FSRA releases draft guidance on missing members
On June 23, 2020, the Financial Services Regulatory Authority of Ontario (FSRA) released a draft guidance document on the topic of missing members.
Information No. PE0203INF: Principles and Practices Regarding Missing Members provides guidance to plans in meeting their obligations towards members whom the plan is unable to locate or communicate with and for whom the contact information on file is out of date. This document also includes guidance on how plan administrators may approach winding up a pension plan in which there remain missing members.
FSRA’s guidance on this topic distinguishes between members who became missing before and after 2017, when the Pension Benefits Act (PBA) first required biennial communications to former and retired members. It is expected that there will be significantly fewer members in the second group.
Once adopted, FSRA’s guidance will replace the Financial Services Commission of Ontario’s (FSCO) Policy A300-900 - Searching for Plan Beneficiaries.
Communication and engagement strategies to prevent loss of contact with members
FSRA encourages administrators to use a variety of communication or engagement strategies to reduce the number of missing members, including use of electronic communications, promoting member activity / connectivity on a portal, regularly reminding members to provide the plan administrator with any changes to their contact information, putting additional emphasis on termination activities, and communicating with approaching retirement.
FSRA also proposes administrators consider obtaining member consent on enrollment or on termination of membership to permit the administrator to publish specified information and authorizing government offices to release information to the plan administrator, in order to help locate the member should the plan lose contact with him or her in the future.
Search tools and internal policies
FSRA provides a list of search tools for administrators to consider using in the conduct of missing member searches. The choice of appropriate search tools and processes is for administrators to make, and will depend upon the circumstances of the plan and any applicable privacy considerations. FSRA also provides recommended considerations for an internal policy on maintaining records and locating members.
Winding up a plan with missing members
Since an administrator’s obligations are not discharged until all entitlements have been settled, the wind up of a plan may have to be delayed while missing member searches are conducted. However, FSRA indicates that it may permit the wind up of a plan with un-located missing members who have locked-in pension benefits under the plan if the missing members are transferred to an ongoing plan or annuities are purchased on their behalf.
Additionally, in cases where the missing members’ benefits are small benefits, surplus entitlements or other cash entitlements, administrators are invited to contact FSRA to discuss alternative approaches to winding up their plans.
FSRA states that, through the summer of 2020, FSRA will be collecting data on missing members from plan administrators on a voluntary basis as part of its regular data collection process. This data will be used to inform FSRA’s future initiatives in this regard, and to evaluate the effectiveness of FSRA’s new guidance on missing members.
Biennial statement waiver
Also on June 23, 2020, FSRA released a second draft guidance document, Approach No. PE0204APP: Waiver of Biennial Statements for Missing Former and Retired Members, which sets out the process by which Ontario-registered pension plans may apply for a waiver of the requirement to issue biennial statements. This document will replace FSCO Policy A300-901: Waiver of Biennial Statements for Missing Former and Retired Members.
Stakeholder comments are permitted until September 20, 2020.