Law Times

Law Times • augusT 22, 2016 Page 11 www.lawtimesnews.com FOCUS Finding harmony in pension oversight BY JIM MIDDLEMISS For Law Times P ension law oversight suffers from the same malaise that inf licts se- curities law oversight in Canada — a labyrinth of regu- lators all battling for jurisdic- tion over the scope of work that overlaps into their respective jurisdictions. That's no surprise. Regulator wrangling is one of the byprod- ucts of Canada's complex Con- stitutional system that features a division of powers between fed- eral and provincial governments. However, in the pension world, the maze is changing, at least for multi-jurisdictional pension plans. In July, five provinces — On- tario, British Columbia, Quebec, Nova Scotia and Saskatchewan — agreed to a new legal frame- work for administering and regulating MJPPs, in a deal that should ease the regulatory bu- rden for pension plans operating in more than one province. The deal builds on a 2011 agreement that saw Ontario and Quebec agree to co-operate on MJPPs. At the time, those two prov- inces accounted for 64% of the MJPPs in place, covering 57% of plan members. It was expected that other provinces would jump on board shortly after, but they didn't. Fast forward to 2016 and that's finally starting to happen, thanks to efforts of the Can- adian Association of Pension Supervisory Authorities, which has been seeking to harmonize aspects of plan administration and oversight similar to the way the Canadian Securities Ad- ministrators, comprising the various provincial securities regulators, have been tackling securities law. Richard Johnston, a partner at Fasken Martineau DuMoulin LLP in Toronto, says the biggest change in the deal is that "you have now got five provinces in- volved. More people and more pension plans could be affected by this agreement." Julien Ranger, a lawyer in the pensions group at Osler Hoskin & Harcourt LLP, called the agreement a "step in the right direction. Businesses al- ways welcome any changes that streamline the administration of their plan. This is one of them. "Essentially, we have a sys- tem where the jurisdiction over pensions is split between all the provinces and the federal gov- ernment." The objective has been to "harmonize certain as- pects of the administration of MJPPs," Ranger says. However, that hasn't been easy and dates back to the origin- al 1968 Memorandum of Recip- rocal Agreement, signed by all the provinces, except Prince Ed- ward Island, which doesn't have pension legislation. That agree- ment was designed to simplify the administration of MJPPs. It set out "major" and "minor" authorities for dealing with the administration of multi-jurisdic- tional plans. The major authority is the provincial regulator where the plurality of the plan mem- bers are employed. The task fell to the major authority to exercise its statutory function and that of the minor authority. The 1968 deal eliminated some of the administrative bu- rden, for example, the need to register in multiple provinces. "It really doesn't make sense to make a plan register in six or eight provinces," Ranger notes. However, it didn't simplify the administration of MJPPs, such as which of the different pieces of legislation governed specific matters, such as funding. The practice emerged to apply the legislation of the ma- jority authority in respect to administrative matters involv- ing the plan and the minority authority regarding member en- titlement issues. However, the Ontario Div- isional Court in Régie des rentes du Québec v. Pension Commis- sion of Ontario, [2000] O.J. No. 2845 (Ont. S.C.), a pension sur- plus fight known as the "Leco" case, cast doubt on the ability of a pension authority to ignore the law in the province where minority members reside. That led to CAPSA undertaking the revamped agreement signed by Quebec and Ontario in 2011. The agreement between Que- bec and Ontario refined those concepts, setting out more fully the major authority's scope and power. Fasken's Johnston says that Schedule B to that deal sets out the area where the majority au- thorities law applies. For example, the majority province's law applies for things such as plan registration, ad- ministrator's duties, plan rec- ords and funding of ongoing plans, among others. "If it's not listed," he says, then it is presumed that the minor province's law applies. "Most people want to comply with the rules, but they need to know what the rules are. "It really tries to sort things out for the regulators and law- yers." The agreement also incor- porated the "final location" method for determining which province's pension regime pre- vails in terms of benefits. The 2016 agreement clarifies some language from the 2011 docu- ment and extends it to more provinces. LT Richard Johnston says that a growing number of provinces involved in a new legal framework for MJPPs means more people and more plans could be affected. © 2016 Thomson Reuters Canada Limited 00238CY-84416-CE Drafting Assistant – Transactional also: • Flags discrepancies in defined terms, numbering, punctuation, and non- conforming phrases • Hyperlinks those flagged issues, allowing you to navigate to the exact location within your documents • Links key concepts such as cited sources and defined terms • Scans your document and quickly connects to other documents referenced in the transaction With Drafting Assistant – Transactional, you'll expedite the document review process and spend more time tackling the substantive, client-specific issues that matter most. Imagine if you could cut your proofreading time in half FOR MORE INFORMATION Call 1-866-609-5811 or visit carswell.com/drafting-assistant-transactional Now you can streamline your proofing tasks with Drafting Assistant – Transactional. In seconds, it analyzes your document and alerts you to potential errors and omissions. Essentially, we have a system where the jurisdiction over pensions is split between all the provinces and the federal government. Julien Ranger

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