The Association of Canadian Pension Management is recommending a few amendments to the Pension Benefits Standards Act, including the required disclosure to spouses and electronic communications with plan beneficiaries.
In a letter to the Department of Finance, the ACPM noted the PBSA currently requires information that’s provided to a plan member or former member — such as a pensioner — is also provided to the spouse or common-law partner. While the association said it’s supportive of a spouse having access to their partner’s pension particulars in principle, it noted these requirements are problematic in practice because employers and plan administrators don’t communicate separately to an employee’s spouse and don’t have independent spousal contact information.
The letter also highlighted the uncertainty of spousal eligibility. In most cases, the maintenance of spousal records is routine, it said, but added the plan administrator is reliant on the plan member and/or spouse to track changes in this relationship.
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“The plan administrator should not be put in a position to determine the spousal relationships of members, except when it affects the payment of benefits,” said the letter. “While complex cases are the exception, it is exactly in these cases where the provision of pension information could become problematic.”
While the ACPM noted it’s most pertinent for spouses or former spouses to have access to a member’s pension information when the parties are involved in the division of property on the breakdown of their relationship, this is already accounted for in provincial property law, which enables the valuation of assets for family law purposes.
“Therefore, it is not clear there is a need for pension legislation to require the disclosure of information to spouses. However, as it is currently provided for within PBSA, it may not be desirable to remove it entirely.”
In its letter, the ACPM recommended the PBSA be amended to provide that a spouse or common-law partner may obtain, upon request, a copy of any documents given to a plan member or former member. Spousal information would still be required to be included on termination and retirement statements and waivers would still be required for any transaction that compromises a spouse’s statutory right, it noted. However, unless a request is made, it suggestion eliminating the requirement to give the spouse termination or retirement statements, as is currently required, unless a spouse so requests.
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The second issue raised in the ACPM’s letter is around facilitating electronic communications with plan beneficiaries.
Due to the PBSA’s requirement in 2010 to make communications available to a pension plan member’s spouse, the Office of the Superintendent of Financial Institutions issued a policy interpretation to the effect that the spouse’s consent to electronic communications is also required.
According to the ACPM, this framework is impractical for many plan sponsors and administrators and is a barrier to using electronic means for communications. “These shortcomings essentially defeat the policy objective of allowing plan sponsors to reduce administrative costs and use modern communication methods to interact with employees and retirees.”
The letter noted that the landscape has continued to evolve, with provincial governments and regulators putting legislation and guidelines in place to encourage digital-first communications between pension plan administrators and their members. “There is a need, however, for this strategy to apply equally to retired members so that they are not subjected to unnecessary distinctions that could potentially create barriers to receiving important information and updates.”
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The ACPM highlight the recent postal disruptions as a reason for alternative communication methods, as well as noting the ease and convenience of receiving electronic communications. To help ensure crucial information reaches retired members without any disruption, they’re best positioned to decide whether paper is best, noted the letter.
“This can be achieved through an opt-out system (i.e., opt out of electronic communication to paper) rather than the current environment of express consent and paper only. This aligns with the approach adopted by several financial services organizations, utility companies, municipal tax authorities and telecommunications companies that have either evolved to require receipt of information electronically or apply a fee to receive paper correspondence — irrespective of a client’s age.”
According to the ACPM, its member organizations report a high open rate when pension plan sponsors can communicate electronically with retired members, with an extremely small percentage of retired members requesting paper options.
Therefore, it’s recommending the PBSA regulations introduce deemed consent to permit electronic communications unless the member or former member specifically requests paper and that such deemed consent be applicable to both members and former members. “Furthermore, the plan administrator should have the flexibility to require active members to access a designated electronic platform provided by the plan administrator, as long as the information can be printed or downloaded.”
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