In this second part of a two-part series on changes of interest
to plan administrators, we focus on the new rules related to
governance and funding policies. However, the Alberta changes are
very broad. If you sponsor a plan with members in Alberta, now is
the time to ensure compliance with Alberta's new rules.
(For Part I of this series, where we discuss enhanced disclosure
requirements, record retention and new provisions on dealing with
the benefits of missing persons, click here.)
The plan administrator must develop a governance policy, which
addresses the structures and processes for overseeing, managing and
administering the plan. Among other things, the governance policy
must define the responsibilities of various parties to the pension
plan, which may include the sponsor, participating employer(s), and
the administrator. The administrator must ensure that the plan is
administered in accordance with the governance policy. Alberta is
the first jurisdiction in Canada to require such a governance
policy for pension plans.
All Alberta registered pension plans must have a governance
policy in place by August 31, 2015. The content of the governance
policy is prescribed in the EPPR and includes:
the structures and processes for overseeing, managing and
administering the plan and an explanation of what those structures
and processes are intended to achieve;
the identification of all participants who have authority to
make decisions in respect of those structures and processes, their
roles, responsibilities and accountabilities, and performance
measures and a process for monitoring the performance of such
procedures to ensure that the plan administrator and any other
participants in those structures and processes have access to
relevant, timely and accurate information;
a code of conduct for the administrator and a procedure to
disclose and address conflicts of interest;
the educational requirements and skills necessary to perform the
duties associated with those structures and processes;
material risks that apply to the plan and internal controls to
manage those risks; and
a process for the resolution of disputes.
Governance has been a hot topic in the corporate environment for
some time now. CAPSA has weighed in on the importance of governance
for pension plans through the issuance of various guidelines that
address governance matters. Accordingly, pension plan
administrators have become increasingly aware of the need to
implement governance structures and processes. The requirement to
have a governance policy in Alberta is in line with the increasing
focus on governance.
If the plan text of a pension plan contains a benefit formula
provision (either a defined benefit provision or a target benefit
provision), the administrator must establish a funding policy that
outlines the plan's funding objectives and sets out the
intended method to achieve those objectives. In addition, the
administrator must provide the plan's actuary with a copy of
the funding policy within 60 days after the establishment of the
Funding policies must be in place by August 31, 2015 for defined
benefit and target benefit plans in Alberta. The content of the
funding policy is prescribed in the EPPR. Although many pension
plans in Canada have voluntarily established funding policies, such
policies are not generally required under pension standards
legislation for defined benefit plans. Interesting to note, in New
Brunswick shared risk plans are required by legislation to have
In light of these changes brought in by the new legislation
coming into force September 1, 2014, administrators are advised to
review their current practices to ensure they are compliant with
the new regulatory requirements for plan administration in
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.
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