Although other revelations in the Auditor General’s report overwhelmed news agencies, the Canadian Federation of Pensioners (CFP) was impressed with her recommendations relating to pensions contained in it. The Auditor General provides support for what CFP, of which ONPA is a member, has been advocating for, over many years and the group will now turn its attention to ensuring these five recommendations are followed through on.
For the ONPA, Recommendation 3 would be welcome, since our complaint regarding participation in the Advisory committee was rejected due to FSCO’s inability to enforce the PBA, not the merits of the complaint.
In view of the significant increasing underfunding of defined-benefit pension plans in Ontario, the Financial Services Commission of Ontario should conduct an analysis of the reasons for this increase, the potential for plans to recover based on a variety of predictions of economic growth in the province over the next several years, and the financial exposure to the province should the underfunding situation not improve in the next few years. It should use this information to identify and recommend strategies and changes to the legislation that could help to inform and mitigate the financial risk to sponsors and members of pension plans, as well as to legislators and taxpayers.
The Financial Services Commission of Ontario should assess the Pension Benefits Guarantee Fund’s (PBGF) financial risk exposure to potential claims and its continuation as an insurer of single-employer defined-benefit pension plans, and it should use this information to recommend further possible changes to the Pensions Benefits Act and regulation
To ensure the Superintendent has sufficient powers, authority and information to effectively monitor the administration and solvency of pension plans, the Financial Services Commission of Ontario should make changes to its policies and procedures, and, where necessary, seek changes to the Pension Benefits Act, to:
• provide it with similar powers to that of the federal Office of the Superintendent of Financial Institutions, including powers to terminate, appoint and act as a plan’s administrator;
• establish a staged approach for earlier monitoring and supervision of pension plans that have solvency deficiencies;
• increase the Superintendent’s power to order a plan administrator to provide an actuarial valuation report, particularly when a plan has a solvency deficiency, and introduce a program that regularly assesses the reasonableness of assumptions used in these reports; and
• take more proactive follow-up action against plan administrators that do not submit statutory filings on time, and acquire powers to impose penalties for late filing
To ensure examinations of pension plans conducted by the Financial Services Commission of Ontario (FSCO) provide an effective level of assurance that plan administrators are operating in accordance with statutory requirements, FSCO should:
• conduct more plan examinations and select plans for examination based on risks to members of the plan;
• ensure that its procedures for examining plans effectively address the risks associated with investments managed by plan administrators;
• provide guidelines to auditors of pension plan financial statements that set out minimum expectations for ensuring compliance with key requirements of the Pension Benefits Act as part of these audits;ensure it has the necessary employer information to identify plans at risk before employers launch bankruptcy proceedings; and
• establish an examination program for defined-contribution plans that provides effective monitoring and protection to plan members
To ensure that pension plan members get more detailed disclosures about their pensions, and about the regulatory oversight performance of the Financial Services Commission of Ontario (FSCO), FSCO should:
• identify and seek to implement improvements to statutory annual disclosure requirements of a plan administrator that would provide more meaningful information to all members on the plan’s performance and expenses, and how their plan performed compared to other similar plans and relevant benchmarks; and
• reassess its annual public reporting on pension plans in Ontario to provide more useful information for assessing how FSCO protects members’ pension interests and how well their plan performed and was administered in comparison to other plans