Paul Owens (Deputy Superintendent of Pensions) and Haripaul Pannu (Senior Manager, Risk Management), both from Alberta Treasury Board and Finance, spoke to a sold out audience on private pension plans in Alberta, including a legislation update, a discussion on plan assessments and a look into the 2016 year. Mr. Owens and Mr. Pannu lead a group which regulates and oversees the 640 private pension plans in Alberta with 474,000 members and a total of $51 Billion in assets.
Legislation Update
The new Employment Pension Plans Act has been in force since September 1, 2014 and the majority of plans have filed the required amendments. The new legislation introduced a principles-based approach to pension regulation; however, on a few key topics, consideration has been given to moving towards a more prescriptive approach. For example, many stakeholders have commented on the rules for pension division on marriage breakdown, prompting a discussion of introducing a more prescriptive process for dividing pensions between separating spouses.
To date, 20 interpretive guidelines (IGs) have been released of which 12 are in final format. The Superintendent’s office expects to release an additional 3, including IGs on the target benefit provisions and one on plan funding.
Both Alberta and BC pension regulators are committed to ongoing legislative and regulatory harmonization. Mr. Owens and Mr. Pannu consult regularly with BC regulators to discuss interpretive questions and emerging issues, frequently reaching an agreement on responses and outcomes despite some legislative differences in the two provincial jurisdictions.
Plan Assessments
Registered pension plans must conduct assessments of the administration, funding and governance of the plan. After the first assessment of the administration of the plan, which for plans with a December 31 fiscal year end must take place by December 30, 2016, assessments must be done at least every three years.
Mr. Owens recommended that plan administrators use the plan assessment as a tool to formalize and verify the administration and processes of each pension plan and suggested that plan sponsors begin their assessment by reviewing the following 3 main areas:
• Policies (investment, governance and funding policy)
• Plan documents (text and trusts)
• Communications to members
Another useful tool for administrators is the Canadian Association of Pension Supervisory Authorities (CAPSA) guidelines. These guidelines and questionnaires ask a number of questions that may be useful to plan administrators such as:
- Do we have the right investment structure in place for our plan design and demographics?
- Do we understand the risks the plan is exposed to?
Economic Uncertainty
Mr. Owens mentioned that his office has received a large number of questions about reducing employer contribution rates to DC Plans due to a cash flow crunch in the current economic environment. However, only a few plans have filed amendment to this effect to date. In addition, less than 20 plans have requested to wind up and a few have converted to Group RRSPs.
The Superintendent’s office is seeking to conduct a consultation with DB plan sponsors on DB plan funding and whether solvency funding is the correct measure for DB plan funding. However, as all government agencies must go through a government process prior to conducting a consultation, there will be a delay before they can conduct it.
Looking ahead
Possible future amendments to the EPPA include:
- Ability to convert accrued benefits to target benefits for CPMEPs
- Changes in eligibility provisions for CBMEPs
- Modification of marriage breakdown rules to include more prescriptive forms and procedures
Mr. Owens indicated that at this time, Alberta does not appear to be pursuing the establishment of its own province-wide pension plan. Mr. Pannu also indicated that his office was working with his BC counterpart to establish actuarial guidance applicable to actuaries practicing in Alberta and BC. - Stian Andersen & Sunita Chowdhury Please visit our WordPress Blog for a copy of the presentation |