Ontario: Proposed regulations on administrative penalties
On May 9, 2017, the Ontario Government released proposed regulatory changes stipulating the procedures and proposed amounts relating to administrative penalties. The proposal will be of significant interest to administrators of Ontario-registered pension plans and others involved in administering such plans.
The Pension Benefits Act (PBA) was amended in November 2016 to permit the Superintendent of Financial Services (the “Superintendent”) to impose administrative penalties on plan administrators and other persons without requiring a prosecution and conviction for a provincial offence (see our News & Views of December 2016).
A “general administrative penalty” would be imposed for non-compliance with a substantive requirement of the PBA, while a “summary administrative penalty” would be imposed for failing to make required regulatory filings in accordance with regulatory deadlines.
Penalty amounts and criteria
The Superintendent would have the discretion to determine the amount of a general administrative penalty, subject to the current maximum amounts of $10,000 for an individual and $25,000 for an entity.
The Superintendent would have the ability to levy summary administrative penalties ranging from $100 or $200 per day, subject to the same $10,000 and $25,000 maximums.
The Superintendent would be required to consider the following criteria when imposing an administrative penalty:
- The degree to which the contravention or failure to comply was intentional, reckless or negligent;
- The extent of the harm or potential harm to others resulting from the contravention or failure to comply;
- The extent to which the person tried to mitigate any loss or to take other remedial action;
- The extent to which the person derived or reasonably might have expected to derive any economic benefit from the contravention or failure to comply; and
- Any other contraventions of or failures to comply with a requirement under the PBA during the preceding five years.
Deadline for payment
The proposed regulations would require payment of penalties within 30 days after the order imposing the penalty is given to the person, or such longer time as specified. Payment would be delayed if the person appealed to the Financial Services Tribunal or courts.
Source of payment
It should be noted that the PBA stipulates that an administrative penalty may not be paid out of the pension fund, which could be problematic for multiemployer pension plans, since it may be difficult to collect amounts for remitting administrative penalties directly from participating employers.
Stakeholders were invited to make submissions on the proposed regulations by June 12, 2017.