Retaining Pension Records: New Regulatory Policy

4 Feb

As one can imagine, pension plans can operate for years.  Over the life of a pension plan thousands of documents are generated containing information vital to the operation of the plan itself as well as the personal information of members (and their spouses and beneficiaries).  One question has always been – how long must an administrator retain plan documents and records?

That question has been answered in part by a new policy of the Ontario pension regulator, the Financial Services Commission of Ontario (“FSCO”).  FSCO has finalized a new policy — Management and Retention of Pension Plan Records by the Administrator – containing rules regarding the manner in which plan administrators retain and manage all of the information and records of a pension plan, both current and historical.  The new policy is important given that new pension legislation will expressly require plan administrators to retain records for prescribed periods.

The policy generally divides the records relating to a pension plan into three categories: (i) records pertaining to legislated requirements, (ii) records pertaining to the day-to-day operation of the plan, and (iii) member specific information.  Falling into the first two categories are all documents that create and support the pension plan (i.e., plan texts and funding documents), as well as financial documentation (i.e., actuarial reports and financial statements) and documents relating to governance and administration (i.e., committee meeting minutes and advisor reports).  Member specific information includes personal information used to determine benefit entitlements (i.e., age, years of employment) and details regarding spouses and beneficiaries.

The policy requires administrators to retain documentation pertaining to legislated requirements indefinitely.  The Pension Benefits Act does not currently contain a limit on the retention period for such records.  Administrators are permitted to make decisions regarding the retention period for documents relating to day-to-day administration.

The retention period as it relates to member specific information is contingent on whether the member retains an entitlement under the plan or the entitlement has been paid out in full.  All member specific records must be retained until the last dollar has been paid out to the member and his or her spouse or beneficiary (which could be decades after the member starting participating in the plan).  Following the final payout, administrators are still expected to retain a summary of the member’s information in case a challenge is raised in the future.  Other legislation regarding personal information may also apply to these records (i.e., Freedom of Information and Protection of Privacy Act), but the other legislation will not overrule an administrator’s duties under pension laws.

Clearly, the FSCO policy results in administrators retaining records and information for many, many years.  Even where a plan terminates, it is important for the administrator to retain a summary of all vital information regarding the plan and its members long after the plan is wound up.  Thankfully, the policy permits electronic record retention and allows administrators to convert records into electronic form subject to certain conditions.

This policy is an important read for anyone who sponsors or administers a pension plan or provides services to a plan administrator.  As a matter of good governance, plan administrators should consider whether they have sufficient policies regarding the retention of plan and member information and records and consider preparing a written guideline that complies with the FSCO policy.

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