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2nd Session, 35th Parliament,
45-46 Elizabeth II, 1996-97

The House of Commons of Canada

BILL C-85

An Act to amend the Pension Benefits Standards Act, 1985 and the Office of the Superintendent of Financial Institutions Act

      Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

R.S., c. 32 (2nd Supp); R.S., c. 18, (3rd Supp.); 1993, c. 28; 1995, c. 17

pension benefits standards act, 1985

1. (1) The definition ``standards for registration'' in subsection 2(1) of the Pension Benefits Standards Act, 1985 is repealed.

(2) The definition ``administrator'' in subsection 2(1) of the Act is replaced by the following:

``adminis-
tra-
tor''
« adminis-
trateur
»

``administrator'', in relation to a pension plan, means the administrator referred to in section 7, and includes the replacement administrator appointed under subsection 29.1(1) ;

(3) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

``surplus''
« excédent »

``surplus'' means the amount, determined in the prescribed manner, by which the assets of a pension plan exceed its liabilities;

2. The heading before section 5 of the English version of the Act is replaced by the following:

powers of superintendent

3. Section 5 of the Act is replaced by the following:

Powers of Superinten-
dent

5. (1) The Superintendent, under the direction of the Minister, has the control and supervision of the administration of this Act and has the powers conferred by this Act .

Information and studies

(2) The Superintendent may

    (a) collect such information as is necessary to determine the extent to which inflation adjustments and other adjustments to pension benefits are provided;

    (b) conduct studies, surveys and research programs and compile statistical and other information relating to pension plans and their operation; and

    (c) disclose, to any government agency or regulatory body, information gathered under paragraph (a) or (b) or filed under section 10, 10.1 or 12.

4. (1) Section 6 of the Act is renumbered as subsection 6(1).

(2) Subparagraph 6(1)(a)(i) of the Act is replaced by the following:

      (i) the administration, application and enforcement of pension legislation, and

(3) Subsection 6(1) of the Act is amended by adding the following after paragraph (a):

    (a.1) enter into agreements with the appropriate authority of a designated province with respect to any pension plan that is required to be registered under this Act and is registered in the designated province in order to

      (i) make applicable the pension law of the designated province, or any part of that law, with such modifications as the Minister deems necessary, in respect of the pension plan, and

      (ii) limit the application of this Act and the regulations to the pension plan;

(4) Paragraph 6(1)(b) of the English version of the Act is replaced by the following:

    (b) authorize the appropriate authority of a designated province, or the association referred to in subparagraph (a)(ii), to exercise such powers on behalf of the Superintendent or otherwise under this Act as the Minister may determine;

(5) Section 6 of the Act is amended by adding the following after subsection (1):

Publication

(2) The Minister shall cause a notice of every agreement entered into under paragraph (1)(a.1) to be published in the Canada Gazette.

5. Section 7 of the Act is replaced by the following:

Adminis-
trator

7. (1) The administrator of a pension plan shall be

    (a) in the case of a multi-employer pension plan established under one or more collective agreements, a board of trustees or other similar body constituted in accordance with the terms of the plan or the collective agreement or agreements to manage the affairs of the plan;

    (b) in the case of a multi-employer pension plan not described in paragraph (a), a pension committee constituted in accordance with the terms of the plan, subject to section 7.1 , to manage the affairs of the plan; or

    (c) in the case of a pension plan other than a multi-employer pension plan,

      (i) the employer, or

      (ii) if the plan is established under one or more collective agreements and the terms of the plan or the collective agreement or agreements to manage the affairs of the plan provide for the constitution of a board of trustees or other similar body, that body.

Adminis-
trator of simplified pension plan

(2) In the case of a simplified pension plan, the administrator of the pension plan shall be the prescribed person or body.

Represen-
tative of members

7.1 A pension committee must

    (a) if a majority of the pension plan members so requests, include a representative of the plan members; and

    (b) if the pension plan has fifty or more retired members and a majority of the retired members so requests, include a representative of the retired members.

Pension council

7.2 (1) An employer who is the administrator may establish a pension council but, if the pension plan has fifty or more members and a majority of the members so requests, the employer shall establish a pension council.

Represen-
tative of members

(2) A pension council must include a representative of the pension plan members and, if the plan has fifty or more retired members and a majority of the retired members so requests, the council must include a representative of the retired members.

Functions of pension council

(3) A pension council has the following functions:

    (a) to promote awareness and understanding of the pension plan among members and potential members;

    (b) to review, at least once every year, the financial, actuarial and administrative aspects of the plan;

    (c) such other administrative functions as are prescribed; and

    (d) such other functions as are specified by the pension plan or the employer.

Information

(4) The employer shall provide a pension council with any information that is necessary to enable it to carry out its functions.

Choosing represen-
tatives

7.3 Pension plan members and retired members shall choose their representatives for the purposes of section 7.1 and subsection 7.2(2), directly or indirectly, in the prescribed manner.

Duties of administrator

7.4 (1) The administrator of a pension plan shall, in accordance with this Act and the regulations, administer the pension plan and the pension fund and file the required documents.

Employer to provide information

(2) An employer who is not the administrator of it's pension plan shall provide the administrator with the information that is required by the administrator in order to comply with the terms of the plan and discharge the duties under subsection (1).

Superinten-
dent to be informed

(3) The administrator of a pension plan shall, within thirty days after being constituted or becoming the administrator, inform the Superintendent of

    (a) the administrator's name and address; or

    (b) the names and addresses of the persons who together constitute the body that is the administrator.

The administrator shall inform the Superintendent of any changes in this information within thirty days after the change.

Superinten-
dent may require meeting

7.5 (1) An administrator shall hold a meeting, within the period specified by the Superintendent, to consider any matters set out in a written notice from the Superintendent requiring the administrator to hold a meeting.

Participation

(2) The Superintendent may

    (a) participate in the meeting;

    (b) require the administrator to invite members, former members or any other persons entitled to pension benefits or refunds under the pension plan to attend the meeting; and

    (c) require any other interested persons to attend the meeting.

6. (1) Paragraph 8(1)(b) of the Act is replaced by the following:

    (b) an amount equal to the aggregate of the prescribed payments that have accrued to date, and

(2) Section 8 of the Act is amended by adding the following after subsection (4):

Manner of investing assets

(4.1) The administrator shall invest the assets of a pension fund in accordance with the regulations and in a manner that a reasonable and prudent person would apply in respect of a portfolio of investments of a pension fund.

(3) Subsection 8(6) of the Act is replaced by the following:

Adminis-
trator not liable

(5.1) An administrator is not liable for contravening subsection (4), (4.1) or (5) if the contravention occurred because the administrator relied in good faith on

    (a) financial statements of the pension plan prepared by an accountant, or a written report of the auditor or auditors of the plan, that have been represented to the administrator as fairly reflecting the financial condition of the plan; or

    (b) a report of an accountant, an actuary, a lawyer, a notary or another professional person whose profession lends credibility to the report.

Conflict of interest

(6) A person shall not accept an appointment to a body referred to in paragraph 7(1)(a) or (b) or subparagraph 7(1)(c)(ii) if there would be a material conflict of interest between that person's role as a member of that body and that person's role in any other capacity.

Not a conflict of interest

(6.1) For the purposes of subsection (6), merely being entitled to a pension benefit or having an interest in a pension benefit credit does not constitute a conflict of interest.

(4) Subsections 8(8) and (9) of the Act are replaced by the following:

Validity of documents

(8) A document issued by a board of trustees or other similar body or a pension committee is valid notwithstanding a material conflict of interest of a member thereof.

Removal of member

(9) If a person contravenes subsection (6) or (7), the Superintendent or any other interested person may apply to a court of competent jurisdiction for an order that that person be replaced, and the court may make an order on such terms as it considers appropriate .

(5) The portion of subsection 8(10) of the Act before paragraph (b) is replaced by the following:

Other conflicts of interest

(10) If there is a material conflict of interest between the role of an employer who is an administrator, or the role of the administrator of a simplified pension plan , and their role in any other capacity, the administrator

    (a) shall, within thirty days after becoming aware that a material conflict of interest exists, declare that conflict of interest to the pension council or to the members of the pension plan; and

(6) Subsection 8(11) of the Act is replaced by the following:

Court order

(11) If an administrator contravenes subsection (10), a court of competent jurisdiction may, on application by the Superintendent or any other interested person, make any order on such terms as the court considers appropriate .

7. The heading before section 9 of the Act is replaced by the following:

funding and surplus

8. (1) Paragraph 9(2)(b) of the Act is replaced by the following:

    (b) in accordance with the standar ds of practice adopted by the Canadian Institute of Actuaries, except as otherwise specified by the Superintendent ,

(2) Subsections 9(4) to (6) of the Act are repealed.

9. The Act is amended by adding the following after section 9:

Notification of remittance

9.1 (1) The administrator of a pension plan shall notify in writing the holder or custodian of the pension fund of all amounts that are to be remitted to the pension fund and the expected date of the remittance.

Effect of late remittance

(2) If a payment to a pension fund is not remitted within thirty days after the date referred to in subsection (1),

    (a) the administrator of the pension plan shall immediately notify the Superintendent in writing; and

    (b) a holder or custodian of the pension fund shall, if the administrator is the employer, immediately notify the Superintendent in writing.

Refund of surplus to the employer

9.2 (1) If an actuarial report filed under subsection 12(3) indicates that there is a surplus, no part of that surplus may be refunded to the employer unless

    (a) the employer establishes that it is entitled to the surplus, or part of it, under the pension plan or this section;

    (b) the requirements of the regulations made under paragraph 39(h.1) are met; and

    (c) the Superintendent consents to the refund.

Entitlement to surplus

(2) An employer is entitled to the surplus, or part of it, if, after being notified of the employer's proposal for a refund of that surplus or part of it, at least two thirds of the persons in each of the following categories notify the employer that they consent to the proposal:

ParlVU