In Ontario, the Financial Services Regulatory Authority of Ontario (FSRA) has published the final version of its supervisory approach guidance, outlining how FSRA will oversee and apply the government’s new regulatory framework for multi-employer pension plans (MEPPs). The enabling legislation – amendments to the Pension Benefits Act (PBA) – came into effect on January 1, 2025. The guidance is effective as of February 2.
In a statement, FSRA says the guidance explains FSRA’s approach to reviewing and approving applications to convert defined benefits plans to target benefits plans. FSRA’s approach to assessing whether a plan’s provision for adverse deviation (PfAD) is aligned with its funding and benefits policy is also discussed, alongside the regulator’s broader supervision plans for target benefits plans.
The document, entitled Supervisory Approach Guidance to Implementation of the Target Benefit MEPP Framework, also sets out the regulator’s approach and practices related to certain assessments and engagements. It applies to target benefit MEPPs, whether benefits were converted or were originally established as target benefits, and their administrators.
“MEPPs that meet the eligibility requirements under the PBA and regulations may apply to the CEO of FSRA to convert all of the defined benefits provided under the MEPP into target benefits. Newly created MEPPs providing target benefits from inception can also be established under the target benefits framework, provided they meet the eligibility requirements,” the guidance states.
Under the PBA, every target benefit MEPP must have and file a funding and benefits policy with the regulator, a governance policy and a communications policy. The guidance discusses what each must include.
Conversion window
“The conversion window that ends on December 31, 2029, does not apply to MEPPs whose registrations are transferred to FSRA from another jurisdiction. Such transferred plans may apply to the FSRA CEO for a target benefit conversion before the fifth anniversary of the day on which the plans’ jurisdiction of registration was transferred,” they add.
The document also examines the process for making an application to convert benefits, eligibility criteria, plan level and sector level supervisory engagements and how FSRA will request documents. The regulator says it will also publish aggregate metrics on the sector.
“This information sharing, feedback loop and education is intended to support target benefit MEPPs’ work in addressing deficiencies and enhancing plan capabilities,” they write.
