Blakes reports that on July 9, 2010, the Financial Services Commission of Ontario (FSCO) posted Policy A300-200 Management and Retention of Pension Records by the Administrator (Records Policy) on the FSCO website.
Pension plans, by their very nature, have long term time horizons. It is therefore imperative that the records related to a pensoon plan and the pension fund of the pension plan be managed and retained for a long period of time. The main purpose of this policy is to discuss the long term commitments and responsibilities of the administraator of a pension plan in the management of pension plan records and to provide guidance for prudent records management and retention practices. The obligations of other pension stakeholders in the management and retention of records are also briefly addressed in this policy.
This policy has a broad application that covers all sizes and types of pension plans (e.g., defined benefit pension plans, defined contribution pension plans, multi-employer pension plans etc.). Therefore, certain information and guidance contained in this policy may not be applicable to all pension plans.
Frequently Asked Questions
Questions from Plan Administrators
Q. My employee has retired and is receiving a pension from the plan. How long do I have to keep this individual’s plan records?
A. Plan records pertaining to an individual plan member should be retained as long as the member and his or her beneficiaries or estate have an entitlement under the pension plan. Upon the death of the plan member and his or her entitled beneficiaries, the administrator should retain a summary of their plan records which should include, as a minimum, the following information:
- The plan beneficiary’s name, employee number or social insurance number (as applicable).
- The plan membership entry date (as applicable).
- The retirement date (as applicable).
- The retired member’s date of death.
- The date of death of the retired member’s spouse or his or her designated beneficiary (as applicable).
- The pension amount that was paid to the retired member, his or her spouse, designated beneficiary or estate (as applicable), including any evidence that substantiates the payment information (e.g., payment stubs, T4A statements, or any other forms of evidence).
- The date(s) when payment(s) commenced and terminated, if periodic payments were made.
- The date payment was made and the amount of the payment, if a lump-sum payment was made.
The summary information that is retained must be sufficient to clearly identify the recipient of the payment(s), the exact amount(s) paid to him or her, and the dates when the payment(s) commenced and terminated.
Q. My employee terminated his or her employment and his or her pension entitlement was transferred out of the plan. Do I still have to maintain the plan records for this individual?
A. All plan records pertaining to this individual do not necessarily have to be kept. However, it is important for the administrator to retain at least a summary of the individual’s plan records that will provide confirmation of his or her payment status. The individual’s records should include, as a minimum, the following information:
- The employee’s name or identifying employee or social insurance number.
- The plan membership entry date.
- The termination date.
- The vested status as of the termination date.
- Evidence of the disclosure made to the member at termination.
- Any options that were elected by the member.
- The payment amount and date it was made, including any evidence that substantiates the payment information (e.g., bank statements, a receipt that shows the transferred amount and destination, the name of the financial institution, a receipt for cash payment, the date when the cheque was cleared, or any other forms of evidence).
The summary information that is retained must be sufficient to clearly identify the recipient of the payment, the exact amount that was paid to him or her, and date when the payment was made.
Q. An individual has come forward claiming that he or she was a former employee of the company over 30 years ago and is certain that he or she has an unpaid entitlement under the company’s pension plan. What is the administrator’s obligation to this individual?
A. If the administrator is unable to verify the individual’s membership under the company’s pension plan, the individual has to provide the administrator with evidence of his or her employment and/or plan membership. The type of evidence that is required may vary depending on whether the plan provides mandatory or optional membership. For example, if the terms of the plan required all employees to join the plan from their date of hire, the individual may only be required to provide proof that he or she was a former employee of the company. However, if the terms of the plan gave employees the option of joining the plan, the individual may need to provide proof of plan membership.
Once the individual’s employment and/or plan membership has been established, the onus is on the administrator to verify whether this individual had an entitlement under the terms of the plan and whether such entitlement has been paid. The administrator must be able to provide evidence in support of its actions.
Q. If plan records are missing, what are some of the resources available to plan administrators?
A. The administrator may request a plan viewing at FSCO’s premises to view current and historic plan documents that are in FSCO’s possession. Please note, however, that FSCO does not maintain records about individual plan members.
If annuities have been purchased for employees or their beneficiaries, the OmbudService for Life & Health Insurance (OLHI) may be able to direct the administrator (or the owner of the annuity) to the insurance company that holds the purchased annuity (contact OLHI toll-free at 1-800-268-8099 or visit OLHI’s website at www.olhi.ca).
Q. A company has closed down its business and wound up its pension plan. When do the administrator’s responsibilities end with respect to the plan records?
A. When a pension plan is terminated, the pension fund of the pension plan will continue to be subject to the PBA and Regulation until such time as all pension entitlements which are owed to the plan beneficiaries have been paid in full and no assets remain in the pension fund. In order to be discharged of further obligations with respect to the pension plan, the administrator must be able to demonstrate that the payments from the pension fund have been made in accordance with terms of the plan and the requirements of the PBA and Regulation. This means that the administrator may remain responsible for the plan records long after the wind up date of the plan. Therefore, it is important for the administrator to make arrangements with an external service provider (e.g., the custodian of the pension fund, an insurer, a consulting firm, a company specializing in third-party administration, etc.) to ensure that members will continue to have a contact person for the settlement of their pension entitlements.
Q. An individual who has a certificate showing that he or she is a deferred vested member of a pension plan has come forward several years after the plan was wound up. This individual is claiming that he or she did not receive his or her entitlement under the plan. What is the administrator’s obligation to this individual?
A. The administrator must be able to confirm whether or not this individual was included in the wind up and confirm if payment has been made to this individual. If payment has not been made, the administrator must take appropriate steps to ensure that this individual receives his or her entitlement under the plan. The termination of the plan does not relieve the administrator of the obligations in respect of members who did not receive their entitlements.
Questions from Plan Members
Q. What are my responsibilities for record keeping? What records should I keep?
A. It is to your benefit to keep records that show you are a member of the pension plan, and that you have an entitlement under the plan. As a minimum, you should keep the following records (at least until such time you are ready to start the payment of your pension entitlement):
- Plan enrolment form (if completed).
- Annual pension statements.
- Termination statement.
- Certificate of a deferred vested entitlement (if issued by the plan).
You are also responsible for reviewing the content of any pension statements that you receive from the administrator and notifying the administrator if any information appears incorrect on your statements.
Q. I was an employee of company ABC over 30 years ago and was a member of the company’s pension plan. When I left the company, I am certain that I did not receive my pension entitlement. What should I do?
A. You should first check your records and find any documents that indicate you were a member of the pension plan or an employee of the company (e.g., plan enrolment or plan termination forms, annual statements of pension benefits, T4 statements, Record of Employment statements, etc.). Once you have this information, you should contact the human resources department of the company and ask to speak with the individual who is responsible for the administration of the pension plan. You may need to write to the individual and provide him or her with proof of your plan membership and/or proof that you were a former employee of the company.