New Pension Plan Investment Disclosure For Federally Regulated Pension Plans
November 08, 2024
As announced in the 2023 Federal Fall Economic Statement and confirmed in Budget 2024, the Federal Government adopted amendments to the Pension Benefits Standards Act, 1985 (PBSA) in June, 2024 to enable and require that the Superintendent of Financial Institutions annually publish prescribed investment information in relation to certain federally regulated pension plans (FRPPs), within a reasonable time after the end of each calendar year. The purpose of the PBSA amendments is to improve the transparency of the investments of large FRPPs for Canadians.
The Department of Finance has now published supporting proposed amendments to the Pension Benefits Standards Regulations, 1985 for public consultation (the Draft Regs). Under the Draft Regs, the Superintendent will be required to report information on FRPPs that have assets of $500 million (market value) at the end of their plan year. The information published by the Superintendent must disclose the market value in dollars and as a percentage of total assets for each specified asset class across each specified geographic location. The specified asset classes include the following: public equities, private equities, bonds, real estate, infrastructure, short-term assets, and any other classes. The specified geographic locations include the following: Canada, the United States, Europe, China, the Asia-Pacific region (excluding China), Latin America and any other location.
The Superintendent is required to disclose information on a per plan basis, with information relating to defined benefit and defined contribution provisions of a plan being listed separately, and in aggregate for all plans. The initial reporting to be delivered by the Superintendent must cover plan years ending in 2022, 2023, and 2024. A public consultation period on the Draft Regs, ending December 2, 2024, provides an opportunity for stakeholders to offer feedback on the Draft Regs.
In order to meet the new statutory disclosure requirements, the Superintendent will need administrators of FRPPs with assets over $500 million to provide him with plan investment information. The Regulatory Impact Statement released with the Draft Regs suggests that the information will be gathered by the Superintendent through annual information returns, but that a temporary collection process may be needed for the first reporting.
The timing and content of the Draft Regs suggests that the amendment to the PBSA may be proclaimed into force before year end. Accordingly, administrators of FRPPs with assets over $500 million may want to take steps so that they will be able to provide the requisite investment disclosure early in the new year.
The new regime does not apply to provincially regulated pension plans. However, the Regulatory Impact Statement states that the Department of Finance has informally engaged with some provincial officials to encourage alignment of the FRPP information to be disclosed with any provinces that choose to implement similar requirements. It is possible that reporting on plan investments may be introduced in other jurisdictions in the future.
