commercial transactions, including mergers, acquisitions and financings. With due diligence, a number of elements can be verified concerning both the other party and the object of the transaction. With investment fund investments becoming increasingly sophisticated, plan administrators would do well to adopting an investment due diligence approach. Due diligence should cover both technical and legal aspects. With respect to legal aspects, particular focus should be given to representations and warrantees, limitation of liability and indemnity clauses and applicable legislation. We recently witnessed a case where an entity making an investment was required to describe the due diligence that had been carried out. Would you be able to do the same?
Infopensions – Issue 6
The Office of the Superintendent of Financial Institutions has just published Issue 6 of its Infopensions newsletter. The newsletter includes announcements and reminders on issues relevant to federally regulated private pension plans.
Reflecting on the future of supplementary pension plans in Quebec
The Régie des rentes du Québec has just announced the creation of a committee to study the future of supplemental pension plans in Quebec. This committee, which is supposed to deliver its findings by the end of 2012, will reflect on a viable and efficient pension system for the future, in order to meet the specific needs of Quebecers. The committee is chaired by Alban D'Amours, former president of Desjardins Group, and one of the committee members is Martin Rochette, senior partner at Norton Rose OR.
Ontario pension plan reform news
Although Phase I and Phase II of Ontario's pension reforms
were passed into legislation back in 2010, we approach the end of
2011 with much of this reform not yet in effect as we wait for the
introduction of yet-to-be-seen regulations. It is anticipated,
however, that the provisions relating to the elimination of partial
wind-ups, the expansion of "grow-in" rights and the
requirement for immediate vesting of pension benefits will go into
effect on July 1, 2012. Once in effect, Ontario member rights on
the termination of their employment will be impacted.
Under the expanded grow-in provisions, any Ontario pension plan member terminated without cause and whose age and service totals 55 or more at termination is entitled to have his or her pension benefit calculated to include any early retirement enhancements that are provided for under the terms of the pension plan (even if he or she did not qualify for early retirement at the date of termination). Under the present rules, grow-in is required only on a full or partial wind-up of a pension plan, not on ordinary terminations.
Paired with the expansion of the grow-in rights are (i) the elimination of partial wind-ups and (ii) the provision of immediate vesting for all Ontario plan members (currently, pension plans may allow a vesting period of up to two years for Ontario members). Plan sponsors and administrators should review their plan terms and systems to ensure they are ready to comply with these changes on the basis that they will likely come into effect on July 1, 2012, as anticipated.
1 Canadian Association of Pension Supervisory Authorities
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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.