Ontario to permit appointment of replacement administrator if employer is restructuring
On September 13, 2016, the Ontario government proposed regulations that would allow the Superintendent of Financial Services to appoint or act as the administrator of an Ontario-registered pension plan in prescribed circumstances. In 2010, Ontario passed amendments to the Pension Benefits Act to permit such regulations, but the amendments to the Pension Benefits Act have not yet been proclaimed.
Ontario legislation already permits the appointment of a replacement administrator to wind up a pension plan. The proposed regulations would permit the Superintendent to appoint a replacement administrator without the requirement for the plan to be wound up if the employer is bankrupt, in receivership or in restructuring under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act. In such circumstances, appointment of an administrator may help limit conflicts of interest and protect benefits of members, retirees and other plan beneficiaries. The Supreme Court of Canada commented on such potential conflicts of interest in the 2013 case, Sun Indalex Finance, LLC v. United Steelworkers, and suggested that a replacement administrator could be one method of addressing potential conflicts of interest when a bankrupt or insolvent employer administers a pension plan.
Comments could be submitted by September 22, 2016.